PrefBlog

Rona Inc. has announced:

that it has entered into an agreement with a syndicate of underwriters led by National Bank Financial Inc. and BMO Capital Markets, acting as joint bookrunners, under which the underwriters have agreed to purchase, on a bought-deal basis, 5,000,000 Cumulative 5-Year Rate Reset Series 6 Class A Preferred Shares (the “Series 6 Class A Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds to RONA of $125,000,000.

Not the most informative of releases! Canadian Business has more details (but not all of them!):

The syndicate led by National Bank Financial and BMO Capital Markets has agreed to purchase at least five million shares for $25 each, for a total of $125 million in gross proceeds.

That could increase to $143.75 million if the underwriters exercise their overallotment option in full.

The Series 6 Class A preferred shares will each pay $1.31 per year in annual fixed cumulative dividends for five years, yielding 5.25 per cent per year. The dividend rate will be reset in March 2016 and be reset every five years.

Rona has the option to redeem the preferreds on March 31, 2016, and on March 31 of every fifth year after that.

Tom Kiladze of the Globe reports:

The deal had strong demand, according to people on the Street, and if anything, being a unique name probably helped because it gave the deal some novelty.

Novelty, schmovelty. If he wants to say “diversification”, that’s reasonable, but “novelty”?

S&P rates them P-3:

Standard & Poor’s Ratings Services today said it assigned its ‘BB’ global scale and ‘P-3’ Canadian scale ratings to RONA (RON.TO) Inc.’s proposed C$125 million cumulative five-year rate reset preferred shares. We are applying “intermediate” equity treatment to the preferred shares, treating them as 50% debt and 50% equity for the calculation of credit ratios.

In view of our debt treatment, as well as the small size of the issuance relative to RONA’s capital structure, we believe the instruments will have only a modestly negative effect on credit measures while boosting the company’s already strong liquidity as it grows through acquisition.

DBRS rates them Pfd-3:

DBRS has today assigned a new rating of Pfd-3 with a Stable trend to the new five million Cumulative Five-Year Rate Reset Series 6 Class A Preferred Shares (Preferred Shares) of RONA inc. (RONA or the Company) for total proceeds of $125 million.

This entry was posted on Tuesday, February 1st, 2011 at 4:29 pm and is filed under New Issues. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.