TORONTO, Dec. 1, 2014 /CNW/ - Marret Resource Corp. (MAR.TO) ("the "Company") announces that it 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%.
The Company has no debt and approximately $85 million in assets, comprised of approximately 83.7% in publically traded, high yield bonds, 17% in publically traded equities, 5% in short exposure to publically traded equities, 10.4% in the bonds of a private issuer, Cline Mining Inc. ("Cline"), and 1.6% in cash. Approximately 44.3% of the portfolio is exposed to the Energy sector, of which 43.3% is through fixed income investments and 1% 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% based on the NAV per share of $4.8053 and closing price of $3.35 on the TSX on November 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 has 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.
About Marret Resource Corp.
Marret Resource Corp. is focused on natural resource lending. The Company's business is primarily directed to investing in public and private debt securities of and making term loans (including bridge and mezzanine debt) to issuers in a broad range of natural resource sectors, including energy, base and precious metals and other commodities, and issuers involved in exploration and development, and may also include financing other resource-related businesses and investing in public and private equity and quasi-equity securities. The Company seeks to generate income mainly from its lending activities, while taking advantage of additional upside through equity participation in the companies which it finances. Marret Asset Management Inc. is the Company's investment manager and is responsible for implementing Marret Resource Corp.'s investment strategy and managing its investment portfolio.
About Marret Asset Management Inc.
Marret Asset Management Inc. is the manager of the Company. Marret Asset Management and its experienced team of investment professionals led by Barry Allan specialize exclusively in fixed income and, particularly, in high yield debt strategies. Barry Allan, the President and Chief Investment Officer, founded Marret Asset Management in 2000, following a career at Altamira, Nesbitt Thomson and a Canadian chartered bank. Mr. Allan has over 30 years of experience in credit and fixed income markets.