MONTREAL, Aug. 2, 2013 /CNW Telbec/ - Global Diversified Investment
Grade Income Trust ("Global DIGIT" or the "Trust") announces today
enhanced tendering procedures. These procedures have been established
by its Trustee for this year's annual redemption of Global DIGIT Units
to help Unitholders in deciding whether or not to participate in the
2013 redemption process. This press release summarizes both the special
procedures which have been adopted this year for the benefit of
Unitholders and the existing procedures for an annual redemption. The
Trust also announces that further to Deutsche Bank A.G. Canada Branch
("Deutsche Bank") election to early terminate the Financial Contracts
in September 2014, it is anticipated that the liquidation process of
the Trust will start shortly thereafter.
The highlights of the information contained in this press release are as
Special measures have been established following an agreement with
Deutsche Bank and National Bank of Canada ("National Bank") to provide
the Trust with indicative and firm bids for the unwind of the Financial
Contracts and the Permitted Investments in relation to the 2013 annual
redemption and to maintain those firm bids until August 30, 2013.
The annual redemption date for 2013 is August 30. The payment date for
the redeemed Units is September 16, 2013.
An indicative annual redemption price will be announced by press release
on August 26, 2013 at the close of markets.
The definitive annual redemption price will be announced by press
release on August 29, 2013 before the opening of the markets.
Unitholders will have until 4:00 p.m. EDT on August 30, 2013 to tender their Units or withdraw their Units tendered under the 2013
annual redemption process.
Deutsche Bank has confirmed that it will terminate the Financial
Contracts on September 9, 2014, leaving approximately 13 months to
maturity and the expected redemption price at such date should be
approximately $9.50 per Unit, in the absence of any default in the portfolios up to
September 9, 2014 leading to losses for the Trust. Shortly thereafter,
the Trust will start its liquidation process.
Special Procedures Adopted for the 2013 Annual Redemption Privilege
As further described below, key components in establishing the Unwind
Price are the bids received by Deutsche Bank and National Bank to
unwind the applicable portion of the credit default swap agreements
between Deutsche Bank and the Trust (the "Financial Contracts") and of
the debt securities given as collateral to secure the Trust's
obligations under the Financial Contracts (the "Permitted Investments")
in connection with the annual redemption.
Determination of the Annual Redemption Price. For the 2013's annual redemption, the Trustee has obtained confirmation
from each of Deutsche Bank and National Bank to provide to the Trust
their respective indicative bid on August 26, 2013 and their firm
respective bid in support of the annual redemption privilege, on
August 29, 2013 and maintain such firm bids until the close of business
on August 30, 2013. Ordinarily, the bids are established only following
the completion of the tendering process on the last business day of
August of each year (an "Annual Redemption Date") when all values are
established by Deutsche Bank and National Bank. Because the bids for
this year's annual redemption will be received without the benefit of
all of this information and remained committed while market factors may
change, it is understood that the bid prices may reflect the cost of
the added market risk being borne by Deutsche Bank and National Bank.
The Trustee intends to communicate the indicative annual redemption
price for the 2013 annual redemption by press release on August 26,
2013 at the close of markets and the final annual redemption price by
press release on August 29, 2013 before the opening of the markets.
Such firm bids will be held until the close of business on August 30,
2013. The press releases for each of the indicative annual redemption
price and final annual redemption price bids will be posted on SEDAR at
www.sedar.com and on the web site info.fbn.ca/trusts.
Extended Tendering and Withdrawal Times. For the 2013 annual redemption privilege, the Trustee will enable
Unitholders to tender their Units for redemption up to 4:00 p.m. EDT on August 30, 2013 (the "Tendering/Withdrawal
Deadline"). In addition, the Trustee will permit Unitholders who have previously
tendered their Units for redemption to withdraw their Units up to the
Existing Annual Redemption Procedure
Under the existing annual redemption process, Unitholders must
irrevocably surrender Units for redemption without prior knowledge of
the price at which they will be redeemed. More specifically, Units of
the Trust must be surrendered for an annual redemption by Unitholders
at any time prior to 4:00 p.m. on the 20th business day immediately preceding the Annual Redemption Date, while the
redemption price is only established as of the Annual Redemption Date.
