FFC and FLC Announce Delay in Payment of September Dividends
September 29 2008 - 9:25PM
Business Wire
The Boards of Directors of Flaherty & Crumrine/Claymore
Preferred Securities Income Fund Incorporated (NYSE: FFC) and
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
(NYSE: FLC) have announced a delay in the payment of the monthly
dividends for the month of September. Under the terms of the Funds�
Articles Supplementary Establishing and Fixing the Rights and
Preferences of the Auction Market Preferred Stock, certain asset
coverage requirements must be met before dividends can be declared
or paid to common stock shareholders. For the reasons set forth
below, these asset coverage requirements have not been met, so the
Funds may not pay the dividends originally scheduled to be paid on
September 30, 2008. At the time the dividends were declared on
September 2, 2008, the Funds had met their asset coverage
requirements. The September dividend will be paid as soon as
practicable after the asset coverage requirements are met, which
cannot be predicted given current market conditions for the
securities in which the Funds invest. The delay in the payments
will be continued until asset coverage can be restored. In order to
meet the asset coverage requirements, the Funds may adjust their
holdings (certain assets receive better asset coverage treatment
than others) and sell assets to raise cash. Proceeds from asset
sales may be invested in higher quality, lower yielding securities
or held in cash, or in some cases used to reduce leverage, to
restore the required level of asset coverage. If market values
decline, additional sales may be needed. If asset values move
higher, the asset coverage will improve and additional asset sales
will not be required. The decline in the Funds� asset coverage has
been the result of declining market values for the Funds� assets,
which consist primarily of preferred securities. The market values
of preferred securities, along with most other fixed income
securities, have been experiencing substantial declines as a result
of the ongoing financial crisis. The uncertainty of a U.S.
government rescue plan has further disrupted the securities markets
and the valuations of the financial companies which are the primary
issuers of preferred securities. The Funds expect to continue to
work towards meeting asset coverage requirements on an ongoing
basis so that the September dividend can be paid and future
dividends may be declared and paid. FFC and FLC were organized in
2003 as closed-end, diversified investment companies. FFC invests
primarily in preferred securities with an investment objective of
high current income consistent with preservation of capital. FLC
invests primarily in preferred and other income-producing
securities with a primary investment objective of high current
income and a secondary objective of capital appreciation. FFC and
FLC are managed by Flaherty & Crumrine Incorporated, an
independent investment adviser which was founded in 1983 to
specialize in the management of portfolios of preferred and related
securities. Website: www.fcclaymore.com
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