Eagle Point Credit Company (ECC) has announced a partial call on the 7.75% term preferred stock (ECCB).
They will redeem 1.078 million shares or about 50% of the outstanding shares. The call date is 12/31/2021.
Gary was on this one this afternoon.
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11/22/2024
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So how will we know whether our holdings will be called?
This wording in the press notice:
“From and after the Redemption Date, the Series B Term Preferred Stock will no longer be
deemed outstanding, dividends will cease to accumulate and all the rights of the shareholders of such shares
will cease, except the right to receive the Redemption Price.”
Does this mean that you’re left holding the bag if your shares are not redeemed?
It will be a pro-rata call, so statistically you’ll receive the same percentage as the call itself, however, in some cases it can vary slightly from the statistic… Also sometimes brokers separate out your called shares but that’s not always the case….. don’t know how it will work on this one…. BTW, if they do separate out the calls, then shares you buy in the open market after that will most likely NOT be subject to the call at all… it does seem to be on a case by case basis, so it’s best to check on your own on this one…..
ECCB, as a monthly payer, goes ex-div on 12/10/2021 for $0.1615 so if owners hold until the redemption date of 12/31/2021, we would get the regular $0.1615 dividend plus 10 days / 30 days =1/3 * 0.1615 = 0.0538 for the portion of the dividend until redemption, right? In similar situations I seem to overestimate how much I’ll be paid so I’d appreciate it if someone would check my thinking here.
Right on, leonard…. I agree. You will get a full dividend of that amount for all shares you own, including those that will be called.
i think all you will get is the 16 cents. i bought some this morning with the hope they don’t call the other 50 percent for a few months .
you are buying below par with the dec div factored in
at least thats how i see it
What about this statement:
“the redemption price of the Series B Term Preferred Stock will be $25 per share, plus an amount equal to all unpaid dividends and distributions on each share accumulated to, but excluding, the Redemption Date, without interest thereon (the “Redemption Price”).”
The above statement is why I tacked on the 0.0538 but I must admit I was wrong when ABR called its preferreds and consequently made less than I had estimated.
i may be wrong, but i think its based on the pay date. not the ex date.
as a matter of fact, i’m wrong on a regular basis
LOL
i’m sure someone will chime in on this to verify whats corrrect
Maybe I misunderstood what you were saying…. I think all you receive is .161458 for all shares owned, including those to be called,, prior to ex-div date, nothing more…
leonard – maybe you are double counting from the ex-div date? Accrued is from payment date to day before payment date always. Ex-div date is merely an accounting date to know who’s entitled to the dividend.
2wr – you hit the nail on the head. I thought accrued was from one ex-div date to the next. Thanks for educating me on this, as I’ve been bitten a few times in the past and did not even see it coming!