What are Corts? They are not preferred stock or trust preferred securities, but they are comparable.
They are $25 face value, exchange-listed instruments that pay interest at a fixed rate.
The Corts (corporate-backed trust securities) are issued by a trust containing J.C. Penney bonds.
The trust was by underwriters, in this case Salomon Smith Barney, with PaineWebber as co-manager.
The underwriters bought a $100,000,000 block of J.C. Penney bonds with a 7 5/8% coupon
maturing in 2097 in the secondary market (the bonds were issued in 1997) and put them in a trust.
Then the trust issued 4,000,000 shares at $25 apiece.
It's essentially a re-denomination of the bonds to give them a face value of $25 instead of $1,000.
This type of security is sometimes called a pass-through.
The payments on the bonds pass directly through the trust to the investor.
Each shareholder collects his or her portion of the income payments on the bonds semiannually.