DBRS Confirms Canadian General Investments, Limited Preference Shares, Series 3 and 4 at Pfd-1 (low)

DBRS Limited (DBRS) has today confirmed the ratings of the 3.90% Cumulative Redeemable Class A Preference Shares, Series 3 (the Series 3 Preference Shares) and the 3.75% Cumulative Redeemable Class A Preference Shares, Series 4 (the Series 4 Preference Shares; collectively, with the Series 3 Preference Shares, the Preference Shares) issued by Canadian General Investments, Limited (the Company) at Pfd-1 (low). The Series 4 Preference Shares will be retractable at the option of their holders on or after June 15, 2023. On April 14, 2016, the Company announced that it has provided notice to holders of the Series 3 Preference Shares that, in accordance with the terms of the Series 3 Preference Shares, it will redeem all of the issued and outstanding Series 3 Preference Shares (the total issue size of $75,000,000) on June 10, 2016.

The Company holds a well-diversified portfolio (the Portfolio) of common shares which includes about 57 well-known names allocated among ten major sectors, with Financials, Energy, Materials, Industrials and Consumer Discretionary receiving collectively the largest allocation. Holders of the Series 3 Preference Shares are entitled to receive fixed cumulative preferential cash dividends of $0.975 per annum, yielding 3.90% on the initial issue price, while holders of the Series 4 Preference Shares are entitled to cash dividends of $0.9375 per annum, yielding 3.75% per annum on the initial issue price. Holders of the common shares have been receiving quarterly distributions of $0.16 and have generally received a special capital gains dividend at year-end.

The current downside protection available to the portfolio is approximately 77.3%. Regular distributions to holders of the common shares of the Company will cause a portfolio grind of about 2.4% per annum for the remaining term. However, the current asset coverage test is 4.4 times, well above the 2.5 times which prevents any distributions to holders of the common shares. The confirmation of the rating at Pfd-1 (low) is supported by the aforementioned metrics.

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

The applicable methodology is Rating Canadian Split Share Companies and Trusts (July 2015), 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.