CGI.PR.B / CGI.PR.C : Capital Unit Dividend in Doubt

Assiduous Reader liketoretire gives me a well-deserved kick for not reporting yesterday’s announcement from Morgan Meighan:

as a result of market conditions and a dividend payment restriction contained in its Class A, Series 2 and Series 3 Preference Share provisions, it was not certain at today’s date whether the Company would be permitted to pay the $0.06 per common share dividend declared on October 15, 2008 to shareholders of record on November 28, 2008 and payable on December 15, 2008. The common shares will commence trading on the Toronto Stock Exchange (TSX) on an “ex dividend” basis at the opening of trading on Wednesday, November 26, 2008.

The dividend payment restriction provides that the Company shall not pay a dividend on its common shares unless after giving effect thereto, the ratio of its Assets to Obligations (both as defined in the Preference Share provisions) exceeds 2.5 times. As at the close of business on November 24, 2008, such ratio was approximately 2.6 times.

The restriction does not affect the scheduled payment of dividends on the Series 2 and Series 3 Preference Shares on December 15, 2008, which will proceed as previously announced.

The two series of preferreds are of high quality, as might be deduced from the very high level of asset coverage required in order to maintain the common dividend.

At one point I was greater consternated to find that I had classified some of the CGI preferred issues as SplitShares and others as OperatingRetractibles. After some thought, I decided they were split shares – they don’t have an actual business, after all, and they’re backed by a portfolio of investments … ergo, SplitShares. There was one Assiduous Reader who strongly disagreed, but I held firm.

CGI.PR.A was redeemed.

CGI.PR.B & CGI.PR.C are both in the “Scraps” index, due to volume concerns.

2 Responses to “CGI.PR.B / CGI.PR.C : Capital Unit Dividend in Doubt”

  1. […] wording follows that of the June declaration (3.0x); March declaration (2.6x) and the December declaration reported on PrefBlog […]

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