GDV.PR.A Steady on Good Volume

Brompton Group has announced (on June 7):

Global Dividend Growth Split Corp. (the “Company”) has determined the exchange ratios for the exchange option (the “Exchange Option”) with respect to its initial public offering. Under the Exchange Option, prospective purchasers could purchase Class A shares or Units (consisting of one Class A and one Preferred share) of the Company by an exchange of freely tradable equity securities (“Exchange Securities”) of the issuers listed below (the “Exchange Eligible Issuers”). The Exchange Option deadline was 5:00 p.m. on May 24, 2018.

The following table indicates the adjusted volume weighted average trading price (“Adjusted VWAP”) and exchange ratio for the Exchange Securities of each Exchange Eligible Issuer as calculated in the manner described in the Company’s prospectus dated May 23, 2018. The adjusted volume weighted average trading price and exchange ratios are rounded to four decimal places. Fractional Class A shares/Units will not be issued.

Company Name (Exchange Ticker Symbol) CUSIP ISIN Adjusted VWAP
(C$ Equiv.)
Exchange
Ratio Per Class A Share
Exchange Ratio Per Unit
Global Equities
APPLE INCORPORATED (AAPL) 37833100 US0378331005 $249.4883 20.7734 11.3404
BCE (BCE) 05534B760 CA05534B7604 $54.4520 4.5339 2.4751
CARNIVAL CORPORATION (CCL) 143658300 PA1436583006 $79.9122 6.6538 3.6324
CISCO SYSTEMS INCORPORATED (CSCO) 17275R102 US17275R1023 $56.6722 4.7188 2.5760
ENBRIDGE (ENB) 29250N105 CA29250N1050 $40.3859 3.3627 1.8357
HSBC HOLDINGS (HSBC) 404280406 US4042804066 $63.6714 5.3015 2.8942
IBM CORPORATION (IBM) 459200101 US4592001014 $186.5488 15.5328 8.4795
INTEL CORPORATION (INTC) 458140100 US4581401001 $73.4187 6.1131 3.3372
JOHNSON & JOHNSON (JNJ) 478160104 US4781601046 $158.4643 13.1944 7.2029
JP MORGAN CHASE & CO. (JPM) 46625H100 US46625H1005 $141.7487 11.8026 6.4431
MANULIFE FINANCIAL (MFC) 56501R106 CA56501R1064 $24.6940 2.0561 1.1225
NOVARTIS AG (NVS) 66987V109 US66987V1098 $97.7830 8.1418 4.4447
PFIZER INCORPORATED (PFE) 717081103 US7170811035 $47.2153 3.9313 2.1462
PROCTER & GAMBLE CO. (PG) 742718109 US7427181091 $96.5067 8.0355 4.3867
SANOFI SA (SNY) 80105N105 US80105N1054 $50.0553 4.1678 2.2752
SUN LIFE FINANCIAL INCORPORATED (SLF) 866796105 CA8667961053 $54.4145 4.5308 2.4734
TELUS CORPORATION (T) 87971M103 CA87971M1032 $45.4713 3.7861 2.0669
TEXAS INSTRUMENTS INCORPORATED (TXN) 882508104 US8825081040 $151.1907 12.5887 6.8723
TORONTO-DOMINION BANK (TD) 891160509 CA8911605092 $75.2690 6.2672 3.4213
Other
ALIMENTATION COUCHE-TARD INCORPORATED (ATD) 01626P403 CA01626P4033 $55.1488 4.5919 2.5068
ARC RESOURCES LIMITED (ARX) 00208D408 CA00208D4084 $13.0453 1.0862 0.5930
BARRICK GOLD CORPORATION (ABX) 67901108 CA0679011084 $16.8209 1.4006 0.7646
BLACKBERRY LIMITED (BB) 09228F103 CA09228F1036 $15.6563 1.3036 0.7117
CRESCENT POINT ENERGY CORPORATION (CPG) 22576C101 CA22576C1014 $10.0508 0.8369 0.4569
EMERA INCORPORATED (EMA) 290876101 CA2908761018 $40.1965 3.3469 1.8271
ENCANA CORPORATION (ECA) 292505104 CA2925051047 $15.9743 1.3301 0.7261
FIRST QUANTUM MINERALS LIMITED (FM) 335934105 CA3359341052 $21.5054 1.7906 0.9775
FRANCO-NEVADA CORPORATION (FNV) 351858105 CA3518581051 $91.7520 7.6396 4.1705
INTER PIPELINE FUND (IPL) 45833V109 CA45833V1094 $24.4985 2.0398 1.1136
KINROSS GOLD CORPORATION (K) 496902404 CA4969024047 $4.6261 0.3852 0.2103
PEMBINA PIPELINE CORPORATION (PPL) 706327103 CA7063271034 $44.7449 3.7256 2.0339
SHAW COMMUNICATIONS INCORPORATED (SJR.B) 82028K200 CA82028K2002 $26.5114 2.2074 1.2051
TRANSCANADA CORPORATION (TRP) 89353D107 CA89353D1078 $53.9139 4.4891 2.4506
VALEANT PHARMACEUTICALS INTERNATIONAL INCORPORATED (VRX) 91911K102 CA91911K1021 $30.8004 2.5646 1.4000
Exchange-Traded Funds
ISHARES CORE S&P 500 INDEX ETF (XUS) 46434R109 CA46434R1091 $44.7166 3.7233 2.0326
ISHARES CORE S&P/TSX CAPPED COMPOSITE INDEX ETF (XIC) 46430J101 CA46430J1012 $25.7062 2.1404 1.1685
ISHARES MSCI EAFE INDEX ETF (XIN) 46428L100 CA46428L1004 $26.7373 2.2263 1.2153
ISHARES MSCI EUROPE IMI INDEX ETF (XEU) 46434W108 CA46434W1086 $24.9395 2.0766 1.1336
ISHARES MSCI WORLD INDEX ETF (XWD) 46430Y108 CA46430Y1088 $50.5080 4.2055 2.2958
ISHARES S&P/TSX 60 INDEX ETF (XIU) 46428D108 CA46428D1087 $23.9088 1.9907 1.0868
VANGUARD S&P 500 INDEX ETF (VFV) 92205Y105 CA92205Y1051 $63.4257 5.2811 2.8830

