Faircourt Asset Management has announced:
that it has filed a final short form prospectus for an offering of warrants to unitholders of the Trust (the “Offering”). Each unitholder will receive one whole Series A warrant (each, a “Series A Warrant”) for each unit of the Trust (each, a “Unit”) on the record date of September 23, 2011.
Each Series A Warrant will entitle the holder thereof to purchase one Unit, one half of a 6.25% preferred security of the Trust (each, a “Preferred Security”) and one Series B warrant (each, a “Series B Warrant”) upon payment of the subscription price of $10.92 (which is the sum of (a) the most recently calculated NAV per Unit prior to the date of the preliminary short form prospectus, (b) $5.00 (which is one-half of the principal amount of a Preferred Security) and (c) the estimated per Unit fees and expenses of the Offering). The Series A Warrants may be exercised on a weekly basis every Friday commencing on September 30, 2011 and ending on December 2, 2011.
Each Series B Warrant will entitle the holder on and only on June 27, 2012 to subscribe for one Unit at the subscription price of $7.25. The Series B Warrants may be only exercised on June 27, 2012.
The TSX has conditionally approved this listing of the Series A Warrants distributed pursuant to the Offering, and the Units, Preferred Securities and Series B Warrants issuable upon the exercise thereof, on the TSX.
Successful completion of the Offering will (a) provide the Trust with additional capital that can be used to take advantage of attractive investment opportunities; (b) increase the trading liquidity of the Units; (c) reduce the leverage associated with the Preferred Securities of the Trust which has increased in recent years due to market conditions and the redemption of Units; (d) bring the Trust closer to achieving a matched position where the number of outstanding Units and Preferred Securities are equal; and (e) reduce the management expense ratio of the Trust.
Asset coverage for this issue has been a continuing matter of interest, with an unmatched retraction of capital units on June 30 being followed by a a matching redemption of preferred securities shortly afterwards. As with many other investment vehicles, the fund is now slightly behind where it was on May 31, the effective date of the retraction.
FCS.PR.B is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.