Manulife Financial Corporation News
John Hancock Announces Refinancing and Redemption of All Outstanding Preferred Shares of Five Closed-End Funds
The Board of Trustees of John Hancock Funds approved a plan whereby a third party commercial bank has agreed to provide a credit facility that will enable a refinancing of five leveraged John Hancock closed-end funds. Documents related to the financing were finalized today.
"At this time, we believe this is an effective and timely solution to the unprecedented illiquidity that has developed in the auction security market," said
The facility will be used to redeem and replace 100 percent of the outstanding Auction Rate Preferred Securities (ARPS) of the five taxable equity funds, and to change the form of leverage from ARPS to debt. The five John Hancock closed-end funds affected by the announcement are: Tax- Advantaged Dividend Income (HTD), Preferred Income (HPI), Preferred Income II (HPF), Preferred Income III (HPS), and Patriot Premium Dividend II (PDT).
John Hancock Funds is evaluating alternatives to complete the refinancing of the remaining two leveraged closed-end funds: Investors Trust (JHI) and Income Securities Trust (JHS). These two closed-end bond funds have approximately
"Today's announcement is the culmination of an effort that has consumed countless hours of the day, nights and weekends for dozens of people, including the highest levels of management, both at John Hancock and our parent company, Manulife Financial Corporation," said
"This solution was made possible because of the fact that our closed-end funds are only moderately leveraged and have asset coverage ratios close to the statutory requirement for debt financing. Although the funds will need to be modestly de-leveraged, the current interest rate expense of the secured facility represents a savings over the cost of the ARPS, and has the potential of benefiting the common shareholders through a moderate increase in net income. In addition, through the refinancing process the ARPS shareholders will gain the liquidity they desire," Mr. Hartstein said.
"Since the industry-wide auction failures began
Implementation
Redemptions of the ARPS for HTD, HPI, HPF and HPS will be on a fund by fund and tranche by tranche basis. It is anticipated that redemptions will begin in May and will be completed in June. It is anticipated that PDT fund redemptions of the ARPS will begin in early June and will be completed in July.
Further details on the redemption schedules will be provided in press releases, and will be posted on the John Hancock Funds web site, www.jhfunds.com.
About John Hancock Funds
The
John Hancock Financial Services is a unit of Manulife Financial Corporation, a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in
FORWARD LOOKING STATEMENTS
Certain statements made in this release are forward-looking statements. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements due to numerous factors. These include, but are not limited to: changes in securities or financial markets or general economic conditions, including changes in interest rates for borrowings, and other risks discussed from time to time in the fund's filings with the Securities and Exchange Commission. John
SOURCE John Hancock Funds
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