Redwood Asset offers to swap out Canadian fund preferreds for units

By Susanna Moon

Chicago, Aug. 24 – Redwood Asset Management Inc. said it is holding an exchange offer for the Redwood Canadian Preferred Share Fund.

Investors may tender their preferreds until Sept. 15 in exchange for units of the fund.

The offering closes on Sept. 22 and is the first of its kind in Canada, according to a company announcement.

The number of ETF units that may be purchased in-kind by tendering preferreds will be determined by dividing the weighted average trading price of the security during the period of five consecutive trading days ending Sept. 15 by the net asset value of the fund on the last day of the pricing period.

The exchange ratio for any securities that do not trade in Canadian dollars will be determined by converting the weighted average trading price on the exchange of the securities into Canadian dollars based on the 4 p.m. rate of exchange on the last day of the pricing period.

Holders who deposited securities under the exchange option will continue to be holders of record up to but excluding the closing date of the offering.

The fund will not issue fractional units under the exchange option.

“With the recent appreciation in preferred shares, we believe that exchanging select preferred shares and ETFs for units in our actively managed ETF provides investors with the ability to continue to participate in the space while protecting recent gains,” Peter Shippen, president and chief executive officer of Redwood Asset Management, said in the company press release.

“This ETF exchange offering will allow investors who have participated in the preferred share market to exchange their individual securities for a diversified, actively managed basket of preferred shares that we believe hold superior risk/reward opportunities.”

The investment objective of the fund is to provide a consistent stream of income with potential for capital appreciation by investing in Canadian income producing securities and Canadian equities.

Redwood is a Toronto-based investment fund manager.

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