New Issue: HSE FixedReset 4.45%+173

Husky Energy Inc. has announced:

that it has agreed to issue to a syndicate of underwriters led by CIBC, RBC Capital Markets and BMO Capital Markets (collectively the “Underwriters”) for distribution to the public 10,000,000 Cumulative Rate Reset First Preferred Shares, Series 1 (the “Series 1 Shares”). The Series 1 Shares will be issued at a price of $25.00 per Series 1 Share, for aggregate gross proceeds of $250 million. Holders of the Series 1 Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 4.45% annually for the initial period ending March 31, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 1.73%.

Holders of Series 1 Shares will have the right, at their option, to convert their shares into Cumulative Rate Reset First Preferred Shares, Series 2 (the “Series 2 Shares”), subject to certain conditions, on March 31, 2016 and on March 31 every five years thereafter. Holders of the Series 2 Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 1.73%.

Husky Energy has granted the Underwriters an option, exercisable in whole or in part prior to closing, to purchase up to an additional 2,000,000 Series 1 Shares at the same offering price. The Series 1 Shares will be offered by way of prospectus supplement to the short form base shelf prospectus of Husky Energy dated November 26, 2010.

The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds from this offering will be used for repayment of existing indebtedness, capital expenditures, corporate and asset acquisitions and for general corporate purposes. The offering is expected to close on or about March 18, 2011, subject to customary closing conditions and required regulatory approvals.

Nice to see a new investment grade issuer in the market – although some might take it as an indication that the market is overvalued.

Update: Rated Pfd-2(low) by DBRS:

DBRS has today assigned a rating of Pfd-2 (low) with a Stable trend to Husky Energy Inc.’s (Husky) Cumulative Redeemable Rate Reset Preferred Shares, Series 1 (Series 1 Preferred Shares), with a dividend rate of 4.45% per annum, payable quarterly for the initial five-year period ending March 31, 2016.

The DBRS rating is based on the expectation that the Series 1 Preferred Shares will remain the most highly ranked preferred shares issued by Husky.

2 Responses to “New Issue: HSE FixedReset 4.45%+173”

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