CXC.PR.A Holders Give Christmas Present to the Capital Units

CIX Split Corp has announced:

that it has obtained approval from its shareholders to change the investment objectives, strategies and restrictions of the Corporation (the “Mandate Change”) to reflect that the Corporation will invest substantially all of its assets in common shares of the corporate successor (“CI Financial”) to CI Financial Income Fund (the “Income Fund”) after the Income Fund converts to a corporation. Currently, the Corporation has exposure to the trust units of the Income Fund.

The Mandate Change will become effective on or before January 1, 2009 and includes deleting from the Corporation’s investment objectives respecting its Class A Shares the reference to targeted monthly cash distributions. The Corporation also will complete the early settlement of the sale of its common share portfolio to the counterparty to its forward purchase and sale agreement and invest the proceeds thereof in additional common shares of CI Financial.

The Corporation’s Class A Shares and Priority Equity Shares are listed on the Toronto Stock Exchange under the symbols CXC and CXC.PR.A, respectively.

When reporting the notice of meeting, I recommended a “No” vote. This would have led to the early wind-up of the company and – given a closing NAV of $10 or more – full repayment to the Preferred Shareholders.

It would appear, however, that they would rather retain their preferred shares, which closed today at 7.70-89, 10×2, with full downside exposure to the underlying portfolio and no upside from the probable closing out price. Zip, Zero, Zilch. Morons.

The NAV of the Preferred and Capital Units combined was 10.58 at today’s close. CXC.PR.A is not tracked by HIMIPref™.

2 Responses to “CXC.PR.A Holders Give Christmas Present to the Capital Units”

  1. cowboylutrell says:

    Losers. This is inexcusable. They spit on a 25% gain (roughly), and if you annualize it, it’s monstruous.

    On the other hand, it looks like the market on CXC.PR.A was expecting such a strange scenario, with the shares at a huge discount to par value, with just a few days to go before what should have been the redemption date.

    All else being equal, the common shares CXC should get a boost on Monday: their implied call got a 24-month extension (at a minimum… in the final months to the maturity date of January 2011, they might as well get yet another extension !).

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