Diversified Canadian Financial II Corp.

Diversified Canadian Financial II Corp.

November 10, 2006 17:19 ET

Diversified Canadian Financial II Corp. Announces Second Quarter Financial Results and Proposed Amalgamation With Brascade Corporation

TORONTO, ONTARIO--(CCNMatthews - Nov. 10, 2006) - Diversified Canadian Financial II Corp. ("DCF II")(TSX:DCC.PR.A) today announced that income available for distribution for the quarter ended September 30, 2006 was $15.5 million, an increase from $4.7 million last year due to a gain of $9.4 million on the sale of preferred shares from its portfolio during the period. During the quarter ended September 30, 2006, the company paid dividends of $6.1 million and $4.0 million to its Senior Preferred and Capital shareholders, respectively.

Amalgamation with Brascade Corporation

DCF II also announced that, subject to shareholder approval, it has agreed to amalgamate with Brascade Corporation and Diversified Canadian Holdings Inc. effective on or about January 1, 2007. The amalgamated company will continue as a public company under the name Brascade Corporation and is expected to continue to serve as an investment company. The amalgamated corporation will have a larger capital base and more diversified portfolio of investments than its predecessors, and should also benefit from reduced administrative, operating and regulatory costs.

In conjunction with this amalgamation, the holders of the DCF II's Class A Senior Preferred shares will be given the option to receive either (a) $25.00 in cash in Canadian funds per Senior Preferred share they now hold, which is the redemption price for these shares as at January 1, 2007; or (b) one senior preferred share of the amalgamated corporation having a redemption price of $25.00 per share in Canadian funds and paying quarterly dividends based on an annual rate of 4.70%. Residents of jurisdictions outside Canada will automatically receive on amalgamation $25.00 in cash per Senior Preferred share they now hold.

The terms of the proposed amalgamation and the resulting impact on the holders of Senior Preferred shares have been reviewed by a committee of independent directors of DCF II. The Independent Committee has confirmed to the board of directors of DCF II that it has determined that the amalgamation is in the best interests of the company and fair to the holders of the Senior Preferred shares. The Independent Committee was assisted in its deliberations by Koger Valuations Inc., an independent financial advisor and qualified valuator, which provided to the Committee and the holders of the Senior Preferred shares a valuation of Brascade Corporation and an opinion as to the fairness, from a financial point of view, of the amalgamation.

A meeting of the company's shareholders will be held at 11:00 a.m. (Toronto time) on Wednesday, December 13, 2006 to vote on the proposed amalgamation and other related matters. An information circular will be mailed to the company's shareholders shortly.

On November 10, 2006, the company's Board of Directors declared the regular quarterly dividend of $0.38125 per Senior Preferred share, payable December 31, 2006 to shareholders of record on December 20, 2006.

DCF II owns a portfolio of preferred shares issued by companies within the Brookfield Asset Management group.

Three months ended
September 30
(unaudited) ------------------------------------
$ thousands 2006 2005
Investment $ 6,181 $ 4,715
Gain on disposition 9,422 -
15,603 4,715
Operating 56 36
Income available for distribution $ 15,547 $ 4,679

($ thousands) Sept. 30, 2006 March 31, 2006
Cash and cash equivalents $ 2,154 $ 123
Investment portfolio 344,197 334,775
Accounts receivable 2,375 -
$ 348,726 $ 334,898

Accounts payable $ 3,050 $ 2
Class A shares 1 1
Senior Preferred shares 200,000 200,000
Shareholders' Equity
Share capital 140,960 140,960
Deficit 4,715 (6,065)
$ 348,726 $ 334,898

Bruce K. Robertson, President and Chief Executive Officer, will be available at 416-363-9491 to answer any questions on the company's financial results.

This news release contains forward-looking statements concerning the company's business and operations. The company cautions that, by their nature, forward-looking statements involve risk and uncertainty and the company's actual results could differ materially from those expressed or implied in such statements. Reference should be made to the most recent Annual Information Form for a description of the major risk factors.

Contact Information

  • Diversified Canadian Financial II Corp.
    Bruce K. Robertson
    President and Chief Executive Officer
    (416) 363-9491