GFV.PR.A : Dividends on Capital Units Suspended

First Asset has announced:

Global 45 Split Corp. (TSX:GFV) the “Company”) announces that it will not pay a monthly distribution on its Class A Shares for the month-ended November 30, 2008.

As set out in the Company’s articles of incorporation, the Company may not pay a distribution on the Class A Shares if, after the payment of the distribution by the Company, the Net Asset Value per Unit would be less than $15.00.

The Manager will assess the ability to pay distributions, and the amount thereof, on a monthly basis.

GFV.PR.A had asset coverage of 1.5+:1 as of November 13. The issue has a monthly retraction feature:

Preferred Shares may be surrendered at any time for retraction by the Company and will be retracted on a monthly basis on the second last business day of each month (a “Valuation Date”). Preferred Shares surrendered for retraction by a holder of Preferred Shares at least ten business days prior to a Valuation Date will be retracted on such Valuation Date and payment of proceeds will be made on or before the tenth business day following such Valuation Date. Except in the case
of the Annual Concurrent Retraction described below, holders retracting a Preferred Share will be entitled to receive an amount per Preferred Share equal to the lesser of: (i) 96% of the Net Asset Value per Unit (as defined herein) determined as of the relevant Valuation Date less the cost to the Company of the purchase of a Class A Share in the market for cancellation; and (ii) $10.00. The cost of the purchase of a Class A Share will include the purchase price of the Class A Share, commission and such other costs, if any, related to the liquidation of any portion of the Portfolio required to fund such purchase (not exceeding 1% of Net Asset Value per Unit). See “Details of the Offering – Certain Provisions of the Preferred Shares – Retraction

The Annual Concurrent Retraction is in September.

The first trade of the Capital Units after the November 13 NAV was on Nov. 17, when they closed at 5.01. The Preferred Shares closed at $8.75 on November 14.

The estimated monthly retraction price using the last valuation data is:
R = 96% (NAV – C)
R = 96% (15.42 – 5.01)
R = 96% (10) … [Maximum Value]
R = $9.60

The monthly retraction feature is supportive … but mind you, the capital units closed today at 4.95-65, 62×2 and presumably the NAV is now below $15.00. The Preferreds closed at 8.86-54, 7×5.

GFV.PR.A was last mentioned on PrefBlog in the report that it had been caught up in the DBRS Mass Review of Splits. GFV.PR.A is not tracked by HIMIPref™.

One Response to “GFV.PR.A : Dividends on Capital Units Suspended”

  1. […] The Capital Unit dividend had been suspended in November 2008. […]

Leave a Reply

You must be logged in to post a comment.