Now at $3.01 with $4.80 net asset value Trading at $1.75 discount to NAV with mandate to eliminate discount.
2014-12-01 12:31 ET - News Release
MARRET RESOURCE CORP. SUSPENDS DIVIDEND; PROVIDES UPDATE
Marret Resource Corp. will be suspending its monthly dividend payments on its common shares until further notice. The suspension is the result of the material deterioration in commodity prices and related securities in the last few months, particularly in the energy and metals sectors. The suspension of the dividend is not related to the income generation of the company's portfolio but is technical in nature, as the company currently cannot satisfy the corporate law requirements applicable to the continued payment of dividends. The portfolio currently yields 6.7 per cent.
The company has no debt and approximately $85-million in assets, comprising approximately 83.7 per cent in publicly traded, high-yield bonds, 17 per cent in publicly traded equities, 5 per cent in short exposure to publicly traded equities, 10.4 per cent in the bonds of a private issuer, Cline Mining Inc., and 1.6 per cent in cash. Approximately 44.3 per cent of the portfolio is exposed to the energy sector, of which 43.3 per cent is through fixed-income investments and 1 per cent through equity investments.
The company intends to reinstate a monthly dividend and make a special distribution as soon as the company is able to pay a dividend under applicable corporate law.
Corporate update
The company's portfolio has been affected by the overall weakness in commodity markets and related securities. The common shares of the company continue to trade at a significant discount to net asset value. The common shares traded at a discount of 30.3 per cent based on the NAV per share of $4.8053 and closing price of $3.35 on the Toronto Stock Exchange on Nov. 27, 2014. The company believes that part of the discount reflects uncertainty surrounding Cline. The continuing decline in the price of coal and other coal properties available for sale, and competing with Cline for potential buyers, have made it difficult to dispose of Cline's coal mine at a favourable price and in a timely manner. Cline has sufficient liquidity to continue for at least two more years, and Cline is looking at various avenues, including surplus equipment sales, to extend this period.
The company is committed to dealing with the significant trading price discount to net asset value of the common shares and providing liquidity to shareholders, and is continuing to consider alternatives available to it. The board of directors anticipates that it will make a proposal on these and other matters in the near term.
No decision on any particular alternative has been reached at this time and there can be no assurance that the board of directors will determine to pursue any alternative. The company will announce any action it decides to pursue in a timely manner.