Archive for the ‘Return of Capital’ Category

New Issue: EIT Retractible, ROC, 4.80%, 7-Year

Wednesday, March 8th, 2017

Canoe EIT Income Fund has announced:

that it has filed and obtained a receipt for a final short form prospectus in respect of the previously announced offering of Cumulative Redeemable Series 1 Preferred Units (the “Series 1 Preferred Units”) at a price of $25.00 per Series 1 Preferred Unit (the “Offering”). The Series 1 Preferred Units were offered to the public through a syndicate of underwriters led by Scotiabank and RBC Capital Markets which also includes BMO Capital Markets, CIBC Capital Markets, National Bank Financial Inc., TD Securities Inc., Canaccord Genuity Corp., Industrial Alliance Securities Inc. and Manulife Securities Incorporated.

The Fund will issue and sell to the underwriters 4,900,000 Series 1 Preferred Units at a price of $25.00 per Series 1 Preferred Unit for total gross proceeds of the Offering of $122,500,000. The Fund has also granted the underwriters an option, exercisable at the offering price for a period of 30 days from the closing of the Offering, to purchase up to an additional 735,000 Series 1 Preferred Units to cover over-allotments, if any. The quarterly cumulative preferential cash distributions on the Series 1 Preferred Units will be 4.80% per annum. The Toronto Stock Exchange has conditionally approved the listing of the Series 1 Preferred Units under the symbol EIT.PR.A. The closing of the Offering is expected to occur on or about March 14, 2017.

The proceeds from the Offering will be invested by the Fund in accordance with its investment objectives and strategies. The Offering is expected to ensure the sustainability of the Fund by increasing the earning capacity of the units. The Series 1 Preferred Units are provisionally rated Pfd – 2 (high) by Dominion Bond Rating Service Limited.

Full details are available in the prospectus, to which I am not permitted to link because Canadian Securities Administrators take the view that you are all stupid, filthy, ignorant investor scum and do not deserve the slightest consideration whatsoever. You will have to go to SEDAR and look for “Canoe EIT Income Fund Mar 8 2017 14:21:01 ET Final short form prospectus – English PDF 266 K”.

On and after March 15, 2022, the Fund may redeem all or from time to time any part of the outstanding Series 1 Preferred Units, at the Fund’s option, at a price per Series 1 Preferred Unit equal to $25.75 if redeemed on or after March 15, 2022, but before March 15, 2023; $25.50 if redeemed on or after March 15, 2023, but before March 15, 2024; and $25.00 thereafter, together, in each case, with all accrued and unpaid distributions up to but excluding the date fixed for redemption. On or after March 15, 2024, the Series 1 Preferred Units will be retractable for cash, at the option of the holder, for $25.00 per Series 1 Preferred Unit, together with any accrued and unpaid distribution in respect of such Series 1 Preferred Units, less any tax required by law to be deducted therefrom, by notice by the holder of the Series 1 Preferred Units (“Series 1 Preferred Unitholders”) to be retracted delivered to the Manager not less than 30 days prior to the applicable retraction date. Certain other provisions relating to the Series 1 Preferred Units are summarized under “Description of the Preferred Units”

The distributions are not expected be entirely eligible dividends:

Distributions in any given period may consist of net income, net capital gains and/or returns of capital. The Fund’s income and net taxable gains for the purposes of the Tax Act will be allocated to the holders of Units and Series 1 Preferred Units in the same proportion as the distributions received by such holders. See “Principal Canadian Federal Income Tax Considerations”.

The recent historical composition of the fund’s distributions is provided in the prospectus and was reproduced in the previous post regarding this issue. I am taking the view that expected distributions will ultimately be taxed at a rate reasonably close to eligible dividends, so for analytical purposes I have recorded the issue as paying dividends.

