Premium Income Corporation Announces Proposal to Extend Redemption Date
20 Agosto 2010 - 4:20PM
PR Newswire (Canada)
TORONTO, Aug. 20 /CNW/ -- TORONTO, Aug. 20 /CNW/ - (TSX: PIC.A;
PIC.PR.A) - Premium Income Corporation (the "Fund") is pleased to
announce that its Board of Directors has approved a proposal to
extend the term of the Fund for an additional seven years. The
final redemption date for the Class A Shares and Preferred Shares
of the Fund is currently November 1, 2010 and the Fund proposes to
implement a reorganization ("Reorganization") that will allow
shareholders to retain their investment in the Fund until at least
November 1, 2017. In connection with the Reorganization, holders of
Class A Shares will continue to receive ongoing leveraged exposure
to a high-quality portfolio consisting principally of common shares
of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial
Bank of Commerce, Royal Bank of Canada and The Toronto-Dominion
Bank, as well as attractive quarterly cash distributions.
Currently, the Fund is paying quarterly distributions at a rate of
$0.60 per year. The Fund intends to continue to pay distributions
at this rate until the net asset value ("NAV") per Unit (a "Unit"
being considered to consist of one Class A Share and one Preferred
Share) reaches $22.50. At such time, quarterly distributions paid
by the Fund will vary and will be calculated as approximately 8.0%
per annum of the NAV of a Class A Share. If the Reorganization is
approved and implemented, holders of Preferred Shares are expected
to continue to benefit from fixed cumulative preferential quarterly
cash dividends in the amount of $0.215625 per Preferred Share
($0.8625 per year) representing a yield of 5.75% per annum on the
original issue price of $15.00. As part of the Reorganization, the
Fund is also proposing other changes including changing its
authorized share capital by adding new classes of shares issuable
in series, changing the monthly retraction prices for the Class A
Shares and the Preferred Shares so that they are calculated by
reference to market price in addition to NAV and changing the dates
by which notice of monthly retractions needs to be provided and by
which the retraction amount will be paid. The Fund will also allow
for the calculation of a diluted NAV in the event the Fund should
ever issue warrants or rights to acquire additional Class A Shares
or Preferred Shares. The Fund believes that the Reorganization will
allow shareholders to maintain their investment in the Fund on a
basis that will better enable it to meet its investment objectives
for both classes of shares. If the Reorganization is approved and
implemented, shareholders will be given a special retraction right
to retract their Class A Shares or Preferred Shares at NAV on
November 1, 2010. The redemption date of the shares will
automatically be extended for successive seven-year terms after
November 1, 2017, the Board of Directors will be authorized to set
the dividend rate on the Preferred Shares for any such extension of
term and shareholders will be able to retract their Class A Shares
or Preferred Shares at NAV prior to any such extension. A special
meeting of holders of Class A Shares and Preferred Shares has been
called and will be held on September 29, 2010 to consider and vote
upon the proposal. Further details of the proposal will be outlined
in an information circular to be prepared and delivered to holders
of Class A Shares and Preferred Shares in connection with the
special meeting. The Reorganization is also subject to all required
regulatory approvals. Commissions, trailing commissions, management
fees and expenses all may be associated with mutual fund
investments. Please read the prospectus before investing. Mutual
funds are not guaranteed, their values change frequently and past
performance may not be repeated. please contact Investor Relations
at 416.681.3966, toll free at 1.800.725.7172 or visit
www.mulvihill.com. John Mulvihill, President and CEO, David Roode,
President, Fund Services, Sheila Szela, Vice-President, Finance and
CFO; A member of the Mulvihill Capital Management Inc. Group of
Funds, Mulvihill Structured Products, 121 King Street West, Suite
2600, Toronto, Ontario, M5H 3T9, 416.681.3966, 1.800.725.7172,
www.mulvihill.com, info@mulvihill.com
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