For 2013, the Annual Redemption Date is August 30, 2013. Apart from the special procedures, the final date to tender Units for
redemption would have been August 2, 2013.
Annual Redemption Price
The redemption price per Unit tendered is equal to the annual redemption
price, being a price equal to the Unwind Price per Unit as of the
Annual Redemption Date.
The Unwind Price is equal to the sum of (i) the bid price received by
the Trust from Deutsche Bank to terminate the applicable portion of the
Financial Contracts and (ii) the market value of such portion of the
Permitted Investments as determined by National Bank, less the unwind
costs. The unwind costs are equal to the sum of all applicable costs
and expenses of Deutsche Bank including applicable hedge termination
costs incurred to unwind a portion of the Financial Contracts
(including hedge termination costs), any unamortized issuance costs and
the pro rata share amongst the Unitholders who have surrendered their
Units for redemption of any current or future operating costs of the
Trust which would dilute the value of the remaining Units as a result
of the redemption of Units, up to the liquidation of the Trust
(calculated on a present value basis).
Any unpaid monthly distribution which might be payable to holders of
Units of record on a record date which falls on or before an Annual
Redemption Date, on which Units are redeemed (or would be redeemed but
for the Trust's election to recirculate such Units) will be paid on the
Units tendered for redemption.
The tender/withdrawal procedure remains unchanged.
A Unitholder who wishes to tender Units for redemption must cause a
broker, dealer, bank or other financial institution participating (a
"CDS Participant") in the book-entry system maintained by CDS Clearing
and Depository Services Inc. ("CDS") to deliver to CDS (at its office
in the City of Montreal, Québec or Toronto, Ontario) on behalf of the
Unitholder a written redemption notice no later than the
Tendering/Withdrawal Deadline. A Unitholder who wishes to have Units
redeemed should ensure that the CDS Participant is provided with
instructions sufficiently in advance of the Tendering/Withdrawal
Deadline to permit the CDS Participant to deliver a notice to CDS by
the Tendering/Withdrawal Deadline. Similarly, a Unitholder who has
tendered Units for redemption but wishes to withdraw such tendered
Units should ensure that a CDS Participant is notified of the
Unitholder's intention sufficiently before the Tendering/Withdrawal
Deadline in order for that CDS Participant to notify CDS before the
Tendering/Withdrawal Deadline. Any Unitholder who does not cause a CDS Participant to tender it's Units
before the Tendering/Withdrawal Deadline will not be able to have such
Units redeemed as part of the 2013 annual redemption process, and any
Unitholder who has submitted Units for redemption in connection with
the 2013 annual redemption process but elects to withdraw them
subsequently must take the necessary steps prior to the
Tendering/Withdrawal Deadline or such Units will be redeemed at the
annual redemption price.
To initiate the tender or withdrawal procedure, Unitholders should
contact their investment advisor.
The time period between the announcement of the annual redemption price
for the 2013 annual redemption and the deadline to tender Units, or, as
the case may be, withdraw Units previously tendered for redemption, is
very short. As a result, Unitholders are encouraged to consult with
their investment advisor in advance of the announcement of the 2013
indicative annual redemption price and to consider the press releases
announcing the indicative annual redemption price and the definitive
2013 annual redemption price.
The boards of directors of the Trustee makes no recommendation regarding
whether any Unitholder should continue to hold their Units, sell their
Units in the market, or tender their Units for redemption under the
annual redemption. These are determinations that Unitholders should
make in consultation with their own financial and tax advisors.
Early Termination of the Financial Contracts
The Financial Contracts had a scheduled termination date of September 9,
2014 but Deutsche Bank had an option to extend such contracts on a
quarterly basis for a period up to September 9, 2016. As earlier
disclosed, Deutsche Bank confirmed that it will not exercise its
privilege to extend the Financial Contracts. In the absence of any
default in the portfolios leading to losses for the Trust up to
September 9, 2014, it is expected that the redemption price of the
Units at the maturity should be approximately $ 9.50 per Unit.
About Global DIGIT
Global DIGIT provides an economic interest in a mezzanine tranche of
credit default swap agreements in respect of portfolios of synthetic
corporate exposures, mortgage-backed securities, asset-backed
securities and structured finance securities.
SOURCE: Global Diversified Investment Grade Income Trust
For further information:
Louis Arteau : (514) 394-7563