Dividend 15 Corp. has announced:
that the Notice of Special Meeting of Shareholders and Management Information Circular relating to the previously announced special meeting of the holders of the Company’s Preferred Shares and Class A Shares, to be held at 10:00 a.m. (Eastern standard time) on June 3, 2013, has been mailed to the shareholders.
The primary purpose of the meeting is to consider a special resolution to allow Class A and Preferred shareholders to continue their investment beyond the currently scheduled termination date of December 1, 2014. Under the proposal, the termination date would be extended by 5 years to December 1, 2019.
If the extension is approved, Class A and Preferred shareholders will be provided with a Special Retraction right which is designed to provide them with an opportunity to retract their shares and receive a retraction price that is calculated in the same way that such price would be calculated if Dividend 15 were to terminate on December 1, 2014 as originally contemplated.
The term extension proposal is being brought to shareholders well in advance of the scheduled 2014-12-1 termination date; I guess markets are good enough that management thinks they can get a good positive vote! Just to make sure, though, the information circular specifies:
The Company will also pay a dealer whose clients hold Shares of the Company a fee of $0.05 in respect of each Preferred Share and $0.10 in respect of each Class A Share voted by the client of such dealer in favour of the Extension Special Resolution, to a maximum of $1,000 per beneficial holder, and provided that such client does not retract the Shares so voted pursuant to the Special Retraction Right (as defined below).
Specifically:
Shareholders are being asked at the Meeting to consider and, if thought advisable, to approve a special resolution (the Extension Special Resolution) (the text of which is set out in Appendix A to this Circular) authorizing the Board of Directors to amend the articles of incorporation of the Company, as amended (the Articles) to
(i) extend the term of the Company initially to December 1, 2019 while providing Shareholders with retraction rights which will effectively provide them with the same rights on such extension that they would have had if the scheduled termination date of the Company were not to be so extended,
(ii) provide the Company with the various means to ensure that, following any exercise of such special retraction right, the number of outstanding Preferred Shares and the number of outstanding Class A Shares is the same,
(iii) from and after December 1, 2019, provide the Board of Directors with the right to extend the term of the Company for further terms of five years each, while also providing Shareholders with retraction rights which will effectively provide them with the same rights on any such extension that they would have had if the term of the Company were not to be so extended,
(iv) provide the Company with the means to ensure that, following any exercise of such retraction right, the number of outstanding Preferred Shares and the number of outstanding Class A Shares is the same,
(v) from and after December 1, 2019, provide the Company with the right to set the rate at which dividends or other distributions will be paid on the Preferred Shares for the ensuing five year renewal term, and
(vi) permit the Company to be terminated prior to any scheduled termination date if the Preferred Shares or the Class A Shares are delisted from the Toronto Stock Exchange (TSX) or if the net asset value of the Company declines to less than $5
million.Shareholders are being asked at the Meeting to consider and, if thought advisable, to approve a special resolution (the Merger Special Resolution) (the text of which is set out in Appendix B to this Circular) approving the transfer of the cash assets of Capital Gains Income STREAMS Corporation and Income STREAMS III Corporation (the STREAMS Companies) into the Company through the amalgamation of the STREAMS Companies with the Company (the Merger) and all matters relating to the Merger including the agreement attached to the Circular as Appendix C, as more particularly described in the Circular.
No change in the preferred share dividend rate is proposed (at least, not until 2019). The current retraction privileges are being retained:
If the Special Resolution is approved, the Preferred Shares and the Class A Shares will continue to be listed and trade on the TSX and holders will also continue to have their normal monthly and annual retraction rights, as described in the Annual Information Form, until the final redemption of all the Shares.
However – and this is important! – the Special Retraction Right is effective very soon!
If the extension of the Termination Date is approved, a Shareholder who retracts a Class A Share under the 2013 Special Retraction Right will receive a retraction price per Class A Share equal to the net asset value per Unit calculated on June 28, 2013, less $10.00. A Shareholder who retracts a Preferred Share under the Special Retraction Right will receive a retraction price per Preferred Share equal to the lesser of (i) $10.00 and (ii) the net asset value per Unit calculated on June 28, 2013. Shareholders wishing to take advantage of the 2013 Special Retraction Right must surrender their Shares for retraction no later than the close of business on June 26, 2013. Payment for the Class A Shares or Preferred Shares so tendered for retraction
pursuant to the 2013 Special Retraction Right will be made no later than July 11, 2013.
The term extension is reasonable enough, although I’m irritated that it’s occurring so much in advance of the scheduled liquidation date and that the company is spending up to $0.15 / Unit on proxy solicitation fees. I recommend that DFN.PR.A shareholders vote in favour of the term extension and merger.
DFN.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-3 by DBRS. DFN.PR.A is tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.
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