New Compass Diversified Holdings Preferred Now Trading

As noted yesterday Compass Diversified Holdings (NYSE:CODI) had sold a new fixed-to-floating rate preferred with a initial coupon of 7.875%.

Shares are now trading on the OTC Grey market under the temporary ticker CMPDP and are trading down at $24.60-$24.75.

The term sheet for the issue filed with the SEC can be found here.

9 thoughts on “New Compass Diversified Holdings Preferred Now Trading”

  1. Hi Leonard–yes this has been confusing as my etrade account showed a big share price rise earlier this month when in fact it was flat. eTrades system called it an ex-date and it was not.

    Yes the prospectus is the gold standard. I will check our entries and see if we are incorrect and correct if necessary.

    Feel welcome to be ‘off topic’ anywhere and anytime here–I have no rules.

  2. Tim,
    I’m not sure if this is the correct spot to ask an off-topic question so please correct me, but you list the SPKEP ex-div months as Feb, May, etc., and I believe they should be Mar, June, etc. according to the prospectus “…will be payable to holders of record as they appear in our stock records for the Series A Preferred Stock at the close of business on the applicable record date, which shall be the 1st day of each of April, July, October and January, whether or not a Business Day, in which the applicable Dividend Payment Date falls (each, a “Dividend Record Date”). ”
    BTW, Etrade shows March 1 as the ex-div date so maybe I’m missing something, but I assume the prospectus is the gold standard. Thanks, Leonard

  3. Hi Rick–maybe you are right, but that would be kind of unusual for a pass through company not taxed as a C corp. I will have to dig a bit more to confirm for our database (I won’t be buying so it doesn’t personally matter).

  4. Hi Rick–may want to double check that as I believe this will be non-qualified dividends.

    1. information. Dividends paid by this preferred security are eligible for the preferential income tax rate of 15% to a maximum of 20% depending on the holder’s tax bracket (and under IRS specified holding restrictions) and are also eligible for the dividends received deduction for corporate holders (see page 20 of the prospectus for further information). ….. From quantum….

      1. Hi Rick–I think this is the key phrase from the prospectus. Basically what it says is that the trust is exempt from taxation—-IF the partnership was ruled invalid dividends received by investors would be QDI. Other wise they are not QDI.

        Also I note that Quantum has the CODI-A issue as non qualified.

        Always good to double check us and quantum since we have plenty incorrect.

        The trust is intended to be treated as a publicly traded partnership exempt from taxation as a corporation. For purposes of applying the “qualifying income” tests, the trust’s share of the company’s income will be treated as received directly by the trust and will retain the same character as it had in the hands of the company.

        If the trust were not treated as a publicly traded partnership exempt from taxation as a corporation and, instead, were to be classified as an association taxable as a corporation, the trust would be subject to federal income tax on any taxable income at regular corporate tax rates, thereby reducing the amount of cash available for distribution to the shareholders. In that event, the holders of shares would not be entitled to take into account their distributive shares of the trust’s deductions in computing their taxable income, nor would they be subject to tax on their respective shares of the trust’s income. Distributions to a holder would be treated as (i) dividends to the extent of the trust’s current or accumulated earnings and profits, (ii) a return of basis to the extent of each holder’s basis in its shares and (iii) gain from the sale or exchange of property to the extent that any remaining distribution exceeds the holder’s basis in its shares. Overall, treatment of the trust as an association taxable as a corporation may substantially reduce the anticipated benefits of an investment in the trust.

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