New Issue: EIT Retractible, ROC, Details to Follow

Wednesday, February 22nd, 2017

Canoe EIT Income Fund has announced:

that it has filed and obtained a receipt for a preliminary short form prospectus in respect of a potential offering of Cumulative Redeemable Series 1 Preferred Units (the “Series 1 Preferred Units”) at a price of $25.00 per Series 1 Preferred Unit (the “Offering”). The Series 1 Preferred Units will be offered to the public through a syndicate of underwriters led by Scotiabank and RBC Capital Markets which also includes BMO Capital Markets, CIBC Capital Markets, National Bank Financial Inc., TD Securities Inc., Canaccord Genuity Corp., Industrial Alliance Securities Inc. and Manulife Securities Incorporated. Canoe Financial LP, the manager of the Fund, believes that successful completion of the Offering will provide the Fund with longer-term fixed rate capital at an attractive all in cost of financing. The additional capital will be used to take advantage of attractive investment opportunities, and is also expected to ensure the sustainability of the Fund by increasing the earning capacity of the Units. The Series 1 Preferred Units are provisionally rated Pfd – 2 (high) by Dominion Bond Rating Service Limited.

The Fund’s regular monthly distribution of $0.10 per unit for unitholders of EIT.UN units remains unchanged. The Fund has maintained the $0.10 per unit monthly distribution since August 2009, through varying market conditions.

The Fund’s annual voluntary redemption feature for unitholders of EIT.UN units remains unchanged. Once a date has been set for the 2017 annual redemption, the Fund will issue a news release with the details.

A preliminary short form prospectus containing important information relating to the Series 1 Preferred Units has been filed with securities commissions or similar authorities in all provinces and territories of Canada. The preliminary short form prospectus is still subject to completion or amendment. Copies of the preliminary short form prospectus may be obtained from your registered financial advisor using the contact information for such advisor, or from representatives of the underwriters listed above. There will not be any sale or any acceptance of an offer to buy the Series 1 Preferred Units until a receipt for the final short form prospectus has been issued.

The preliminary prospectus is on SEDAR, but Canadian Regulatory Authorities have determined in their infinite wisdom that nasty investor scum may not link directly to it. Instead, one must search for “Canoe EIT Income Fund Feb 17 2017 16:18:30 ET Preliminary short form prospectus – English PDF 335 K”

The investment objectives of the Fund are to maximize monthly distributions relative to risk and maximize Net Asset Value, while maintaining and expanding a diversified investment portfolio, primarily through acquiring, investing, holding, transferring, disposing of or otherwise dealing with or in equity and debt securities of corporations, partnerships, or other issuers and such other investments as the Manager may determine in its sole discretion from time to time. The investment objectives set forth above may be achieved through direct acquisitions, investments or, at the election of the Manager, through “exchange offers” or rights offerings completed by the Fund from time to time.

Set out below are the tax classifications of the historical distributions of the Fund (which were $0.10 per Unit per month for the entire period presented) for the past five years and the Manager expects the Series 1 Preferred Units to have a similar distribution breakdown:
% 2015 2014 2013 2012 2011
Capital gain 60.92% 59.89% 32.73% 32.82%
Actual amount of eligible dividends 9.29% 5.33% 18.18% 32.25% 16.73%
Actual amount of ineligible dividends
Foreign income, net of tax 17.28%
Other income 1.49%
Return of Capital(1) 29.79% 34.78% 49.09% 66.26% 33.17%
Total 100.00% 100.00% 100.00% 100.00% 100.00%

(1) Includes warrants from 2012-2016


Certain Provisions of the Series 1 Preferred Units

Distributions

Series 1 Preferred Unitholders will be entitled to receive quarterly cumulative preferential cash distributions on the 15th day of March, June, September and December of each year at a rate of ●% per annum of the issue price of a Series 1 Preferred Unit ($● per Series 1 Preferred Unit per annum or $● per Series 1 Preferred Unit per quarter), less any tax required by law to be deducted therefrom. The initial distribution, if declared, will be payable on June 15, 2017 and will be $● per Series 1 Preferred Unit, assuming a closing date of ●, 2017. Distributions in any given period may consist of net income, net capital gains and/or returns of capital. The Fund’s income and net taxable gains for the purposes of the Tax Act will be allocated to the holders of Units and Series 1 Preferred Units in the same proportion as the distributions received by such holders. See “Principal Canadian Federal Income Tax Considerations”.

