PrefBlog

Quadravest has announced:

Canadian Banc Corp. (the “Company’) is pleased to announce it has extended the termination date of the Company a further five year period from December 1, 2018 to December 1, 2023.

In connection with the extension, the Company will also amend the dividend entitlement of the BK.PR.A Preferred Shares (“Preferred Shares”) effective December 1, 2018, to pay a cumulative preferential floating rate monthly dividend at an annual rate equivalent to the prevailing Canadian Prime Rate plus 1.5% (previously 0.75%). The minimum rate per annum of which dividends will be paid on the Preferred Shares remains at 5% and the maximum rate will increase from 7% to 8%. Assuming no change in the current Prime Rate of 3.7%, the dividends paid on the Preferred Shares would increase from the current rate of 5.0% to 5.2% per annum on their $10 redemption value. The BK Class A Shares (“Class A Shares”) will continue to receive their targeted monthly payments currently set at an annualized rate of 10%, based on the volume weighted average market price of the Class A Shares over the last 3 trading days of the preceding month.

In connection with the term extension, the Company will offer a Special Retraction Right which will allow existing shareholders to tender one or both classes of Shares and receive a retraction price based on the November 30, 2018 net asset value per unit.

Since inception of the Company, the Class A Shares have received a total of $14.05 per share and the Preferred Shares have received a total of $6.98 per share, for a combined total of $21.03.

The Company invests in a portfolio of six publicly traded Canadian Banks as follows:

Bank of Montreal	Canadian Imperial Bank of Commerce	Royal Bank of Canada
The Bank of Nova Scotia	National Bank of Canada	The Toronto-Dominion Bank

BK.PR.A is currently backed by a NAVPU of 22.76 as of 2018-9-14. The fund has total assets (including Capital Units) of 255-million as of 2018-8-31.

BK.PR.A was extended in December, 2012, in accordance with a vote taken in 2011.

According to the 2018 Annual Information Form:

In the event that the Termination Date is extended in any Extension Year, each holder of Preferred Shares or Class A Shares shall have the right to retract such Preferred Shares or Class A Shares effective December 1 of such Extension Year (the “Recurring Special Retraction Right”). The price payable per Preferred Share so retracted shall be equal to (i) the sum of (A) the lesser of (x) $10.00 and (y) the net asset value of the Company calculated on November 30 of such Extension Year, divided by the number of Preferred Shares then outstanding, plus (B) an amount equal to the accrued and unpaid dividends on each Preferred Share to but excluding November 30 of such Extension Year, plus (ii) all declared and unpaid dividends thereon to but excluding November 30 of such Extension Year. The price payable per Class A Share so retracted shall be equal to the greater of (i) the net asset value per Unit calculated on November 30 of such Extension Year less $10.00, and (ii) zero. Holders of Preferred Shares or Class A Shares wishing to take advantage of the Recurring Special Retraction Right must surrender their Preferred Shares or Class A Shares for retraction no later than the close of business on November 1 of such Extension Year (or, if November 1 of such year is not a business day, on the immediately preceding business day). Payment of the retraction price per Preferred Share or Class A Share owing in respect of the exercise of the Recurring Special Retraction Right will be made on or before December 15 of such Extension Year (or, if December 15 of such year is not a business day, on the immediately succeeding business day).

November 1 is a Thursday this year so the deadline to notify the company of a desire to retract is November 1 (brokerages will set their internal deadlines a few days earlier). BK.PR.A is currently trading above its retraction price, however, so in the absence of extortionate transaction costs, holders who want to get out are better off selling.

This entry was posted on Thursday, September 27th, 2018 at 8:20 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.