Brompton Group has announced:
Brompton Oil Split Corp. (the “Fund”) is pleased to announce that the board of directors has approved an extension of the maturity date of the Class A and Preferred shares of the Company. The current maturity date of March 31, 2020 will be extended for an additional period of three to five years. The new term and the proposed rate for the preferred share dividend for the new term will be announced at least 60 days prior to the current March 31, 2020 maturity date. The preferred share dividend rate for the extended term will be based on market yields for preferred shares with similar terms at that time. The extension of the term of the Fund is not expected to be a taxable event.
The Fund invests in a portfolio of equity securities of large capitalization North American oil and gas issuers, primarily focused on those with significant exposure to oil.
OSP.PR.A commenced trading 2015-2-24 in accordance with pre-issue marketting. It is a Split Share, 5-Year, with a 5% coupon.
It was originally rated Pfd-3(high) by DBRS with downside protection of 57.3%; downgraded a year later to Pfd-3 with downside protection of 37%; and downgraded in January, 2019 to Pfd-4(low) with downside protection 10%. It has been a rough few years for the oil industry!
The NAVPU of the Whole Units is currently 11.46, derived by summing the values for the capital units and the preferred shares in Brompton’s new-fangled presentation.
Hopefully most (or ideally all) of the preferred shareholders chose to retract/redeem if they get the option to near the original termination date. Having issues like this around tarnishes other good credit quality split shares which have much better downside protection. I own a own a bunch of Brompton products so I do like them a lot, I just question their need to continue this particular fund.
Well, I can’t fault them for trying! And who knows what the NAVPU will be once the retraction deadline rolls around …
“Well, I can’t fault them for trying! And who knows what the NAVPU will be once the retraction deadline rolls around”
I’m just curious if you owned ops.pr.a would you redeem? I would for sure myself considering the the lack of downside protection.
More interesting is what level of dividend will be offered then to coax the holders to maintain ownership of this issue?
This does not look good for the capital units….
I’m just curious if you owned ops.pr.a would you redeem?
Why would I speculate so far in advance of the data? I find it quite hard enough to figure out what to do now with data I have now.
For a general discussion, see my article Split Share Credit Quality.
More interesting is what level of dividend will be offered then to coax the holders to maintain ownership of this issue?
As you may remember, FTU.PR.B recently jacked up the dividend to 10% … but the NAVPU was underwater at the time, so it was just a bit of flim-flam to seduce the unwary and unsophisticated. I recommended retraction but only about one-third of preferred shareholders followed that path.