Redemption at the Option of the Fund

Prior to March 15, 2022, the Fund may not redeem any Series 1 Preferred Units. On or after March 15, 2022, the Fund may give notice in writing not less than 30 days nor more than 60 days prior to the applicable redemption date of its intention to redeem for cash the Series 1 Preferred Units in whole or in part, at the Fund’s option, at a price per Series 1 Preferred Unit equal to $25.75 if redeemed on or after March 15, 2022, but before March 15, 2023; $25.50 if redeemed on or after March 15, 2023, but before March 15, 2024; and $25.00 thereafter, together, in each case, with all accrued and unpaid distributions up to but excluding the date fixed for redemption and less any tax required by law to be deducted therefrom.

If less than all outstanding Series 1 Preferred Units are at any time to be redeemed, the particular Series 1 Preferred Units to be redeemed will be selected on a pro rata basis (disregarding fractions) or in such other manner as the Trustee in its discretion may, by resolution, determine.

Retraction by Series 1 Preferred Unitholders

Prior to March 15, 2024, a Series 1 Preferred Unitholder may not require the Fund to retract any Series 1 Preferred Units. Subject to the provisions of any equity securities of the Fund ranking prior to or pari passu with the Series 1 Preferred Units, and to the provisions described under “− Restrictions on Distributions and Retirement and Issue of Series 1 Preferred Units”, a Series 1 Preferred Unitholder may require the Fund to retract such Series 1 Preferred Units (by delivering notice to the Manager of the intention to have Series 1 Preferred Units retracted not less than 30 days prior to the applicable retraction date) on or after March 15, 2024 for a cash price of $25.00, together with any accrued and unpaid distributions up to but excluding the date of retraction and less any tax required by law to be deducted therefrom.

Purchase for Cancellation

Subject to applicable law, including the requirements in NI 81-102, the provisions of any equity securities of the Fund ranking prior to or pari passu with the Series 1 Preferred Units, and to the provisions described under “− Restrictions on Distributions and Retirement and Issue of Series 1 Preferred Units”, the Fund may at any time purchase for cancellation the whole or any part of the Series 1 Preferred Units outstanding from time to time, in the open market through or from an investment dealer or any firm holding membership on a recognized stock exchange, or by private agreement or otherwise, at the lowest price or prices at which, in the opinion of the Manager of the Fund, such Series 1 Preferred Units are obtainable.

Rating

The Series 1 Preferred Units are provisionally rated Pfd-2(high) by Dominion Bond Rating Service Limited (“DBRS”).

BEP.PR.K Firm On Good Volume

Wednesday, February 15th, 2017

Brookfield Renewable Partners L.P. has announced that it has:

completed its previously announced issue of Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 11 (the “Series 11 Preferred Units”). The offering was underwritten by a syndicate led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank.

Brookfield Renewable issued 10,000,000 Series 11 Preferred Units at a price of $25.00 per unit, for total gross proceeds of CDN$250,000,000.

The Series 11 Preferred Units will commence trading on the Toronto Stock Exchange this morning under the ticker symbol BEP.PR.K.

BEP.PR.K is a FixedReset, 5.00%+382M500, announced 2017-2-7. Note that distributions on this security will be a mix of ordinary income and return of capital. It will be tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

The issue traded 784,722 shares today in a range of 24.88-00 before closing at 24.97-99, 54×45. Vital statistics are:

BEP.PR.K FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-02-14
Maturity Price : 23.14
Evaluated at bid price : 24.97
Bid-YTW : 4.93 %

New Issue: BEP FixedReset, 5.00%+382M500

Tuesday, February 7th, 2017

Brookfield Renewable Partners L.P. has announced:

that it has agreed to issue 8,000,000 Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 11 (the “Series 11 Preferred Units”) on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank for distribution to the public. The Series 11 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $200,000,000.

Holders of the Series 11 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution yielding 5.00% annually for the initial period ending April 30, 2022. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of (i) the 5-year Government of Canada bond yield plus 3.82%, and (ii) 5.00%. The Series 11 Preferred Units are redeemable on April 30, 2022 and on each Series 11 Reclassification Date (as defined below) thereafter.

