PrefBlog

CC&L Group announced on March 31:

ROC Pref II Corp., ROC Pref III Corp. and Connor, Clark & Lunn ROC Pref Corp. (collectively the “Companies”) announced that the decision by Idearc Inc. to voluntarily file petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code is expected to constitute a credit event under the credit linked note (“CLN”) issued by their respective counterparties.

Idearc was created through a spin-off from Verizon Communications Inc. in November 2006. The Reference Portfolios of the Companies have exposure to Idearc Inc. at a half-weight as opposed to a full weight as a result of the spin-off. Idearc operates yellow pages directories in the U.S. The economic recession has negatively affected spending on directories advertising with customer cancellations due to credit deterioration and lower customer renewal rates resulting in declining cash flows thereby reducing Idearc’s ability to support its current level of debt.

The impact of the Idearc credit event on ROC Pref II Corp. and Connor, Clark & Lunn ROC Pref Corp. will be known when the recovery rate is determined within the next several weeks. The recovery rate for ROC Pref III Corp. is fixed at 40%. As a result, the Idearc credit event is expected to reduce the number of additional defaults that ROC Pref III Corp. can sustain before the payment of $25.00 per Preferred Share at maturity is adversely affected by approximately 0.5 to 2.6.

ROC Pref II Corp., ROC Pref III Corp. and Connor, Clark & Lunn ROC Pref Corp. are listed for trading on the Toronto Stock Exchange under the symbols RPA.PR.A, RPB.PR.B and RPQ.PR.A, respectively.

Additionally, RPQ.PR.A is restating its financials:

the Company has restated and refiled its interim financial statements and management report of fund performance for the six months ended December 31, 2008.

In November 2008, the Company announced the implementation of restructuring initiatives designed to increase the likelihood that the Company will be able to repay the $25.00 Preferred Share issue price on the redemption of the Preferred Shares on June 30, 2011. As part of these initiatives, the next three quarters’ coupons on the underlying credit linked note (“CLN”) were sold to The Bank of Nova Scotia (“BNS”) (the issuer of the CLN) in return for additional subordination so that the number of defaults the CLN can sustain before principal and interest payments are adversely affected was increased.

In March 2009, the Manager determined that the 2008 fourth quarter CLN coupon payment had mistakenly been made by BNS resulting in an overstatement of Credit Trust IV’s and the Company’s net asset value. At the same time, the Manager also revisited the assumptions used to calculate the deferred management fee. The net impact of the two adjustments was a decrease in net assets by $0.07 per Preferred Share as at December 31, 2008. The Company has been reimbursed for the excess amounts paid out on the redemption of Preferred Shares as a result of the higher Preferred Share value.

It never rains but it pours!

RPQ.PR.A was last mentioned on PrefBlog in connection with the downgrade of the credit linked note (or, at least, what I think is the credit linked note). All three issues were mentioned with respect to the Tribune Credit Event in December.

None of these issues are tracked by HIMIPref™.

Better late than never! Brompton Split Banc Corp. announced on 2008-12-17:

In accordance with its prospectus and the Class A Share Provisions, the regular, non-cumulative, monthly distribution for the month of December will not be paid on the class A shares of Brompton Split Banc Corp. Under the prospectus, no cash distribution may be paid on the class A shares, if after payment of the distribution by the Fund, the net asset value per unit (consisting of one class A share and one preferred share) would be less than $15.00. The net asset value per unit as at December 11, 2008 was $13.52. The Fund will re-evaluate the payment of class A share distributions in each subsequent month with the expectation that normal monthly distributions will resume and a press release will be issued if the net asset value per unit is in excess of $15.00 prior to declaration.

NAV was $15.16 on April 2 according to the company, so resumption may well be in the cards!

SBC.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-3 by DBRS. SBC.PR.A is tracked by HIMIPref™ but was relegated to the “Scraps” index at the February 2009 rebalancing on credit concerns.

Better late than never! Canadian Life Companies Split Corp announced on Dec. 18:

There will not be a distribution paid to the Class A shares for December 31, 2008 as per the Prospectus which states no regular monthly dividends or other distributions will be paid on the Class A shares in any month as long as the net asset value per unit is equal to or less than $15.00. The net asset value as of December 15, 2008 was $13.65.

The NAV on March 31 was $11.69 according to the company.

LFE.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-4 by DBRS. LFE.PR.A is tracked by HIMIPref™ but was relegated to the “Scraps” index in the March 2009 rebalancing due to credit concerns.