PrefBlog

Mulvihill Capital Management Inc. announced (on 2024-8-30):

that holders of Class A Shares and Preferred Shares of SBN and holders Capital Units and Preferred Securities of TXT have approved a proposal to merge both SBN and TXT into Premium Global Income Split Corp. (“Premium Global”), all as more particularly described in the joint management information circular dated July 24, 2024 (the “Circular”), at a special meeting of the securityholders held earlier today.

The merger of TXT into Premium Global is expected to become effective on or about September 9, 2024 and the merger of SBN into Premium Global is expected to become effective on or about September 13, 2024.

Under the mergers, (a) holders of Class A Shares of SBN will become holders of Class A Shares of Premium Global, (b) holders of Preferred Shares of SBN will become holders of Class A Shares and a lesser number of Preferred Shares of Premium Global, (c) holders of Capital Units of TXT will become holders of Class A Shares of Premium Global, and (d) holders of Preferred Securities of TXT will become holders of Class A Shares and a lesser number of Preferred Shares of Premium Global. The number of shares of Premium Global to be issued to SBN and TXT securityholders will be announced once the exchange ratios have been determined, prior to implementation of the mergers.

For further information, please contact Investor Relations at 416.681.3966, toll free at 1-800-725-7172 or visit www.mulvihill.com

They further announced (on 2024-9-9):

that, following approval by holders of Capital Units and Preferred Securities of TXT at a special meeting of securityholders on August 30, 2024 of the proposal (the “Merger Proposal”) to merge TXT into Premium Global Income Split Corp. (“Premium Global”), the holders of Capital Units of TXT will receive 0.453607 Class A Shares of Premium Global for each Capital Unit held and holders of Preferred Securities of TXT will receive 0.948049 Preferred Shares of Premium Global and 0.415545 Class A Shares of Premium Global for each Preferred Security held.

The Exchange Ratios have been calculated based on the relative NAV of the Capital Units and Preferred Securities of TXT and Class A Shares and Preferred Shares of Premium Global. Fractional Class A Shares or Preferred Shares of Premium Global or cash in lieu thereof will not be issued or paid under the Merger Proposal. The Merger is expected to be completed on September 9, 2024 and holders of Capital Units and Preferred Securities of TXT need not take any action to receive the Class A Shares and Preferred Shares to which they will be entitled under the transaction.

For further information, please contact Investor Relations at 416.681.3966, toll free at 1-800-725-7172 or visit www.mulvihill.com

… and have further announced:

that, following approval by holders of Class A Shares and Preferred Shares of SBN at a special meeting of securityholders on August 30, 2024 of the proposal (the “Merger Proposal”) to merge SBN into Premium Global Income Split Corp. (“Premium Global”), the holders of Class A Shares of SBN will receive 0.373815 Class A Shares of Premium Global for each Class A Share held and holders of Preferred Shares of SBN will receive 0.743873 Preferred Shares and 0.330689 Class A Shares for each Preferred Share held.

The Exchange Ratios have been calculated based on the relative NAV of the Class A Shares and Preferred Shares of SBN and Class A Shares and Preferred Shares of Premium Global. Fractional Class A Shares or Preferred Shares of Premium Global or cash in lieu thereof will not be issued or paid under the Merger Proposal. The Merger is expected to be completed on September 13, 2024 and holders of Class A Shares and Preferred Shares of SBN need not take any action to receive the Class A Shares and Preferred Shares to which they will be entitled under the transaction.

For further information, please contact Investor Relations at 416.681.3966, toll free at 1-800-725-7172 or visit www.mulvihill.com

I can’t say I’m very impressed. As I noted when WFS.PR.A became PGIC.PR.A:

But anyway, with such a small float, no credit rating (discontinued in 2010) and no NAV test for Capital Unit distributions … I’m finally dropping this issue from HIMIPref™ coverage.

… and then I followed up in the comments with:

For example, the fact that there is a small float and no credit rating is not a deal breaker for me.

If any single issue should be a dealbreaker, it should be the lack of an NAV test on Capital Unit distributions – see here and here. The Capital Units have a Current Yield slightly in excess of 14% p.a. … at that rate, together with a 7.5% preferred share yield, the 40% downside protection you cite has a pretty short life expectancy.

The lack of a credit rating means that if bad times come, there will be less pressure on management and the board to batten down the hatches.

I will note that at the time I last calculated it (as of 2024-8-8, when preparing the August PrefLetter), SBN / SBN.PR.A had Investment Coverage (NAVPU divided by preferred share bid price) of only 1.28; I haven’t bothered tracking TXT.PR.A for a long time.

Update, 2024-9-17: There will be no September dividend declared for SBN.PR.A. New and extant holders of PGIC / PGIC.PR.A as of September 16 will receive a distribution from the continuing company, with record date 2024-9-16.

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