Holders of the Series 11 Preferred Units will have the right, at their option, to reclassify their Series 11 Preferred Units into Cumulative Floating Rate Reset Class A Preferred Limited Partnership Units, Series 12 (“Series 12 Preferred Units”), subject to certain conditions, on April 30, 2022 and on April 30 every 5 years thereafter (each a “Series 11 Reclassification Date”). Holders of Series 12 Preferred Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the 90-day Canadian Treasury Bill yield plus 3.82%.

Brookfield Renewable has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 11 Preferred Units which, if exercised, would increase the gross offering size to $250,000,000.

They later announced:

that as a result of strong investor demand for its previously announced offering, the underwriters have exercised their option to increase the size of the offering to 10,000,000 Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 11 (the “Series 11 Preferred Units”) to be offered on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank. The Series 11 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $250,000,000.

Update, 2017-2-10: Barry Critchley has written a piece about this issue titled Will that be preferred units or preferred shares — they are not quite the same:

Apart from Brookfield, real estate investment trusts have, over the years, also issued rate reset preferred units. In January 2011, Rio-Can REIT made history by becoming the first REIT to issue such a piece of paper. It raised $125 million at 5.25 per cent and redeemed it early last year.

It took at least three years for RioCan to get to the stage where it could issue such a security. Regulatory and unit holder approval as well as securing an advanced tax ruling were all required. Given the time and costs involved, the security is only an option for a few issuers. (RioCan raised $149.50 million from a similar issue in late 2011. That issue is still outstanding though RioCan can redeem next June.)

BIP.PR.D Achieves Small Premium On Excellent Volume

Friday, January 27th, 2017

Brookfield Infrastructure has announced:

the completion of its previously announced issue of Cumulative Class A Preferred Limited Partnership Units, Series 7 (“Series 7 Preferred Units”) in the amount of $300,000,000. The offering was underwritten by a syndicate led by CIBC Capital Markets, RBC Capital Markets, Scotiabank, and TD Securities Inc.

Brookfield Infrastructure issued 12,000,000 Series 7 Preferred Units at a price of $25.00 per unit, for total gross proceeds of $300,000,000. Holders of the Series 7 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution yielding 5.00% annually for the initial period ending March 31, 2022. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 3.78%, and (ii) 5.00%. The Series 7 Preferred Units will commence trading on the Toronto Stock Exchange this morning under the ticker symbol BIP.PR.D.

BIP.PR.D is a FixedReset, 5.00%+378M500, ROC + Interest, announced January 19. It will be tracked by HIMIPref™ and has been assigned to the FixedReset subindex.

The issue traded 1,272,999 shares today in a range of 25.05-19 before closing at 25.15-17, 10×30. Vital statistics are:

BIP.PR.D FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2047-01-26
Maturity Price : 23.20
Evaluated at bid price : 25.15
Bid-YTW : 4.88 %

Implied Volatility analysis yields the following chart:

impvol_bip_170126
Click for Big

New Issue: BIP FixedReset, 5.00%+378M500, ROC + Interest

Friday, January 20th, 2017

Brookfield Infrastructure has announced:

that it has agreed to issue 8,000,000 Cumulative Class A Preferred Limited Partnership Units, Series 7 (“Series 7 Preferred Units”) on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, RBC Capital Markets, Scotiabank, and TD Securities Inc. The Series 7 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $200,000,000. Holders of the Series 7 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution at a rate of 5.00% annually for the initial period ending March 31, 2022. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 3.78%, and (ii) 5.00%. The Series 7 Preferred Units are redeemable on or after March 31, 2022.

Holders of the Series 7 Preferred Units will have the right, at their option, to reclassify their Series 7 Preferred Units into Cumulative Class A Preferred Limited Partnership Units, Series 8 (“Series 8 Preferred Units”), subject to certain conditions, on March 31, 2022 and on March 31 every five years thereafter. Holders of Series 8 Preferred Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the 90-day Canadian Treasury Bill yield plus 3.78%.

Brookfield Infrastructure has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 7 Preferred Units which, if exercised, would increase the gross offering size to $250,000,000.

The Series 7 Preferred Units will be offered in all provinces and territories of Canada by way of a supplement to Brookfield Infrastructure’s existing short form base shelf prospectus.

Brookfield Infrastructure intends to use the net proceeds of the issue of the Series 7 Preferred Units for investment opportunities, working capital and other general corporate purposes. The offering of Series 7 Preferred Units is expected to close on or about January 26, 2017.

