Sprott Physical Platinum and Palladium Trust gives exchange-traded convenience

By Toni Weeks

San Diego, Jan. 13 - The Sprott Physical Platinum and Palladium Trust announced its initial offering of units in an F-1 filing with the Securities and Exchange Commission.

Morgan Stanley & Co. LLC and RBC Capital Markets Corp. will act as co-lead underwriters for the offering in the United States. RBC Dominion Securities Inc. and Morgan Stanley Canada Ltd. will act in the same capacity in Canada.

The trust was created to invest and hold substantially all of its assets in physical platinum and palladium bullion. The trust seeks to provide a convenient, exchange-traded investment alternative for investors interested in holding physical platinum and palladium without the inconvenience of a direct investment in the metals. The physical metals will be stored with the Royal Canadian Mint.

The trust will invest primarily in long-term holdings of unencumbered, fully allocated physical platinum and palladium bullion. The filing noted that the trust will not speculate with regard to short-term changes in platinum or palladium prices and will not invest in platinum or palladium certificates, futures or other financial instruments that represent or may be exchanged for the two metals.

The trust intends to list the units on the NYSE Arca and the Toronto Stock Exchange under the symbols "SPPP" and "PPT.U," respectively.

The initial offering is for 11.5 million transferrable and redeemable units, which includes 1.5 million units for an over-allotment option. The units are priced at $10 each for total proceeds of $115 million.

Unitholders will have the ability to redeem their units for physical platinum and palladium bullion on a monthly basis, subject to a minimum redemption amount of 25,000 units, at a redemption price equal to 100% of the net asset value per unit, less redemption and delivery expenses.

A monthly management fee equal to 1/12 of 0.5% of the value of net assets of the trust will be paid to the manager. The trust will absorb all other costs and expenses; aggregate annual operating expenses are estimated to be about $760,000.

The trust's manager and sponsor is Toronto-based Sprott Asset Management LP.

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