Wall Street North: Listing in Toronto Piques U.S. Interest
O Canada!
Some small, slow-growth U.S. companies are trekking to Toronto to raise money in the public markets. That these companies are crossing the border rather than listing on a U.S. exchange says something about Canadian investors' hunger for income-oriented stocks. It also says something about a particular breed of stock listing common to the Great White North that makes it attractive for such companies to list there.
In the past 12 months, four U.S. businesses launched initial public offerings on the Toronto Stock Exchange as so-called income-participating securities. These securities operate much like real-estate investment trusts or master limited partnerships in the U.S. in that they are designed to pay owners a substantial yield by distributing as a monthly dividend a large portion of the cash flow generated by the business. Unlike the Canadian income trusts on which they are modeled, these securities aren't trusts, but just ordinary business with a unique capital structure.
While American investors have been slow to accept similar offerings issued domestically, Canadian investors are snapping up the shares and, in the process, pocketing annual yields of 10% or more. As such, many smaller U.S. companies in modest-growth industries figure they will find a better following outside their home market.
Today, for example, FMF Capital Group Ltd., a Southfield, Mich., mortgage lender, is slated to go public in Toronto at 10 Canadian dollars (US$8.28) a share with an initial yield of 11%. Last month Keystone North America Inc., a Tampa, Fla., operator of funeral homes, listed in Toronto. In December, Student Transportation of America Ltd., based in Wall, N.J., did the same. Both companies' shares yielded 10% or more, based on their initial price.
"We'd be on the smaller end of [the IPO] market in the U.S.," says Howard Morof , chief financial officer at FMF Capital, which expects to raise about C$220 million, or roughly US$180 million, through its offering. "We get greater attention in the Canadian market than in the U.S."
In the U.S., a high yield, particularly above 10%, is often a warning sign. The thinking: Because a stock's yield is simply its annual dividend payment divided by its share price, a high yield often signals a depressed stock, which, in turn, indicates a company that has hit rough times.
In Canada, however, high yields are commonplace among the country's so-called income trusts. "We don't have the high-yield bond market that the U.S. has, so income trusts" serve that role, says Simon Romano, a partner at Toronto law firm Stikeman Elliott.
What sets the income-oriented shares apart -- and what makes them rare in the U.S. -- is that they include one part stock and one part high-yield subordinated debt, or debt that is second in line to any senior bank loans a company might have. They are what traders might call a "paper-clipped" security: Essentially, with each monthly distribution, investors receive dividend income as well as interest income.
That structure hasn't gelled with investors in the U.S. At one point last summer, investment banks had filed at least 21 deals in which American companies planned to list on U.S. exchanges as income-deposit securities, or IDS shares, but after extra scrutiny of the structure from regulators, "deal fatigue set in and reduced the appetite for going through the process," says Tim Johnston, a managing director at RBC Capital Market Corp., a unit of Toronto's Royal Bank of Canada.
In the end, only five IDS issues have made it to market in the U.S., and they generally haven't fared well. Take, for instance, Centerplate Inc., the concessionaire at Yankee Stadium and other sporting venues. Then known as Volume Services America Holdings Inc., the company, based in Spartanburg, S.C., was the first to list in the U.S. as an IDS. The shares were priced at $15 in the December 2003 initial offering. Today, the stock trades at $12.70.
Facing such lukewarm reception at home, underwriters are turning to Canada, where institutional and retail investors are receptive.
Medical Facilities Corp., which owns controlling interests in three specialty surgical hospitals in South Dakota, is up 30% since listing in Toronto last March as the first U.S. company to offer income-participating securities north of the border. Two are up between 5% and 21% since listing; the fourth is flat.
In all, Canada is home to about 178 income and royalty trusts. Annual yields generally range from 7% to 14%, though some are much higher.
And while Americans have rebuffed IDS shares at home, they are snapping up the handful of Canadian trusts that trade on U.S. exchanges. "People are so hungry for yield in the U.S. that when word gets out about these things, investors jump on them like mad," says Neil McCarthy, a financial planner in Roswell, Ga. He has been buying U.S.-traded Canadian trusts for himself and his clients.