They later announced:

that as a result of strong investor demand for its previously announced offering it has agreed to increase the size of the offering to 12,000,000 Cumulative Class A Preferred Limited Partnership Units, Series 7 (“Series 7 Preferred Units”) to be offered on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, RBC Capital Markets, Scotiabank, and TD Securities Inc. The Series 7 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $300,000,000.

I understand that the Return of Capital percentage of distributions is forecast – but by no means guaranteed! – to be about 50% over the next five years. See the discussion of BIP.PR.A for some sample calculations regarding the implications of this.

Implied Volatility analysis suggests that this issue is expensive:

impvol_bip_170119
Click for Big

However, this conclusion rests to a large degree on the question of how much the minimum reset guarantee is worth. I’m not inclined to assign a particularly high value on it; but others might be more generous.

New Issue: BIP FixedReset 5.35%+464M535

Monday, July 25th, 2016

Brookfield Infrastructure has announced:

that it has agreed to issue 8,000,000 Cumulative Class A Preferred Limited Partnership Units, Series 5 (“Series 5 Preferred Units”) on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets, and Scotiabank. The Series 5 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $200,000,000. Holders of the Series 5 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution at a rate of 5.35% annually for the initial period ending September 30, 2021. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 4.64%, and (ii) 5.35%. The Series 5 Preferred Units are redeemable on or after September 30, 2021.

Holders of the Series 5 Preferred Units will have the right, at their option, to reclassify their Series 5 Preferred Units into Cumulative Class A Preferred Limited Partnership Units, Series 6 (“Series 6 Preferred Units”), subject to certain conditions, on September 30, 2021 and on September 30 every five years thereafter. Holders of Series 6 Preferred Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the 90-day Canadian Treasury Bill yield plus 4.64%.

Brookfield Infrastructure has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 5 Preferred Units which, if exercised, would increase the gross offering size to $250,000,000.

The Series 5 Preferred Units will be offered in all provinces and territories of Canada by way of a supplement to Brookfield Infrastructure’s existing short form base shelf prospectus.

Brookfield Infrastructure intends to use the net proceeds of the issue of the Series 5 Preferred Units for investment opportunities, working capital and other general corporate purposes. The offering of Series 5 Preferred Units is expected to close on or about August 2, 2016.

Note that this issue has an unusual tax status on its distributions: like BIP.PR.A and BIP.PR.B, the distributions will be comprised of a mixture of ordinary income and return of capital, in what are expected to be approximately equal proportions, but with no guarantees on just what the proportions will be, either for any particular year or in total!

It will be interesting to see how this issue trades relative to BIP.PR.B, which is a FixedReset, 5.50%+453M550 (Interest + ROC). Readers will note that BIP.PR.B has a lower Issue Reset Spread (453bp vs 464bp) than the new issue, but a higher Minimum Reset Rate (5.50% vs. 5.35%). BIP.PR.B closed today at 25.85-96, 2×5.

BEP.PR.I Soft On Good Volume

Wednesday, May 25th, 2016

Brookfield Renewable Partners L.P. has announced that it has:

completed its previously announced issue of Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 9 (the “Series 9 Preferred Units”). The offering was underwritten by a syndicate led by CIBC Capital Markets, RBC Capital Markets, Scotiabank and TD Securities Inc.

Brookfield Renewable issued 8,000,000 Series 9 Preferred Units at a price of $25.00 per unit, for total gross proceeds of $200,000,000.

The Series 9 Preferred Units will commence trading on the Toronto Stock Exchange this morning under the ticker symbol BEP.PR.I.

BEP.PR.I is a FixedReset, 5.75%+501M575, announced 2016-5-16. The issue will be tracked by HIMIPref™ but has been relegated to the Scraps subindex on credit concerns.

