Prime Dividend Corp.

Prime Dividend Corp.

October 18, 2005 12:04 ET

Prime Dividend Corp. Sets to Increase IPO Distribution Rate

TORONTO, ONTARIO--(CCNMatthews - Oct. 18, 2005) - CCN Matthews: Prime Dividend Corp. ("Prime Dividend") sets to increase the initial public offering distribution rate for both the Floating Rate Preferred shares and the Floating Rate Class A shares by 0.25% per annum as a result of today's increase in the Prime Rate in Canada. The change in the Prime Rate to 4.75% (assuming this rate remains in effect as at December 15) effectively increases the initial distribution rate for the Floating Rate Preferred shares to 5.50% (Prime Rate plus 0.75%) per annum and the Floating Rate Class A shares to 6.75% (Prime Rate plus 2.00%) per annum.

The proposed offering of Prime Dividend is currently being marketed through a syndicate of dealers. CIBC and RBC Capital Markets are co-lead agents for the proposed offering. The other members of the syndicate are TD Securities Inc., BMO Nesbitt Burns, National Bank Financial, Desjardins Securities Inc., HSBC Securities (Canada) Inc., Canaccord Capital Corporation, Dundee Securities Corporation, Raymond James Ltd, Bieber Securities Inc., Blackmont Capital Inc., BLC Securities Inc., and Wellington West Capital Inc.

The offering is expected to close in mid November with the initial distributions paid to shareholders of record on December 31, 2005. Details of the offering are as follows:

Prime Dividend's Floating Rate Preferred Shares offer, cumulative preferential monthly cash dividends initially at a rate of 5.50% per annum. The dividend will float at the prime rate in Canada plus 0.75%, with the objective of repaying the original issue price upon termination. The Preferred shares have received a provisional rating of PFD-2 from DBRS.

Prime Dividend's Floating Rate Class A Shares offer regular monthly cash distributions initially targeted to be 6.75% per annum. The dividend will float at the prime rate in Canada plus 2.00%, with the objective of repaying the original issue price upon termination. The Class A shares will also provide holders with any capital appreciation or dividend growth achieved in the investment portfolio.

The net proceeds from the proposed offering will be used by Prime Dividend to invest in a portfolio of high yielding Canadian Companies as follows:

Banks Investment Management
Bank of Montreal AGF Management Ltd.
The Bank of Nova Scotia CI Fund Management Inc.
CIBC IGM Financial Inc.
National Bank of Canada
Royal Bank of Canada
Toronto-Dominion Bank

Life Insurance Utilities & Other
Great-West Lifeco Inc. BCE Inc.
Manulife Financial Corp. TransAlta Corp
Sun Life Financial Inc. TransCanada Corp
Power Financial Corp.
TSX Group Inc.

Shares held within the Portfolio will generally represent no les than 4% and no more than 8% of the net asset value.

To supplement the dividends received on the portfolio and reduce risk, Prime Dividend will from time to time write covered call options.

Please visit the Prime Dividend Corp. website at

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