Partners Value Split Corp. has announced (although not yet on their website):
its intention to redeem all 7,631,100 of its Class AA Preferred Shares, Series 3 (“Preferred Shares, Series 3”) for cash on January 10, 2019 (the “Redemption Date”) in accordance with the terms of the Preferred Shares, Series 3.
The redemption price per Preferred Shares, Series 3 will be equal to C$25.00 plus accrued and unpaid dividends of C$0.1222 per share to January 9, 2019, representing a total redemption price of C$25.1222 per share (the “Redemption Price”).
Notice will be delivered to holders of the Preferred Shares, Series 3 in accordance with the terms of the Preferred Shares, Series 3.
From and after the Redemption Date, the Preferred Shares, Series 3 will cease to be entitled to dividends or any other participation in any distribution of the assets of the Company and the holders thereof shall not be entitled to exercise any of their other rights as shareholders in respect thereof except to receive the Redemption Price (less any tax required to be deducted and withheld by the Company). After the redemption of the Preferred Shares, Series 3, the Company will consolidate the existing capital shares held by Partners Value Investments Inc. so that there are an equal number of preferred shares and capital shares outstanding.
PVS.PR.B commenced trading as a ticker change from BNA.PR.C. BNA.PR.C commenced trading 2007-1-10 as a SplitShare, 12-Year, 4.35% after being announced 2006-12-20. It is famous for the immense confusion surrounding its first dividend and for having been recommended in the December 2008 PrefLetter with a quote of 8.15-39 and a yield of 20.59%. Asset Coverage even in those dark days was “just under 1.7:1 as of December 12, based on 2.4 shares of BAM.A per unit.” It was recommended at other times too, of course, but that one sticks in my mind because the yield was so awesome.
Farewell, PVS.PR.B! You were a very useful issue for a very long time!
I have been a satisfied owner for almost the entire duration; first picking up shares at your recommendation following the credit crisis in 2009. Thank you!
Re: YTW 20.59%
It would be interesting to see a calculation of the realized yield, 10 years after the recommendation. Obviously it will be a lesser number, even though hardly anybody would have complained, having had a crystal ball back then.
What I meant by “realized yield” is by taking the dividends in cash, and not reinvesting them.
I have been a satisfied owner for almost the entire duration;
Well done!
It would be interesting to see a calculation of the realized yield, 10 years after the recommendation. … What I meant by “realized yield” is by taking the dividends in cash, and not reinvesting them.
For those new to the game, remember that yield calculations are normally performed assuming that any income received during the period covered by the calculation (buy date to maturity, for instance) is reinvested at the same yield as the initial investment.
In real life, of course, this is rarely the case (which is one reason why some people like strip-bonds). In this particular case, it is inconceivable that most of the quarterly distributions received from this issue over the past ten years could have been reinvested to yield anywhere near to 20% – so the realized yield would be lower, reflecting these lower reinvestment rates.
The realized yield would probably be not too bad, even with a 0% reinvestment yield. The issue paid 4.35%, or $1.0875 p.a., or $10.875 over the ten years. But the capital gain component was more than this: $25 par value – $8.15 initial bid price = 16.85 through the period. Usually the income component dwarfs the expected capital gain! There are, of course, no interim reinvestment complications with the capital gain component.
It’s also worth pointing out that performing this calculation after-tax makes the issue look even better, since tax on the capital gain won’t be due until tax-time for 2019, that is, April 2020!