Terms

Series

7.250% Series A Preferred Shares

Liquidation Preference

$25.00

Coupon Rate

7.25%

Rate Type

Fixed

Annual Dividend

$1.81

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

July 30, 2022

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness Of The Trust, Any Future Senior Equity Securities Of The Trust, Allocation Interests (To The Extent Provided In Llc Agreement); Pari Passu With: Any Future Parity Preferred Shares; Senior To: Common Shares, Junior Shares

Regulatory (Basel III) Call

No

Tax Classification

Mlp K1

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

4,000,000

Prospectus Summary

Compass Diversified Holdings (CODI), a Delaware statutory trust that owns and manages small- and middle-market operating businesses, is issuing 4,000,000 shares of its 7.250% Series A Preferred Shares at a liquidation preference of $25.00 per share, callable at par on or after July 30, 2022. The shares pay a fixed annual distribution of 7.25% ($1.8125 per share), payable quarterly on January 30, April 30, July 30, and October 30, beginning October 30, 2017. Distributions are non-cumulative, meaning if the board does not declare a distribution for any quarter, that payment is permanently lost and holders have no claim to it in future periods. The Series A Preferred Shares rank senior to CODI's common shares and any future junior equity, and on parity with any future preferred shares of equal ranking. They rank junior to all of the trust's existing and future indebtedness and to any future senior equity securities. Because the trust's sole asset is its interest in the operating LLC (Compass Group Diversified Holdings LLC), which in turn holds leveraged, controlling interests in operating subsidiaries, holders are structurally subordinated to all subsidiary-level debt — distributions to preferred holders depend entirely on cash flowing up from businesses that carry their own credit obligations. There is no regulatory capital call provision, as this issuer is a statutory trust rather than a bank. At the $25.00 offering price, the effective yield is 7.25%. Unusually, distributions do not qualify for the preferential 15%/20% qualified dividend income (QDI) rate or the corporate dividends-received deduction (DRD): the trust is treated as a partnership for U.S. federal income tax purposes, issues Schedule K-1s, and income is expected to be largely interest income — taxed as ordinary income. Dividend stopper mechanics prohibit the trust from paying distributions on common or junior shares in any quarter in which Series A distributions were not declared and paid, giving preferred holders a modest protective mechanism, though unpaid non-cumulative distributions cannot be recovered.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If distributions on the Series A Preferred Shares have not been declared and paid (or set apart) for a quarterly period, the trust is blocked from declaring or paying distributions on its common shares or any junior shares, and from repurchasing common or junior shares, for the remainder of that period.

Other Preferreds from Compass Diversified Holdings

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 40 (Weak)