SBC.PR.A: Proposal to Extend Term

Brompton Split Banc Corp. has announced:

that its board of directors (the “Board”) has approved a proposal to extend the term of SBC beyond its current final redemption date of November 30, 2012. Under the proposal, the term of SBC may be extended for an additional term of up to 5 years, as determined by the Board. In addition, the termination date may be extended further for successive terms of up to 5 years thereafter, as determined by the Board. The distribution rates on the preferred shares and class A shares for the new term will be announced prior to the extension of the term. If the proposal is approved, class A shareholders and preferred shareholders will be provided a special retraction right which is designed to provide shareholders with an additional option to retract either preferred shares or class A shares at the end of each term (and each successive term thereafter) and receive a retraction price that is calculated in the same way that such price would be calculated if SBC were to terminate on November 30, 2012.

SBC invests in a portfolio, on an approximately equal weight basis, in common shares of 6 Canadian Banks: Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, The Bank of Nova Scotia and The Toronto-Dominion Bank.

SBC will hold a special meeting of holders of preferred shares and class A shares on March 29, 2012 to consider and vote upon the proposal. Shareholders of record at the close of business on February 28, 2012 will be provided with the notice of meeting and management information circular in respect of the meeting and will be entitled to vote at the meeting. The proposal is also subject to any required regulatory approvals.

I recommend a favourable vote, assuming that there is nothing material in the final documents that isn’t in the press release. Credit quality is good, with a NAV of 20.74 as of 2012-1-26 and the special retraction right is good.

Leave a Reply

You must be logged in to post a comment.