As previously reported, the management of EN.PR.A is attempting to extend the term on this split-share corporation … why not, it’s a lot cheaper than having to underwrite a new one!
In accordance with the plan, Scotia Managed Companies announced today:
that pursuant to the Company’s reorganization the new fixed distribution rate on the ROC Preferred Shares is 5.00%. This represents an increase of 0.75% over the current fixed rate of 4.25% of the ROC Preferred Shares. If the reorganization is successful and based on the $25.00 issue price of the ROC Preferred Shares, holders of ROC Preferred Shares will be entitled to quarterly fixed distributions of $0.3125 effective December 16, 2007.
The new fixed distribution rate was determined based on a formula approved by holders of Capital Yield Shares and holders of ROC Preferred Shares at a special meeting held October 23, 2007. The formula provided for the rate to equal the greater of (i) 5.00% and (ii) the Government of Canada three year bond rate as at November 9, 2007 plus 0.75%, rounded down to the nearest 0.05%.
…
The reorganization will only be implemented if a minimum of 1,280,000 Capital Yield Shares remain issued and outstanding following exercise of the Special Retraction Right by holders on or before November 16, 2007. If this condition is not satisfied, the Company will redeem the Capital Yield Shares and the ROC Preferred Shares on December 16, 2007 as originally contemplated.
If the reorganization is implemented the ratio of Capital Yield Shares to ROC Preferred Shares will continue to be two-to-one and the asset coverage on the ROC Preferred Shares will be set at approximately 2.2 times to extend the current Pfd-2(low) rating. In order to achieve this, the Company may redeem ROC Preferred Shares which are not surrendered for retraction pursuant to the Special Retraction Right. The reorganization is not conditional on the rating being maintained.
So, now the preferred shareholders will know what they’re voting on, anyway! Frankly, 5% looks a little skimpy – not horrible, but a little skimpy – given the other three-year-ish split share paper that’s currently available.
EN.PR.A is tracked by HIMIPref™, but is not included in any of the indices due to low average volume. There are a mere 1,209,398 shares outstanding, according to the Toronto Stock Exchange.
HIMIPref™ and PrefInfo information will not be updated until it is known whether the reorganization has been effected. This should be announced on or just after November 16.
[…] In accordance with the company’s plans, Energy Split Corp. II Inc. has announced: that the final condition required to extend the term of the Company for an additional three years to December 16, 2010, has been met. Holders of Capital Yield Shares and holders of ROC Preferred Shares previously approved the extension of the term of the Company subject to the condition that a minimum of 1,280,000 Capital Yield Shares remain outstanding following the November 16, 2007 additional special retraction right (the “Special Retraction Right”). Following the Special Retraction, 2,366,686 Capital Yield Shares (representing 98% of the currently outstanding Capital Yield Shares) will remain outstanding. … In order to increase the asset coverage for the continuing ROC Preferred Shares and in order to meet the requirements needed to maintain the current rating of Pfd-2 (low), the Company expects to call approximately 16% of the continuing ROC Preferred Shares for redemption on December 14, 2007 on the same basis as those tendered to the Special Retraction Right. The exact number of shares called for redemption will be announced on November 30, 2007. While the Company expects to receive a confirmation of the Pfd-2 (low) rating on the ROC Preferred Shares, the redemption and reorganization is not conditional on the rating being maintained. Upon the completion of the reorganization, the Company expects to adjust the number of remaining outstanding ROC Preferred Shares by way of sub-division in order to maintain the ratio of Capital Yield Shares to ROC Preferred Shares of two-to-one. […]