PrefBlog

Claymore Investments Inc. has announced:

that Big Bank Big Oil Split Corp. (the “Company”) has filed a preliminary short form prospectus in connection with a follow‐on offering (the “Offering”) of Capital Shares and Preferred Shares of the Company.

The Company completed its initial public offering of Capital Shares and Preferred Shares on June 16, 2006. The outstanding Capital Shares and Preferred Shares currently trade on the Toronto Stock Exchange (the “TSX”) under the symbols “BBO” and “BBO.PR.A” respectively.

The Company invests in a portfolio (the “Portfolio”) of common shares of the six big Canadian banks and the ten biggest (by market capitalization) Canadian oil and gas companies utilizing a split share structure. The Company invests on an equal‐weighted basis and provides a low fee approach to the underlying sectors. The Preferred Shares are rated Pfd‐2 by Dominion Bond Rating Service Ltd. The Company may write covered call options and cash covered put options on the Portfolio in order to generate additional returns.

The investment objectives for the Preferred Shares are: (i) to provide holders with fixed cumulative preferential quarterly cash distributions in the amount of $0.13125 per Preferred Share; and (ii) to return the original issue price of $10.00 per Preferred Share to holders on December 30, 2016. The investment objectives for the Capital Shares are: (i) to provide holders with regular monthly cash distributions, which are currently $0.09 per Capital Share; and (ii) to provide holders with the opportunity for growth in the net asset value per Capital Share.

The Offering is being made on a best efforts agency basis in each of the provinces and territories in Canada through a syndicate of investment dealers co‐led by TD Securities Inc. and CIBC World Markets Inc. and including GMP Securities L.P., RBC Dominion Securities Inc., Scotia Capital Inc., BMO Nesbitt Burns Inc., National Bank Financial Inc., Canaccord Genuity Corp., HSBC Securities (Canada) Inc., Raymond James Ltd., Desjardins Securities Inc., Macquarie Private Wealth Inc., Dundee Securities Ltd., Mackie Research Capital Corporation, and Rothenberg Capital Management Inc.

I was startled to see the claim that the issue is rated Pfd-2 by DBRS, because BBO.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-2(low). Did I miss something? Nope – it is still rated Pfd-2(low) and was confirmed at that level 2011-9-6.

Asset Coverage is currently 2.1-:1. The July, 2008 prospectus (for a warrant issue) indicates that there is a NAV test (1.5:1) and monthly retraction [96%(NAV – C)]

The issue has heretofore been too small to warrant tracking by HIMIPref™ (only about 1.6-million outstanding), but who knows? Maybe that will change.

Update, 2011-9-14: I wasn’t the only one who was startled:

Claymore Investments, Inc. wishes to confirm that the outstanding Preferred Shares of Big Bank Big Oil Split Corp. (the “Company”), which trade on the Toronto Stock Exchange under the symbol “BBO.PR.A”, are currently rated Pfd-2(low) by Dominion Bond Rating Service Ltd.

A press release issued on behalf of the Company on September 13, 2011 announcing the filing of a short form preliminary prospectus in respect of a proposed offering of Preferred Shares and Capital Shares of the Company inadvertently referred to the rating as Pfd-2.

This entry was posted on Tuesday, September 13th, 2011 at 9:39 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.