CGQ & CGQ.E Merged Into DFN & DFN.PR.A

In June, 2013, Quadravest sent CGQ & CGQ.E unitholders a management information circular:

The purpose of the meeting is to consider and vote upon a special resolution that would allow the merger of CG STREAMS into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013 while still allowing any CG STREAMS shareholders, should they choose, to retract their shares on the existing scheduled termination date on the same terms as originally contemplated.

A vote FOR the proposal will give you two options at the December 1, 2013 termination date:
1) Capital Yield and Equity Dividend shareholders will be able to have their shares exchanged (based on relative net asset values) for an equal dollar amount of units of Dividend 15 through the merger of CG STREAMS into Dividend 15, OR
2) Capital Yield shares would receive $25 per share and Equity Dividend shares would receive the NAV less $25 (to a maximum of $15 per share) under the existing termination formula as originally contemplated.

If this proposal is approved, shareholders will not be required to make a decision on this choice until early in November 2013
when further information will be provided.

Shareholders approved the proposal in July, 2013:

The Board of Directors of Capital Gains Income STREAMS (“CG STREAMS”) is pleased to announce that both classes of shareholders have voted over 94% in favour of a proposal that would allow the merger of CG STREAMS into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013.

On November 29, final exchange ratios were announced:

Capital Gains Income STREAMS (“CG STREAMS”) provides the final exchange ratio and other details relating to the merger of CG STREAMS into Dividend 15 Split Corp (“Dividend 15”).

All Capital Yield (TSX symbol CGQ) and Equity Dividend (TSX symbol CGQ.E) shares outstanding on December 1, 2013 will automatically be exchanged into an equal dollar amount of Dividend 15 units based on the November 28 net asset value (NAV) exchange ratios. One unit of Dividend 15 is comprised of one Class A share (TSX symbol DFN) and one Preferred share (TSX symbol DFN.PR.A).

The final exchange ratios are as follows:

1 CGQ share will be exchanged into 1.22352296 DFN shares and 1.22352296 DFN.PR.A shares

1 CGQ.E share will be exchanged into 0.19516249 DFN shares and 0.19516249 DFN.PR.A shares

(Fractional shares will not be issued)

It is expected that CGQ and CGQ.E shares will be halted for trading by the TSX before the opening of trading on December 3, 2013 and delisted from the TSX on that day. Any CGQ or CGQ.E purchased prior to the halt of these shares will receive the applicable number of DFN and DFN.PR.A shares upon settlement. The exchange of CGQ and CGQ.E into DFN and DFN.PR.A shares will occur automatically and no further action is required by CGQ or CGQ.E shareholders. This exchange is a non taxable event.

Based on the November 28, 2013 NAV exchange ratios and the market value of a Dividend 15 unit (as at November 28, 2013), CGQ shareholders will receive the equivalent of $ 25.69 in market value of Dividend 15 units for each CGQ share exchanged. CGQ.E shareholders would receive the equivalent of $4.10 in market value of Dividend 15 units for each CGQ.E share exchanged.

Well, the recovery of about $4.17 on CGQ.E is a far cry from the par value of $15! CGQ.E was last mentioned on PrefBlog when the credit rating was discontinued in February 2008. CGQ.E has been tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

Leave a Reply

You must be logged in to post a comment.