PrefBlog

Newgrowth Corp. has announced:

that it has completed its public offering of Series 2 Class B Preferred Shares, (the “Preferred Shares”), raising approximately $ 30.7 million through the issuance of 2,238,510 Preferred Shares at a price of $ 13.70 per Preferred Share. The Preferred Shares were offered to the public by a syndicate of agents led by Scotia Capital Inc. The Preferred Shares were offered in order to maintain the leveraged “split share” structure of the Company following the successful reorganization of the Company approved by shareholders on May 11, 2009 which, among other things, extended the redemption date of the Capital Shares for an additional five year term. With the closing of the offering, there will be 2,238,510 Capital Shares and 2,238,510 Preferred Shares issued and outstanding on the close of business on June 26, 2009.

NewGrowth Corp. is a mutual fund corporation whose investment portfolio consists of publicly-listed securities of selected Canadian chartered banks and utility issuers. The Capital Shares and Preferred Shares of NewGrowth Corp. are both listed for trading on The Toronto Stock Exchange under the symbols NEW.A and NEW.PR.B respectively.

The issue pays $0.822 p.a., payable quarterly, for an issue yield on the issue price of 6.00%.

There is a monthly retraction feature:

A holder retracting Series 2 Preferred Shares will receive a cash price per Series 2 Preferred Share retracted equal to the amount, if any, by which 95% of the Unit Value exceeds the aggregate of (i) the average cost to the Company, including commissions, of purchasing a Class A Capital Share in the market; and (ii) $1.00. See “Retraction and Redemption of Series 2 Preferred Shares”.

… and annual calls at par until maturity:

Any outstanding Series 2 Preferred Shares will be redeemed by the Company on June 26, 2014 (the “Redemption Date”) at a price per share (the “Series 2 Preferred Share Redemption Price”) equal to the lesser of $13.70 and Unit Value.

Asset coverage is somewhere around 2.9:1 and DBRS has assigned a provisional rating of Pfd-2 on the issue; this seems a little conservative given the nature of the portfolio and the degree of asset coverage.

As previously discussed on PrefBlog, this issue refunds the NEW.PR.B. Sadly, the issue will not be tracked by HIMIPref™; it’s just too small.

This entry was posted on Friday, June 26th, 2009 at 6:11 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.