DBRS Rates Global Champions Split Corp. Class A Preferred Shares, Series 1 Pfd-2 (low)

DBRS has today assigned a final rating of Pfd-2 (low) to the Class A Preferred Shares, Series 1 (the Preferred Shares) issued by Global Champions Split Corp. (the Company). The Company will issue a maximum of 2,300,000 Class A Preferred Shares at an issue price of $25.00 per Class A Preferred Share and an equal number of capital shares (the Capital Shares) in order to attain a leveraged split share structure. The redemption date for the Class A Preferred Shares will be on or about July 31, 2019.

Net proceeds from the initial offering will be used to invest in a portfolio of common shares of approximately 15 international large capitalization companies (the Portfolio). The Portfolio will initially be equally weighted and may be changed from time to time.
All of the Portfolio’s investments denominated in currencies other than the U.S. dollar (USD) are expected to be hedged back to USD. Dividends received on the Portfolio securities denominated in currencies other than USD may – but are not required to – be hedged back to USD. Distributions to holders of the Class A Preferred Shares are denominated in Canadian dollars and will be hedged back to USD unless the net asset value (NAV) of the Company is less than the aggregate original issue price of the Class A Preferred Shares.

The Portfolio provides initial downside protection of approximately 48.9% to holders of the Class A Preferred Shares. The Company will make quarterly fixed cumulative distributions of $0.25 per Class A Preferred Share to yield 4.00% per annum on the issue price. Based on the dividend yields on Portfolio and foreign exchange rates as of February 27, 2013, the initial dividend coverage ratio (net of expenses) is 1.2 times. Holders of the Capital Shares are expected to receive all excess income after Company expenses and Class A Preferred Share distributions have been paid.

The Pfd-2 (low) rating on the Class A Preferred Shares is primarily based on the downside protection and dividend coverage available to holders of the Preferred Shares, the credit quality of the underlying companies in the Portfolio and disclosure included in the final prospectus.

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

The applicable methodology is Rating Canadian Split Share Companies and Trusts (August 2012), which can be found on our website under Methodologies.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.