Brompton Split Banc Corp.
TSX : SBC
TSX : SBC.PR.A

Brompton Split Banc Corp.

April 06, 2017 10:28 ET

Brompton Split Banc Corp. Announces Intention to Implement a Class A Share Split and Concurrent Preferred Share Private Placement

TORONTO, ONTARIO--(Marketwired - April 6, 2017) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

(TSX:SBC)(TSX:SBC.PR.A) Due to the strong performance of its class A shares, Brompton Split Banc Corp. (the "Company") announces its intention to effect a split of its class A shares (the "Share Split") and a concurrent private placement of preferred shares (the "Private Placement"). The Company intends to announce the final number of new class A and preferred shares expected to be issued and outstanding as a result of the Share Split and the Private Placement by way of a press release on or about Wednesday, April 12, 2017.

It is the Company's intention that class A shareholders of record on or about Monday, April 24, 2017 will receive additional class A shares pursuant to the Share Split. The number of preferred shares offered in the Private Placement will be an amount such that following the Share Split there will be an equal number of class A and preferred shares outstanding. The Company expects that the Share Split and the Private Placement will result in an approximately 20% increase in the number of outstanding class A and preferred shares. The Share Split and the Private Placement are subject to regulatory approval.

Following the Share Split, class A shareholders will continue to receive the currently targeted monthly distribution of $0.10 per class A share. As such, existing class A shareholders are expected to be provided with an effective increase in monthly cash distributions equal to approximately 20%, in-line with the expected percentage increase in outstanding class A shares due to the Share Split. The Company provides a distribution reinvestment plan, on a commission-free basis, for class A shareholders that wish to reinvest distributions and realize the benefits of compound growth.

The preferred share equity coverage, as represented by the class A net asset value ("NAV"), is expected to be at least $13.68 following the Share Split(1). As such, following the completion of the Share Split and the Private Placement, the preferred shares are expected to have downside protection from a decline in the value of the Company's portfolio of approximately 58%. The expected class A NAV is higher than the equity coverage available for the preferred shares: (a) at the inception of the Company, (b) at the time that the current Pfd-3 (high) rating was initially assigned, and (c) at the time the current preferred share dividend rate of $0.45 per annum was originally announced(2). DBRS has confirmed that the rating of the preferred shares will continue to be Pfd-3 (high) following the completion of the Share Split and the Private Placement.

For over 11 years, since inception in November 2005 to March 31, 2017, the class A share have delivered a 12.0% per annum total return based on NAV, outperforming the total return of the S&P/TSX Capped Financials Index by 3.5% per annum and the total return of the S&P/TSX Composite Index by 5.6% per annum(3). Since inception, class A shareholders have received cash distributions of $13.25 per class A share.

Over the last five years to March 31, 2017, the preferred shares have delivered a 4.7% per annum total return based on NAV, outperforming the total return of the S&P/TSX Preferred Share Index by 3.5% per annum with lower volatility(3).

Brompton Split Banc Corp. invests in a portfolio, on an approximately equal weight basis, in common shares of 6 Canadian Banks: Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, The Bank of Nova Scotia and The Toronto-Dominion Bank.

About Brompton Funds

Brompton Funds, a division of Brompton Group which was founded in 2000, is an experienced investment fund manager with approximately $2 billion in assets under management. Brompton's investment solutions include TSX traded funds, mutual funds, and flow-through limited partnerships. For further information, please contact your investment advisor, call Brompton's investor relations line at 416-642-6000 (toll-free at 1-866-642-6001), email info@bromptongroup.com or visit our website at www.bromptongroup.com.

(1) Based on the NAV of the class A shares used to determine the Share Split ratio.
(2) Inception date: November 16, 2005;DBRS assignment of Pfd-3(high) rating:August 27, 2009 (class A NAV: $11.51); current term's preferred share dividend rate announced September 26, 2012 (class A NAV: $11.33 as at September 24, 2012)
(3) See Standard Performance Data table below.Source: Brompton, Thomson Reuters, as at March 31, 2017
Brompton Split Banc Corp.
Performance to March 31, 2017
1 Yr 3 Yrs 5 Yrs 10 Yrs Incep. (16/11/05)
Class A Shares (TSX:SBC) 47.2 % 17.0 % 18.7 % 10.0 % 12.0 %
S&P/TSX Capped Financials Index 24.3 % 11.0 % 13.3 % 7.0 % 8.5 %
S&P/TSX Composite Index 18.6 % 5.8 % 7.8 % 4.7 % 6.4 %
Preferred Shares (TSX:SBC.PR.A) 4.6 % 4.6 % 4.7 % 5.0 % 5.1 %
S&P/TSX Preferred Share Index 21.9 % 0.6 % 1.2 % n/a n/a

You will usually pay brokerage fees to your dealer if you purchase or sell shares of the investment funds on the Toronto Stock Exchange or other alternative Canadian trading system (an "exchange"). If the shares are purchased or sold on an exchange, investors may pay more than the current net asset value when buying shares of the investment fund and may receive less than the current net asset value when selling them.

There are ongoing fees and expenses associated with owning shares of an investment fund. An investment fund must prepare disclosure documents that contain key information about the funds. You can find more detailed information about the fund in the public filings available at www.sedar.com. The indicated rates of return are the historical annual compounded total returns including changes in share value and reinvestment of all distributions and do not take into account certain fees such as redemption costs or income taxes payable by any securityholder that would have reduced returns. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.

Certain statements contained in this document constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to matters disclosed in this document and to other matters identified in public filings relating to the fund, to the future outlook of the fund and anticipated events or results and may include statements regarding the future financial performance of the fund. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and we assume no obligation to update or revise them to reflect new events or circumstances.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or any applicable exemption from the registration requirements. This news release does not constitute an offer to sell or the solicitation of an offer to buy securities nor will there be any sale of such securities in any state in which such offer, solicitation or sale would be unlawful.

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