The Toronto Stock Exchange has conditionally approved the listing of the Class A and Preferred shares, subject to the Company fulfilling all customary requirements. Trading under the symbols GDV and GDV.PR.A is expected to commence on the closing date, June 15, 2018.

The Company will invest in a diversified portfolio (the “Portfolio”) of equity securities of large capitalization global dividend growth companies selected by the Manager. In order to qualify for inclusion in the Portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing of the Portfolio, each global dividend growth company included in the Portfolio must (i) have a market capitalization of at least US$10 billion; and (ii) have a history of dividend growth or, in the Manager’s view, have high potential for future dividend growth.

The Manager expects that at least 20 global dividend growth companies will comprise the Portfolio. The indicative portfolio includes: Airbus SE, Apple Inc., AstraZeneca plc, BCE Inc., Carnival Corporation, Cisco Systems Inc., Deutsche Post AG, Enbridge Inc., HSBC Holdings plc, Intel Corporation, IBM Corporation, Johnson & Johnson, JP Morgan Chase & Co., Manulife Financial Corporation, Novartis AG, Pfizer Inc., Proctor & Gamble Co., Sanofi SA, Siemens AG, Sun Life Financial Inc., TELUS Corporation, Texas Instruments Inc., Toronto-Dominion Bank, UBS Group AG, and Vinci SA.

The investment objectives for the Class A shares are to provide their holders with regular monthly non-cumulative cash distributions and the opportunity for capital appreciation through exposure to the Portfolio. The monthly cash distribution is targeted to be $0.10 per Class A share representing a yield on the issue price of the Class A shares of 10.0% per annum.

