TORONTO, August 22, 2013 - First Asset U.S. & Canada LifeCo Income Fund (the "Fund") announces the closing of its initial public offering. Pursuant to the offering, the Fund issued 13.5 million units (the "Units") at a price of $10 per Unit, for gross proceeds of $135 million. The Units are listed on the Toronto Stock Exchange under the symbol ULC.UN. The Fund has granted the agents of the offering an over-allotment option to acquire up to 2,025,000 Units at a price of $10 per Unit exercisable at any time during the next thirty days.
The Fund's investment objectives are to provide holders of Units with:
- quarterly cash distributions;
- the opportunity for capital appreciation; and
- lower overall volatility of Portfolio (as defined below) returns than would be experienced by holding a portfolio of common equity securities of LifeCo Companies (as defined below) directly.
The Fund will invest in a portfolio (the "Portfolio") of publicly-traded common equity securities (the "Portfolio Securities") of the ten largest U.S. and Canadian life insurance companies by market capitalization (each a "LifeCo Company", and collectively, the "LifeCo Companies"). The Portfolio will be constituted on an approximately equal weight basis and thereafter will be rebalanced annually or in connection with corporate events. Initially, the Portfolio is expected to include common equity securities of: MetLife Inc., Prudential Financial, Inc., Manulife Financial Corp., AFLAC Inc., Great-West Lifeco Inc., Sun Life Financial Inc., Principal Financial Group Inc., Lincoln National Corporation, Unum Group and Torchmark Corporation. First Asset Investment Management Inc. (the "Manager" or "First Asset") intends to sell call options each month on up to 25% of the Portfolio Securities of each LifeCo Company held in the Portfolio.
The Fund will not have a fixed distribution, but intends to set periodic distribution targets. Based on the Manager's current estimates, the initial distribution target for the Fund is $0.1625 per Unit per quarter ($0.65 per Unit per annum to yield 6.5% on the subscription price of $10 per Unit).
The Fund will automatically convert into an exchange-traded fund after March 31, 2014 if, for a period of 10 consecutive trading days, the daily weighted average trading price (or, in the event there has been no trading on a particular day, the average of the closing bid and ask prices) of the Units is at a discount greater than 2% of the net asset value per Unit for that day and, in any event, no later than March 31, 2015, subject to applicable regulatory approvals.
The syndicate of agents for this offering was led by CIBC, co-led by National Bank Financial Inc. and RBC Capital Markets, and included TD Securities Inc., BMO Capital Markets, Scotiabank, Canaccord Genuity Corp., Raymond James Ltd., Desjardins Securities Inc., Macquarie Private Wealth Inc., GMP Securities L.P., Manulife Securities Incorporated and Rothenberg Capital Management Inc.
For further information, please call Rob MacNiven, Investor Relations, First Asset at 416-642-1289 or 1-877-642-1289 or visit www.firstasset.com.
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