PrefBlog

Talisman Energy has announced:

that it has agreed to issue to a syndicate of underwriters led by RBC Capital Markets and CIBC for distribution to the public 8,000,000 Cumulative Redeemable Rate Reset First Preferred Shares, Series 1 (the “Series 1 Preferred Shares”). The Series 1 Preferred Shares will be issued at a price of $25.00 per Series 1 Preferred Share, for aggregate gross proceeds of $200 million. Holders of the Series 1 Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend at an annual rate of 4.20% for the initial period ending December 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 2.77%.

Holders of Series 1 Preferred Shares will have the right, at their option, to convert their shares into Cumulative Redeemable Rate Reset First Preferred Shares, Series 2 (the “Series 2 Preferred Shares”), subject to certain conditions, on December 31, 2016 and on December 31 every five years thereafter. Holders of the Series 2 Preferred 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 2.77%.

Talisman 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 Preferred Shares at the same offering price.

The net proceeds from this offering will be used to contribute to funding capital projects, reducing indebtedness and for general corporate purposes, as the need may arise and as management may consider appropriate at the time. The offering is expected to close on or about December 13, 2011.

The Series 1 Preferred Shares will be offered only in Canada by way of prospectus supplement to the short form base shelf prospectus of Talisman dated March 22, 2010.

As has often been the case in the past year, I am pleased to see a new issuer coming to market, but annoyed that it is another junk FixedReset! It’s interesting to see that their cost of funds is lower than last week’s MFC 4.40%+290 announcement.

Update, 2011-12-7: DBRS rates it as Pfd-3(high).

This entry was posted on Monday, December 5th, 2011 at 3:47 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.