By KATHERINE MACKLEM
Real Estate Reporter The Financial Post
ÿThree days after effective control of Gentra Inc. was swapped from one EdperBrascan Corp. company to another, Gentra announced Friday it is cleaning house,
including paying dividends that have been in arrears since March 1993.
ÿCarrying out a promise made in April to deal with dividend arrears, the Toronto-based real estate company said it will spend $232 million to straighten out its
capital structure. That will clear the way for reinstating dividends on preferred and common shares.
ÿFor the time being, the company intends to make dividend payments only on its preferreds, said chief financial officer Janice Topp.
ÿIndustry observers applauded the news. They said the suspended dividends, while above board, are an embarrassment to Gentra.
ÿOn Tuesday, Brookfield Properties Corp. acquired an essentially controlling 43% share of Gentra from Trilon Financial Corp.
ÿ"They had to do it," said Bob Weir, senior vice-president of Dominion Bond Rating Service Ltd., describing Gentra's latest move. "Cleaning up the balance sheet
facilitates their growth opportunities under Brookfield.
ÿ"It will make it easier for them to operate," he said.
ÿ"We have examined many alternatives to address our arrear dividends and concluded that the fair result to Gentra cumulative preferred shareholders is to pay
dividends in full at this time," said James Walker, Gentra's president and chief executive.
ÿ"Upon completion of these initiatives, the company can ... pursue its real estate investment activities in Canada."
ÿThere are $475 million of preferred shares outstanding, issued in seven series. The company stopped paying dividends on all shares four years ago, leaving most
of the preferreds to accumulate dividends.
ÿTwo of the series, valued at $93 million, are non-cumulative, which means they are not accumulating dividends. These shares will be redeemed in exchange for
Gentra common shares.
ÿ"We've got a victory," said one long-time holder of Gentra preferreds, who asked not to be named. "Things are unfolding as they should. My only complaint is
that it should have happened a year ago."
ÿTrilon held onto its preferred shares in Gentra "for investment purposes" when it sold its interest to Brookfield.
ÿTrilon holds about half of Gentra's outstanding preferreds.
ÿIncluded in Friday's plan is a $145-million repayment of junior subordinated debentures issued in 1993. A covenant attached to them said dividends could not be
paid until this debt was covered. So redeeming these debentures also allows Gentra to reinstate dividends.
ÿSome of the preferreds are hold-overs from Royal Trustco Ltd. Gentra was created from the real estate assets of Royal Trust after the trust company failed in
1993.
ÿGentra shares (GTA/TSE) closed down 10› Friday at $3.35.
ÿ
Truble is that when Royal Trustco folded, big guys got the prefered shares and small guys like myself got ordinary shares at a fraction of there value. Should'nt some one look into this? |
