FFN.PR.A & FTN.PR.A : We Have Nothing to Fear but Fear Itself

Continuing their plea for calm last week Quadravest has begged holders of FTN & FFN not to panic – please, don’t panic! we implore you not to panic!:

Fueled by the intensification of the ongoing credit crisis, world financial markets reached a level of “panic” during the last several weeks which arguably has never been seen by investors on such a global scale. Several of the largest financial institutions in the United States and around the world required unprecedented government intervention in order to rescue them from complete insolvency.

The impact of the broad based selling has adversely impacted the portfolios of Financial 15 Split Corp. (“Financial 15”) and Financial 15 Split Corp. II (“Financial 15 II”). The net asset values have declined by approximately 15% from August 31, 2008 to October 15, 2008.

Asset coverage of the preferred shares remains OK: 1.9+:1 for FTN.PR.A and just under 1.6:1 for FFN.PR.A according to the company. But the capital unitholders are certainly feeling some pain:

3 Responses to “FFN.PR.A & FTN.PR.A : We Have Nothing to Fear but Fear Itself”

  1. realboomer says:

    The NAV for FFN.PR.A was $14.06 as of Nov 14. According to my understanding of the prospectus, the distributions on the Class A shares should be suspended, since payment of distributions on the Class A shares requires a minimum $15 NAV on the valuation date (15th day of each month). Do you concur with my understanding of the prospectus?

  2. jiHymas says:

    I do.

    The prospectus states:

    No regular monthly dividends will be paid in any year on the Class A Shares so long as any dividends on the Preferred Shares are then in arrears or so long as the Net Asset Value per Unit is equal to or less than $15.00(calculated as described under ‘‘Details of the Offering — Valuation of Assets’’). Additionally, no special year-end dividends will be paid if after payment of such a special dividend the Net Asset Value per Unit (calculated as described under ‘‘Details of the Offering — Valuation of Assets’’) would be less than $25.00.

    Such a move will eliminate a $1.20 p.a. drag on NAV and (according to the May 2008 Financials and assuming dividend income received is constant) make the company cash-flow positive.

  3. […] was last mentioned on PrefBlog when it implored unitholders NOT TO PANIC!!!!. There was a query regarding possible suspension of dividends on this thread; I concurred with the […]

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