DFN.PR.A Retractions: Quadravest Coy

Quadravest has announced:

Dividend 15 Split Corp. (the “Company”) invests in a high-quality portfolio consisting of 15 leading Canadian dividend-yielding stocks. The top five holdings currently held in the portfolio are as follows: Royal Bank of Canada, Manulife Financial Corp., Canadian Imperial Bank of Commerce, Sun Life Financial Inc. and TC Energy Corp.

The recent extension of the Company’s termination date included a retraction right for Class A shareholders and Preferred shareholders. The Company will not require a rebalance of shares and all retraction rights have been satisfied.

The Company may use the normal course issuer to repurchase Class A shares at or below intrinsic value. The current intrinsic value exceeds $6.80 per share.

As previously announced, the annual dividend rate for the Preferred Shares has been set at 7.00% for the fiveyear renewal period effective December 1, 2024. The dividend policy for the Class A Shares will remain at the current targeted rate of $0.10 per share monthly, or $1.20 per annum.

Some details would be appreciated! Like, how many shares of each class were retracted? I wouldn’t expect many preferreds got retracted, given that the issue has been trading over par for the past three months, but what about the Capital Units? Inquiring minds want to know!

The terms of the extension were reported on PrefBlog.

Thanks to Assiduous Reader IrateAR for bringing this to my attention!

7 Responses to “DFN.PR.A Retractions: Quadravest Coy”

  1. IrateAR says:

    LFE apparently had net retractions of the prefs and is splitting 1.1 : 1

    Backwards as LFE was trading at a discount and LFE.PR.B at a premium.

    A little positive for LFE getting to buy back a bit of the pref at a 5% discount to market.

    https://www.quadravest.com/_files/ugd/78f11d_4dc6e221f4e04497b1042f5f433baa3f.pdf

  2. IrateAR says:

    Oh nevermind I was thinking about this backwards… that’d mean net retraction of capital shares. Makes sense.

  3. […] noted by Assiduous Reader IrateAR, this implies that more Capital Units were retracted than preferred shares, which makes sense since […]

  4. RAV4guy says:

    DFN UNITS OUTSTANDING

    I track the number of units outstanding of several Split Share Funds. I have done this for several years since Quadravest stopped reporting the number of units in their monthly Fund Updates. In particular I own DFN.PR.A shares.

    For DFN, from the Fund Updates published monthly, I calculate:
    Dec31 2020 58.16 million units (rounding to 2 decimal places)
    Dec31 2021 92.44 million units
    Dec31 2022 106.55 million units
    Dec31 2023 120.16 million units
    Dec31 2024 123.25 million units

    So Quadravest has managed to grow DFN by 65.09 units over 4 years. Well done.

    The data also shows that on Nov29 2024 there were 125.35 million units outstanding. So there was a net retraction of 2.10 million units in the month. This is at the time of the 5 year retraction privilege.

    How was this accomplished? Did investors in DFN put up 2.10 million shares for retraction? Did Quadravest then buy shares of DFN.PR.A in the open market to pair with these for cancelling whole units?

    I can make no sense of Quadravest’s announcement.

    I track the issuance of units because Quadravest is not necessarily a current investor’s friend. Quadravest can supply more units than the market wants to pay the market price for.

  5. IrateAR says:

    Oh good idea inferring the units outstanding from the monthly update.

    Yeah I don’t know what’s up with DFN there either.

    You inspired me to check on FTU/FTU.PR.B – I see the units outstanding decreasing by 310,000 from November to December. The pref was trading at a discount and it makes sense there would be a bunch of redemptions. The capital shares have 0 value so presumably wouldn’t be redeemed at all. 310,000 shares is more than the entire volume traded in November/December. So where did the shares go? I was expecting a consolidation of the capital shares and then nothing happened.

  6. RAV4guy says:

    Quadravest has changed the format of the Fund Update, for several of them that I checked, with the January 2025 issue. This is the email I sent to Quadravest asking for an explantion of the inconsistencies I believe exist.

    I wrote:

    “I am an investor in DFN.PR.A. I look at the Fund Update (FU) each month. The FU format has changed from December 2024 to January 2025. In January you now report the number of shares outstanding. You no longer report the Market Capitalization of each part of the unit. In this case you report DFN.PR.A has 124,369,643 shares outstanding and DFN has 126,195,184 shares outstanding. In addition if one divides the Total Net Assets of the fund reported as $2,062,416,184 by the NAV (per unit?) reported of $16.49 one arrives at 125,070,758 units. I understand a “unit” is one share of DFN.PR.A and one share of DF. In the past, the number of shares of each part of the unit that I could work out from the Market Capitalization were the same.

    How do you explain that none of these numbers are now the same?”

    If anyone here has an explanation I would be pleased to be made aware of it. I will report back with any explanation I receive from Quadravest.

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