DBRS Downgrades High Income Preferred Shares Corp. Series 2 Shares to D and Discontinues Series 1 and Series 2 Shares

DBRS has today downgraded the Series 2 Shares issued by High Income Preferred Shares Corp. (the Company) to D from Pfd-5 (low) and has discontinued the rating immediately following this rating action. The rating assigned to the Series 1 Shares issued by the Company has also been discontinued.

At inception, the Company issued 1.26 million Series 1 Shares at $25 per share, 1.26 million Series 2 Shares at $14.70 per share and privately placed 1.26 million Equity Shares at $3.54 per share. The scheduled termination date for each series of shares was June 29, 2012. However, on February 25, 2010, shareholders of the Company approved a special resolution authorizing the amendment of the articles of the Company to change the termination date of the Company to March 12, 2010.

As part of the early wind-up of the Company, holders of the Series 1 Shares received their full principal amount of $25.00 per share and the amount of all declared but unpaid dividends up to March 12, 2010 ($2.80 per share). Holders of the Series 2 Shares received their full principal amount of $14.70 per share less a cost of $0.28 per share, representing half of the expected costs of amending the articles and winding up the Company. Holders of the Series 2 Shares also received all declared but unpaid dividends up to March 12, 2010 ($2.04 per share). The total payment of $16.46 per Series 2 Share equals 98.3% of the sum of full principal and accrued dividends.

Since holders of the Series 2 Shares did not receive an amount equalling 100% of principal and accrued dividends on the termination date, DBRS has downgraded the rating on the Series 2 Shares to D. On March 12, 2010, all Series 1 Shares and Series 2 Shares of the Company were redeemed and the shares were de-listed from the TSX. Consequently, DBRS has discontinued the ratings assigned to the Series 1 Shares and the Series 2 Shares.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Canadian Split Share Companies and Trusts, which can be found on our website under Methodologies.

This is a Structured Finance rating.