LCS.PR.A To Get Bigger

Brompton Group has announced:

Brompton Lifeco Split Corp. (the “Company”) is pleased to announce it is undertaking an overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively).

The sales period for this overnight offering will end at 9:00 a.m. (ET) on Friday, January 7, 2022. The offering is expected to close on or about January 13, 2022 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (“TSX”).

The Class A Shares will be offered at a price of $6.95 per Class A Share for a distribution rate of 12.9% on the issue price, and the Preferred Shares will be offered at a price of $10.05 per Preferred Share for a yield to maturity of 6.6%.(1) The closing market price on the TSX for each of the Class A Shares and Preferred Shares on January 5, 2022 was $7.06 and $10.30, respectively. The Class A Share and Preferred Share offering prices were determined so as to be non-dilutive to the most recently calculated net asset value per unit of the Company (“Unit”) (calculated as at December 30, 2021), as adjusted for dividends and certain expenses to be accrued
prior to or upon settlement of the offering. The offering is being led by RBC Capital Markets.

The Company invests in a portfolio (the “Portfolio”) of common shares of the four Canadian life insurance companies on an approximately equal weight basis: Great-West Lifeco Inc., iA Financial Corporation Inc., Manulife Financial Corporation and Sun Life Financial Inc.

Over the last 3 years, the Class A Shares have delivered a 42.0% per annum total return based on net asset value (“NAV”) and the Preferred Shares have returned 6.4% per annum, as of December 31, 2021.(1)

The investment objectives for the Class A Shares are to provide holders with regular monthly cash distributions targeted to be at least $0.075 per Class A Share and to provide the opportunity for growth in the net asset value per Class A Share.

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions, currently in the amount of $0.15625 per Preferred Share, and to return the original issue price to holders of Preferred Shares on April 29, 2024.

The NAVPU of the fund was 16.40 per whole unit on 2021-12-30 so the new issue comes at a premium of 3.7% over the December 30 price.

Update, 2022-1-7:They raised $40.5-million:

Brompton Lifeco Split Corp. (the “Company”) is pleased to announce a successful overnight treasury offering of class A shares and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively). Gross proceeds of the offering are expected to be approximately $40.5 million. The offering is expected to close on or about January 13, 2022 and is subject to certain closing conditions. The Company has granted the Agents (as defined below) an over-allotment option, exercisable for 30 days following the closing date of the offering, to purchase up to an additional 15% of the number of Class A Shares and Preferred Shares issued at the closing of the offering.

2 Responses to “LCS.PR.A To Get Bigger”

  1. NAVGOD says:

    By the close of business jan.06 the unit NAV had improved 2.2% since dec.30. Petty sure the issue expenses are greater than 1.5% remaining premium. In my opinion the offering is dilutive and should have never been issued.

  2. jiHymas says:

    By the close of business jan.06 the unit NAV had improved 2.2% since dec.30.

    Yes, updated figures from Brompton indicate the whole unit NAVPU was 16.76 on January 6.

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