Horizons ETFs Management has announced today that it intends to split or consolidate the units of five exchange traded funds (ETFs).
After the close of trading on Friday, 27 May, 2016, on the Toronto Stock Exchange, the units of four ETFs will be consolidated as follows: Horizons BetaPro S&P/TSX Global Gold™ Bear Plus ETF (1:4); Horizons BetaPro NYMEX® Crude Oil Bull Plus ETF (1:2); Horizons BetaPro US 30-year Bond Bear Plus ETF (:2); and Horizons BetaPro US 30-year Bond Bear Plus ETF (1:2). They will begin trading on a post-consolidated basis on Monday, 30 May, 2016, the effective date of the consolidations.
When a unit consolidation occurs, the net asset value per unit is increased by the same ratio as the unit consolidation so that the unit consolidation has no impact on the value of the investor’s total unit position. An investor’s cost per unit is also increased by the same ratio as the unit consolidation, although their total cost remains unchanged.
No fractional units will be issued. Where the consolidation results in a fractional unit, the number of post-consolidation units will be rounded down to the nearest whole unit, in the case of a fractional interest that is less than 0.5, or rounded up to the nearest whole number, in the case of a fractional interest that is 0.5 or greater.
In addition to the consolidations detailed above, the units of Horizons BetaPro S&P/TSX Global Gold Bull Plus ETF will be subdivided on the basis of a 2:1 ratio. The split will be payable on 27 May, 2016, to unitholders of record on Thursday, 26 May, 2016. Units will trade on a “due bill” basis at the opening of the TSX on 24 May, 2016 until 27 May, 2016, inclusive. The units of the ETF will commence trading on a split-adjusted basis on the “ex-dividend” date of Monday, 30 May, 2016. Units of the ETF purchased on the ex-dividend date will no longer have an attached entitlement to the unit split.
When a unit split occurs, the net asset value per unit is decreased by the same ratio as the unit split so that the unit split has no impact on the value of the investor’s total unit position. An investor’s cost per unit is also decreased by the same ratio as the unit consolidation, although their total cost remains unchanged. Unitholders of the ETF on the record date will be entitled to receive one additional unit for every unit of the ETF they own on that date.
The “due bill” trading procedures of the TSX will apply to the ETF’s split of its units. A due bill is an entitlement attached to listed securities undergoing a corporate action, such as the one described above. The units of the ETF will trade on a due bill basis from two trading days prior to the record date until the payment date, inclusive (the “due bill period”). Any trades that are executed on the TSX during the due bill period will be identified to ensure purchasers of the units of the ETF receive the entitlement to the unit split. The due bill redemption date will be 1 June , 2016.
Unitholders of the ETF do not need to take any action. Unitholders will have their brokerage accounts automatically updated to reflect the unit split.