到多伦多上市去！
美国一些增长缓慢的小公司正在舍近求远到多伦多的股市去筹集资金。这些企业放弃美国证交所而选择加拿大，说明加拿大投资者对收益型股票充满热情。这还说明在加拿大常见的这种特殊股票已经对同类公司产生了吸引力。
在过去1年中，有4家美国企业作为“收益参与型证券”在多伦多证交所进行了首次公开募股。这类证券更像是美国的房地产投资信托公司或业主有限合伙企业，将业务产生的大部分现金流都以月度派息的方式返还给持有人，具有较高的收益率。同加拿大收益信托公司的模式不同，这些证券并不是信托公司，而是具有独特资本结构的普通企业发行的。
尽管美国投资者对在国内发行此类证券一时难以接受，但加拿大投资者却踊跃买进，并在此过程中获得10%，甚至更高的年收益率。因此，处于温和增长行业中的许多美国小公司认为在国外市场可能找到更好的归宿。
比如，密歇根州的抵押贷款机构FMF Capital Group Ltd.周四就将在多伦多证交所上市，发行价每股10加元（合8.28美元），初始收益率为11%。上个月，美国殡仪馆运营商Keystone North America Inc.在多伦多上市。去年12月，Student Transportation of America Ltd.也在多伦多上市。按照最初的价格计算，这两家公司股票的收益率都不低于10%。
FMF Capital的首席财务长霍华德?莫罗夫(Howard Morof)称：“如果在美国，我们就是IPO市场的丑小鸭，而在加拿大市场，我们比在美国市场受到了更多的关注。”该公司预计将通过首次公开募股筹集大约2.20亿加元，约合1.80亿美元。
在美国，高收益率，尤其是在10%以上的高收益率一般都是应加以警惕的迹象。理由是：由于股票的收益率等于年度股息除以股价，因此高收益率通常是股价表现低迷的信号，也表明这家公司的境况不佳。
但在加拿大，高收益率在所谓的收益信托类股中并不罕见。多伦多律师事务所Stikeman Elliott的合伙人西蒙?罗马诺(Simon Romano)说：“加拿大并没有美国那样的高收益债券市场，因此收益信托股票起到了这一作用。”
收益型股票与众不同以及它在美国并不多见的原因是它们包含一部分股票，还包含一部分高收益后偿债券。这类股票一般每个月都派息，投资者可以获得股息收入及利息收入。
这种结构还无法得到美国投资者的认可。去年夏天，美国投资银行共提交了至少21起美国公司计划在美国证交所发行收益存款证券的申请，但经过监管当局对这类证券的结构进行特别审议后，“（投资银行）出现了交易疲劳，降低了继续推进审批过程的兴趣。”RBC Capital Market Corp.的董事总经理蒂姆?约翰斯顿(Tim Johnston)表示。RBC是加拿大皇家银行(Royal Bank of Canada)的子公司。
最终，只有5家收益存款证券在美国上市，表现也不尽人意。以 Centerplate Inc.为例，当时名为Volume Services America Holdings Inc.的这家公司是在美国率先发行收益存款证券的公司。2003年12月首次公开募股时的价格为15美元，目前，该股报价为12.70美元。
国内的冷淡局面促使承销商转向加拿大，那里的机构投资者和散户更愿意接受这类股票。
拥有3家专科医院控股权的Medical Facilities Corp.自去年3月份在加拿大上市以来，已经上涨了30%，这是首只在加拿大上市的美国收益型证券。后两只上市的股票涨幅在5%-21%之间，第四只持平。
总体上，加拿大共有大约178只收益和权益信托证券。年收益率一般在7%-14%之间，有些甚至更高。
尽管美国人排斥国内的收益存款证券，但他们却买进了大量在美国证交所交易的加拿大信托证券。乔治亚州金融规划师内尔?麦卡锡(Neil McCarthy)说，在美国人们对收益率非常渴望，一旦有所耳闻就会疯狂买进。他一直在为自己和客户买进在美国交易的加拿大信托类证券。
