Quadravest has announced:
TDb Split Corp. (the “Company”) announces a Class A share consolidation.
The recent extension of the Company’s termination date included a retraction right for Class A shareholders and Preferred shareholders which resulted in more Preferred shares being tendered than Class A shares. To restore balance in the number of shares outstanding for each class of shares, Class A shareholders will receive 0.50 Class A shares for each Class A share they hold.
The total intrinsic value of Class A shares will remain the same, but the net asset value per share will increase proportionally following the consolidation. This adjustment will also result in a higher asset coverage ratio for Preferred shares.
The Class A shares are expected to commence trading on a post consolidation basis at the opening of trading on December 12, 2024. No fractional Class A shares will be issued, and the number of Class A shares each holder will receive will be rounded down to the nearest whole number. The consolidation is a non-taxable event.
The impact of the Class A share consolidation will be reflected in the next reported net asset value per unit as at December 13, 2024.
The Company invests in common shares of Toronto-Dominion Bank, a leading Canadian Financial institution.
A Capital Unit consolidation of 0.5 new for 1.0 old implies that at least half of the preferred shares were tendered for retraction; some additional preferreds will have been tendered as part of a Whole Unit retraction; some preferred share retractions will have been offset by Capital Unit retractions.
This has happened despite the dividend hike on extension from 5.25% to 7.00%. However, TD’s recent woes have resulted in a decline of the Whole Unit value to 11.15 as of 2024-11-29; additionally, the NAV test for Capital Unit distributions only kicks in at Whole Unit values of 12.50 or lower.
Thanks to Assiduous Reader niagara for bringing this to my attention!
Well there’s FFN
– crazy price moves in that one the last few days.
https://www.quadravest.com/_files/ugd/78f11d_bc84808bcc6742d8860ad1b71705f359.pdf
[…] IrateAR remarks, the Capital Units have […]
The consolidation of the capital shares has resulted in a slight improvement to the downside protection on the prefs. Total fund NAV (capital +pref) is now $12.08.
https://www.quadravest.com/xtd-fund-features
Still rather thin downside protection, especially in light of TD’s share price in the doghouse. Still, the dividends on the prefs will likely continue to be paid for a long time.