Quadravest has announced (on September 19):
North American Financial 15 Split Corp. (the “Company”) announced previously on February 21, 2019 it will extend the termination date of the Company a further five year period from December 1, 2019 to December 1, 2024.
In connection with the extension, the Company is entitled to amend the prescribed minimum annual rate of cumulative preferential monthly dividends to be paid to the FFN.PR.A Preferred Shares (“Preferred Shares”) for the five year renewal period, commencing December 1, 2019. The Company may also amend the dividend entitlement of the Preferred Shares on an annual basis. Based on current market rates for preferred shares with similar terms, the minimum annual rate for the five year term will be set at 5.5% and the annual payment rate will remain unchanged at 5.5% per annum, based on the $10 repayment value. The Preferred shareholders have received a total of $7.85 per share in distributions since inception. The dividend policy for the FFN Class A Shares (“Class A Shares”) will remain unchanged.
In relation to the term extension and the Preferred Share minimum rate increase, the Company has an additional retraction right for those shareholders not wishing to continue holding their investment, allowing existing shareholders to tender one or both classes of Shares and receive a retraction price based on the November 29, 2019 net asset value per unit. Alternatively, shareholders may sell their shares for the market price at any time, potentially at a higher price than would be achieved through retraction, or shareholders may take no action and continue to hold their shares.
The Company invests in a high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows: Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto-Dominion Bank, National Bank of Canada, Manulife Financial Corporation, Sun Life Financial, Great-West Lifeco, CI Financial Corp, Bank of America, Citigroup Inc., Goldman Sachs Group, JP Morgan Chase & Co. and Wells Fargo & Co.
The extension to 2024-12-1 was previously reported. The dividend rate was increased to 5.50% in 2017 and has remained there since. The name of the fund was changed from Financial 15 Split Corp. II in 2015. The term was extended in 2014 after the first extension in 2007. The issue had an exciting time during the Credit Crunch.
What a dream !! Too bad the other resets don’t have this feature (ie redeem at par or close to it) …..
Too bad the other resets don’t have this feature (ie redeem at par or close to it)
Then they would be classed as debt for accounting purposes and provide little protection for holders of the companies’ bonds; making them pointless to issue.
Unfortunately, we preferred share investors have to accept that if we want the liquidity premium on preferred shares, we have to accept the risk that comes with it.
[…] must say, I am growing to dislike these annual resets intensely. The minimum rate on these resets is only 5.5% and apart from this the company has full discretion. A prudent analysis must therefore […]
I’ve moved some of my cash from the “Rate Reset” to these split share preferred simply because I have the option to redeem “on redemption date” at the NAV (be it $10, or lower if the market absolutely tanks).
[…] must say, I am growing to dislike these annual resets intensely. The minimum rate on these resets is only 5.5% and apart from this the company has full discretion. A prudent analysis must therefore […]