The investment objectives for the Preferred shares are to provide their holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on June 30, 2021, subject to extension for successive terms of up to five years as determined by the board of directors of the Company. The quarterly cash distribution will be $0.1250 per Preferred share ($0.50 per annum, or 5.0% per annum on the issue price of $10.00 per preferred share), until June 30, 2021. The Preferred shares have been provisionally rated Pfd-3 (high) by DBRS Limited.

The syndicate of agents for the offering is being led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank and includes BMO Capital Markets, TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., Raymond James Ltd., Echelon Wealth Partners., Industrial Alliance Securities Inc., Desjardins Securities Inc., and Mackie Research Capital Corporation.

Today, Brompton announced:

Brompton Funds Limited (the “Manager”) is pleased to announce that Global Dividend Growth Split Corp. (the “Company”) has completed its initial public offering of 3,550,000 Class A shares and 3,550,000 Preferred shares for total gross proceeds of $78.1 million. The Class A and Preferred shares will commence trading today on the Toronto Stock Exchange under the symbols GDV and GDV.PR.A, respectively.

The Company will invest in a diversified portfolio (the “Portfolio”) of equity securities of large capitalization global dividend growth companies selected by the Manager. In order to qualify for inclusion in the Portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing of the Portfolio, each global dividend growth company included in the Portfolio must (i) have a market capitalization of at least US$10 billion; and (ii) have a history of dividend growth or, in the Manager’s view, have high potential for future dividend growth.
The investment objectives for the Class A shares are to provide their holders with regular monthly non-cumulative cash distributions and the opportunity for capital appreciation through exposure to the Portfolio. The monthly cash distribution is targeted to be $0.10 per Class A share representing a yield on the issue price of the Class A shares of 10.0% per annum.

The investment objectives for the Preferred shares are to provide their holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on June 30, 2021, subject to extension for successive terms of up to five years as determined by the board of directors of the Company. The quarterly cash distribution will be $0.1250 per Preferred share ($0.50 per annum, or 5.0% per annum) on the issue price of $10.00 per Preferred share, until June 30, 2021. The Preferred shares have been provisionally rated Pfd-3 (high) by DBRS Limited.

Brompton Funds Limited acts as the manager and portfolio manager of the Company. The Manager currently manages five split share corporations with combined assets of over $1.3 billion.

The syndicate of agents for the offering was led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank and includes BMO Capital Markets, TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., Raymond James Ltd., Echelon Wealth Partners., Industrial Alliance Securities Inc., Desjardins Securities Inc., and Mackie Research Capital Corporation.

DBRS has finalized the Pfd-3(high) rating:

DBRS Limited (DBRS) finalized the provisional rating of Pfd-3 (high) assigned to the Preferred Shares issued by Global Dividend Growth Split Corp. (the Company). The Company issued an equal number (3,550,000) of the Preferred Shares and the Class A Shares at an issue price of $10.00 per Preferred Share and $12.00 per Class A Share. From to time or during the events of issuance and redemption, the number of the Class A Shares outstanding may exceed the number of the Preferred Shares outstanding. It is expected that such excess will not be more than 10% and the excess of over 10% should not be outstanding for more than 15 days. Both classes of shares are scheduled to mature on June 30, 2021. The term of the Company may be extended beyond the maturity date for additional terms of five years each as determined by the Company’s board of directors.

Based on the initial asset coverage of 2.1x, the net asset value of the Company would have to fall by approximately 53% for the holders of the Preferred Shares to be in a loss position. The initial dividend coverage ratio is 0.6x.

GDV.PR.A commenced marketing in late April and issued a final prospectus on May 24. It is a 5% three-year SplitShare and will be tracked by HIMIPref™ but has been relegated to the Scraps subindex on credit concerns.

The issue traded 154,447 shares today in a range of 9.90-00 before closing at 10.00-01. Vital statistics are:

GDV.PR.A SplitShare YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2021-06-30
Maturity Price : 10.00
Evaluated at bid price : 10.00
Bid-YTW : 4.98 %

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