PrefBlog

M-Split Corp. has announced:

its regular monthly distribution $0.04375 for each Preferred share ($0.525 annually). Distributions are payable December 10, 2008 to shareholders on record as of November 28, 2008. There will not be a distribution paid to M-Split Class A Shares for November 28, 2008 as per the Prospectus which states no regular monthly dividends or other distributions will be paid on the Class A Shares in any month as long as the net asset value per unit is equal to or less than $12.50. The Net Asset Value as of November 14, 2008 was $10.13.

Since inception (April 18, 2007) Class A shareholders have received a total of $0.90 per share and Preferred shareholders have received a total of $0.85 per share inclusive of this distribution, for a combined total of $1.75 per share.

M-Split invests in common shares of Manulife Financial Corporation, the largest life insurer in Canada offering financial products and wealth management services.

The prospectus gives details of the Monthly Retraction option:

Priority Equity Shares may be surrendered at any time for retraction and will be retracted on a monthly basis on the last business day of each month (a ‘‘Retraction Date’’), provided such Priority Equity Shares are surrendered for retraction not less than 20 business days prior to the Retraction Date. Payment for any Priority Equity Shares so retracted will be made within 15 business days of the applicable Retraction Date.

Holders retracting a Priority Equity Share will be entitled to receive an amount per Priority Equity Share equal to the lesser of (i) $10.00; and (ii) 96% of the net asset value per Unit determined as of the Retraction Date less the cost to the Company of the purchase of a Class A Share in the market for cancellation. For this purpose, the cost of the purchase of a Class A Share will include the purchase price of the Class A Share and commissions and costs, if any, related to the liquidation of any portion of the assets of the Company to fund the purchase of the Class A Share (to a maximum of 1% of the net asset value per Unit).

It isn’t clear to me whether

R = 96% (NAV-C)
or
R = (96%NAV) – C

Interested Assiduous Readers will have to call the company! Whatever it is, Capital Units closed today at 1.41-50, 50×30 and Preferreds closed at 7.23-50, 50×120. On the November 14th NAV date, MFC closed at 23.08 and it closed today at 20.97, implying a November 19 NAV of about
10.13 * 20.97 / 23.08 = 9.20 … so the Monthly Retraction is

R = (96%NAV) – C …. [guessing at the proper form of the equation]
= (96%*9.20) – 1.50
= 8.83 – 1.50
= 7.33

So the preferreds are trading around estimated retraction price.

XMF.PR.A was last mentioned on PrefBlog when it entered the Protection Plan.

XMF.PR.A is not tracked by HIMIPref™.

This entry was posted on Wednesday, November 19th, 2008 at 7:23 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.