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Gentra worries preferred holders
By KATHERINE MACKLEM
Real Estate Reporter The Financial Post
ÿHolders of Gentra Inc. preferred shares are concerned a reorganization of the company's real estate assets will further delay a dividend payment on their holdings.
ÿThe Financial Post reported last week that Gentra, part of the EdperBrascan Corp. group, is looking at creating a real estate investment trust with its retail property
holdings and may spin out its office properties into a new publicly traded company.
ÿBut preferred shareholders -- most of whose dividends have been in arrears since 1993 - say they want their stock redeemed sooner rather than later. And industry
observers said the suspended dividends, while above board, are an embarrassment to the company.
ÿ"These guys are running a hotshot real estate company on the backs of preferred shareholders," said one long-time shareholder who asked not to be named. "It's not
nice.
ÿ"They have enough money; they've got money in the bank ... and they're buying more real estate," said the shareholder, who wants the company lift the freeze on
dividends.
ÿThere are $475 million of preferred shares outstanding, issued in seven series. Gentra suspended dividends on all shares four years ago, leaving most of the
preferred shares to accumulate dividends. At the end of 1996, cumulative dividends in arrears amounted to $79 million, according to Gentra's annual report.
ÿ"Is this another can of worms if they start moving assets around?" one analyst asked. "How will these preferreds and their cumulative dividends be treated in the
event they move the assets around?"
ÿGentra will address the dividend arrears this year, company president James Walker said yesterday. To create a separate public company, Gentra must deal with
most of the preferred shares, he said. Walker said he is not prepared to spell out the company's plan for the preferred shares until after it is presented to Gentra's
board of directors.
ÿTwo of the series, valued together at $93 million, are non-cumulative, which means they are not accumulating dividends. These will be dealt with differently,
Walker said.
ÿ"We are not required to reinstate non-cumulative preferred share dividends," he said, refusing to elaborate.
ÿMany of the preferred shares are holdovers from Royal Trustco Ltd., the predecessor company to Gentra. Gentra was created out of the real estate assets of Royal
Trust after the trust company failed in 1993.
ÿGentra's second-quarter earnings are expected to be released today.
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