PrefBlog

Brompton Group has announced:

Life & Banc Split Corp. (the “Fund”) announces that the preferred share (the “Preferred Shares”) distribution rate for the new 5-year term from October 31, 2023 to October 30, 2028 will be $0.725 per annum (7.25% on the par value of $10.00 per Preferred Share) payable quarterly. This represents a pre-tax equivalent yield of approximately 9.5%(1). The Preferred Share distribution rate is based on current market rates for preferred shares with similar terms. The term extension offers Preferred shareholders the opportunity to enjoy preferential, tax-advantaged eligible dividends until October 30, 2028. Since inception in October 2006 to July 31, 2023, the Preferred share has paid $8.61 in cash dividends and generated a 5.3% per annum return, outperforming the S&P/TSX Preferred Share Index by 3.7% per annum.(2)

Annual Compound Returns(2)	YTD	1-Year	3-Year	5-Year	10-Year	Since Inception (Oct. 17, 2006)
Preferred Shares (TSX: LBS.PR.A)	3.2%	5.6%	5.6%	5.5%	5.2%	5.3%
S&P/TSX Preferred Share Index	1.6%	-7.4%	3.7%	-0.3%	1.0%	1.6%

The Fund intends to maintain the monthly class A share (the “Class A Share”) distribution rate of $0.10 per Class A Share. Since inception to July 31, 2023, Class A shareholders have received cash distributions of $18.35 per share. Over the 1, 3, 5 and 10-year periods to July 31, 2023, the Class A Share has significantly outperformed both the S&P/TSX Capped Financials Index and the S&P/TSX Composite Index and has delivered a 10.2% per annum return since inception of the Fund approximately 17 years ago.(2) Class A shareholders have the option to benefit by reinvesting their cash distributions in a distribution reinvestment plan (“DRIP”) which is commission free to participants. Class A shareholders can enroll in the DRIP program by contacting their investment advisor.

Annual Compound Returns(2)	YTD	1-Year	3-Year	5-Year	10-Year	Since Inception (Oct. 17, 2006)
Class A Shares (TSX:LBS)	21.4%	21.4%	43.1%	11.0%	14.8%	10.2%
S&P/TSX Capped Financials Index	7.7%	6.3%	17.1%	8.1%	10.2%	8.0%
S&P/TSX Composite Index	8.5%	8.4%	11.8%	8.0%	8.4%	6.4%

The Fund invests, on an approximately equal weighted basis in a portfolio consisting of common shares of the six largest Canadian banks (currently, Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, The Bank of Nova Scotia and The Toronto-Dominion Bank) and the four major publicly traded Canadian life insurance companies (currently, iA Financial Corporation Inc., Sun Life Financial Inc., Manulife Financial Corp. and Great-West Lifeco Inc.).

In connection with the extension, shareholders who do not wish to continue their investment in the Fund, will be able to retract their Preferred Shares or Class A Shares on October 30, 2023 pursuant to a special retraction right and receive a retraction price that is calculated in the same way that such price would be calculated if the Fund were to terminate on October 30, 2023. Pursuant to this option, the retraction price may be less than the market price if the share is trading at a premium to net asset value. To exercise this retraction right, shareholders must provide notice to their investment dealer by September 29, 2023 at 5:00 p.m. (Toronto time). Alternatively, shareholders may sell their Preferred Shares and/or Class A Shares through their securities dealer at the market price at any time, potentially at a higher price than would be achieved through retraction, or shareholders may take no action and continue to hold their shares.

Thanks to Assiduous Reader niagara for bringing this to my attention.

This entry was posted on Wednesday, August 30th, 2023 at 11:20 am 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.