Brookfield Investment Funds Management has announced:
as manager of Brascan SoundVest Rising Distribution Split Trust (TSX: BSD.UN and BSD.PR.A) (the “Trust”), announced today that the Toronto Stock Exchange has accepted its Notice of Intention to make a normal course issuer bid. The Trust will have the right under the bid to purchase for cancellation up to 284,127 of its Capital Units and 284,127 of its Preferred Securities (collectively, the “Shares”), representing 5% of the 5,682,543 Capital Units and 5,682,543 Preferred Securities issued and outstanding as at January 29, 2009.
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The Manager is of the opinion that Capital Units and Preferred Securities of the Trust may become available during the proposed purchase period at prices that would make such purchases in the best interests of the Trust and its securityholders. The Trust has not previously purchased its Capital Units or Preferred Securities under a normal course issuer bid.
An announcement of a bid of this nature is not normally considered newsworthy unless the company has a history of actually putting some money on the table. In this case, however, the company suspended retraction rights prior to being downgraded to Pfd-5 by DBRS in December. The suspension of retractions was permitted by the prospectus, but was not mandatory, and remains in effect.
The Preferred Securities remain underwater: the February 6 combined NAV of $8.61 may be expressed as an asset coverage of 0.9-:1.
BSD.PR.A closed today at 5.90-00, 3×5, after trading 6,636 shares in a range of 5.70-93. The capital units, BSD.UN, traded 1,000 shares at $0.50 before closing at 0.50-73, 9×4. At these levels, an issuer bid will indeed be incremental to NAV; but I consider it an absolute disgrace that capital unitholders will be getting so much as a nickel from the company through management fiat while the preferreds are underwater.
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