Mulvihill Capital Management Inc. has announced (2024-9-4):
Premium Income Corporation (the “Fund”) is pleased to announce that the term of the Fund will be extended automatically for an additional seven year period beyond November 1, 2024 to November 1, 2031 as provided for in its articles of incorporation. In addition, in connection with the new term, holders of Class A shares will continue to receive ongoing leveraged exposure to a high-quality portfolio consisting principally of common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and The Toronto-Dominion Bank, as well as attractive monthly distributions. Holders of the preferred shares are expected to continue to benefit from fixed cumulative preferential monthly distributions in the amount of $0.10625 ($1.275 per annum) per preferred share representing a yield of 8.5% on the original issue price of $15.00.
In connection with the extension of the term, holders of class A shares and preferred shares have a special retraction right (“Special Retraction Right”) to permit holders of such securities to retract such shares on November 1, 2024 on the terms on which such shares would have been redeemed had the term of the Fund not been extended. In order to exercise the Special Retraction Right, shares must be surrendered for retraction on or prior to 5:00 p.m. (Toronto time) on October 17, 2024. Depending on if more class A shares or preferred shares are retracted under the Special Retraction Right, the Fund will have to redeem preferred shares or consolidate the class A shares on a basis to ensure an equal number of class A shares and preferred shares remain outstanding.
For further information, please contact Investor Relations at 416.681.3966, toll free at 1.800.725.7172, email at info@mulvihill.com or visit www.mulvihill.com.
Amusingly, this extension notice was published 2024-9-4, following the prior announcement of a dividend rate boost to 8.50%.
Thanks to the miracle of Canadian banking (tax the poor with excessive fees so the rich can have a good investment and politicians will have future employers) PIC / PIC.PR.A has managed to keep above the $15.00 par value of the preferreds, despite the massive distribution rate of over $0.80 per year on the Capital Units. And I end up with egg on my face yet again for not recommending PIC.PR.A despite its generous yield.
Well, I’m a glutton for punishment. I’m still not going to recommend it due to the lack of a NAV test on Capital Distributions. Some day, that’s going to catch up with the corporation … particularly with an 8.5% dividend rate on the preferreds – see here and here for a discussion of what cash drag can do to split share credit quality.
[…] It will be remembered that the Capital Units could also be retracted; so the 33% excess preferred share retraction is on top of the number that were retracted in equal numbers to the Capital Units. And all this, despite the dividend boost to 8.50%! […]