Energy Split Corp. II has announced:
it has called 26,750 ROC Preferred Shares for cash redemption on December 16, 2008 (in accordance with the Company’s Articles) representing approximately 2.655% of the outstanding ROC Preferred Shares as a result of the special annual retraction of 403,700 Capital Yield Shares by the holders thereof. The ROC Preferred Shares shall be redeemed on a pro rata basis, so that each holder of ROC Preferred Shares of record on December 15, 2008 will have approximately 2.655% of their ROC Preferred Shares redeemed. The redemption price for the ROC Preferred Shares will be $13.74 per share.
Holders of ROC Preferred Shares that are on record for dividends but have been called for redemption will be entitled to receive dividends thereon which have been declared but remain unpaid up to but not including December 16, 2008.
Payment of the amount due to holders of ROC Preferred Shares will be made by the Company on December 16, 2008. From and after December 16, 2008 the holders of ROC Preferred Shares that have been called for redemption will not be entitled to dividends or to exercise any right in respect of such shares except to receive the amount due on redemption.
EN.PR.A was last mentioned on HIMIPref™ when they were subdivided to reflect differing rates of retraction when the term was extended last year.
EN.PR.A is tracked by HIMIPref™. It is incorporated in the “Scraps” sub-index rather than “SplitShare” due to volume concerns.
Gee… I love how they phrase it:
‘The ROC Preferred Shares shall be redeemed on a pro rata basis, so that each holder of ROC Preferred Shares of record on December 15, 2008 will have approximately 2.655% of their ROC Preferred Shares redeemed.’
But you and me know one broker who won’t process it this way!
Ha!
For those Readers who are not as Assiduous as they should be, cowboylutrell is referring to earlier comments.
I thought it would be interesting to present how my broker’s lottery works. Here’s an excerpt of a communication I received from my broker on November 26 following a complaint that I made pertaining to this very subject.
Where applicable, I replaced the actual broker’s name by ‘broker’s name’ in brackets. Aside from that, it’s a pure cut and paste, bad English included:
‘(…) you did not get any shares recalled in your account because shares allocation are done through a random selection. Basically, the way it works is that all the shares held by customers eligible for corporate action are given a number and correspond to a particular customer (the more the shares customer has, the more number he has). Then, (broker’s name) system (not a human as in your claim) randomly selects a number and subsequently assigned corporate action to affected accounts. For example, (1000 shares eligible, 200 shares being redeemed, customer 1 (300 shares (1-300)), cust 2 (500 shares (301-800)) and cust 3 (200 shares (801-1000)), system picks number 701. Customer 1 gets 0 shares, customer 2 gets 100 shares recalled and customer 3 gets 100 shares recalled).’
Well …
I don’t understand why Customer #3 had 100 shares redeemed. But for now I’ll assume the system picked two numbers and the second was in the range 801-1000.
I’ll also assume that a separate draw is made for each board lot.
The system is not very good for small holders: they will experience greater variance in redemption results, whether the redemption is good or bad for them. In the example given, Customer #3 had half his position called, and it could have been 100%. Nice when the redemption is favourable, rather less pleasant when unfavourable.
All I can suggest is that you find out your broker’s “Fairness Policy”, but I don’t know if they have such a thing. The OSC insists that ICPMs have such a policy (I have one) but whether it applies to brokers is another matter. The policies are directed towards allocation of block trades and new issues, but it’s not stretching a point too far to apply it to reorganizations. I would have difficulty justifying your broker’s actions under my policy.