The prospectus supplement (a public document) is available on the regulator-owned SEDAR with the identifiers “Brookfield Renewable Partners L.P. May 17 2016 19:33:41 ET Prospectus supplement – English PDF 276 K” but I am not permitted to link to it directly since I am mere investor scum without even enough dignity to get a government job. The prospectus notes:

For Canadian federal income tax purposes, holders of Series 9 Preferred Units will be allocated a portion of the taxable income of the Partnership based on their proportionate share of distributions received on their units. The allocation of taxable income to such holders may be less than the distributions received. This difference is commonly referred to as a tax deferred return of capital (i.e., returns that are initially non-taxable but which reduce the adjusted cost base of the holder’s units). See “Certain Canadian Federal Income Tax Considerations” in this Prospectus Supplement for further details. As shown in the table below, the historical 3 year average per unit Canadian dividends, ordinary income and return of capital (i.e., excess of distributions over allocated taxable income) expressed as a percentage of the annual distributions in respect of units of the Partnership for the period 2013 through 2015 were approximately 61%, 20%, and 19%, respectively. Management anticipates the 5 year average per unit Canadian dividend, ordinary income and return of capital will be 50%, 25%, and 25%, respectively, for the period between 2016 and 2021; however, no assurance can be provided this will occur.

So be careful! This isn’t your usual distribution taxation status! See the coverage of the first day of trading of BEP.PR.G for an analytical framework.

BEP.PR.I traded 745,122 shares today (consolidated exchanges) in a range of 24.85-97 before closing at 24.92-95, 5×28. Vital statistics are:

BEP.PR.I FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-05-25
Maturity Price : 23.12
Evaluated at bid price : 24.92
Bid-YTW : 5.74 %

The TXPR index is up about 35bp since the announcement date, so closing below par suggest a very slight softness in the market’s reception of the issue.

New Issue: BEP FixedReset, 5.75%+501M575

Monday, May 16th, 2016

Brookfield Renewable Partners L.P. has announced:

that it has agreed to issue 6,000,000 Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 9 (the “Series 9 Preferred Units”) on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, RBC Capital Markets, Scotiabank and TD Securities Inc. for distribution to the public. The Series 9 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $150,000,000.

Holders of the Series 9 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution yielding 5.75% annually for the initial period ending July 31, 2021. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of (i) the 5-year Government of Canada bond yield plus 5.01%, and (ii) 5.75%. The Series 9 Preferred Units are redeemable on July 31, 2021 and on each Series 9 Reclassification Date (as defined below) thereafter.

Holders of the Series 9 Preferred Units will have the right, at their option, to reclassify their Series 9 Preferred Units into Cumulative Floating Rate Reset Class A Preferred Limited Partnership Units, Series 10 (the “Series 10 Preferred Units”), subject to certain conditions, on July 31, 2021 and on July 31 every 5 years thereafter (each a “Series 9 Reclassification Date”). Holders of Series 10 Preferred Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the 90-day Canadian Treasury Bill yield plus 5.01%.

Brookfield Renewable has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 9 Preferred Units which, if exercised, would increase the gross offering size to $200,000,000.

The Series 9 Preferred Units will be offered in all provinces and territories of Canada by way of a supplement to Brookfield Renewable’s existing Canadian short form base shelf prospectus. The Series 9 Preferred Units may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

Brookfield Renewable intends to use the net proceeds of the issue of Series 9 Preferred Units to repay indebtedness. The offering of Series 9 Preferred Units is expected to close on or about May 25, 2016.

It is my understanding that distributions on the units will be characterized in the same manner as, for instance, the related issue BEP.PR.G:

According to the prospectus:
Management anticipates the 5 year average per unit Canadian dividend, ordinary income and return of capital will be 50%, 25%, and 25%, respectively, for the period between 2015 and 2020; however, no assurance can be provided this will occur.

… but the prospectus supplement is not yet available for this particular new issue. It’s a pity they didn’t include this rather vital information in the press release.

BEP.PR.E Listed

Thursday, February 11th, 2016

BEP.PR.E, which has resulted from a 41% conversion from BRF.PR.E commenced trading today.

“Trading” is perhaps a misnomer, because not a single share changed hands; fortunately, the well compensated and strictly supervised market maker stepped up to the plate and the issue closed 16.00-21.00, 9×2, a mere $5 spread.

BEP.PR.E will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

BEP.PR.E Perpetual-Discount YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2046-02-11
Maturity Price : 16.00
Evaluated at bid price : 16.00
Bid-YTW : 8.86 %