ALB.PR.A Revises Capital Unit Dividend Policy

Allbanc Split Corp. II has announced:

The Company has determined to revise its Capital Share dividend policy to not pay a dividend on the Capital Shares if the Net Asset Value at the time of declaration, after giving effect to the dividend, is less than or equal to the par value of the Preferred Shares. Any excess dividends received on the underlying portfolio securities minus the dividends payable on the Preferred Shares and all administrative and operating expenses will be reinvested in short-term debt securities or underlying portfolio securities

That’s nice, eh? They’ll paying dividends on the capital units until the preferred shareholders are actually under water. Still, it’s better than the distribution policy outlined in the prospectus which had no asset coverage test:

It will be the policy of the Board of Directors to declare and pay quarterly distributions on the Capital Shares in an amount equal to the dividends received by the Company on the Portfolio Shares minus the distributions payable on the Preferred Shares and all administrative and operating expenses.

Asset coverage is 1.1+:1 as of January 29, according to Scotia. ALB.PR.A is currently under Review-Negative by DBRS – the mass review announced October 24 has not yet come to resolution … on October 23 the NAVPU was $38.10; it is now $27.76 covering a $25 pref.

ALB.PR.A is currently included in the HIMIPref™ SplitShare index, somewhat to my chagrin.

3 Responses to “ALB.PR.A Revises Capital Unit Dividend Policy”

  1. […] coverage of 1.0-:1 as of February 19, according to Scotia. Looks like the capital unit holders dividend will be halted. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2011-02-28 Maturity Price : 25.00 […]

  2. […] reported in February 2009, the board has a distribution policy for the Capital Units that states these distributions will not […]

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