PrefBlog

Loblaw Companies has announced:

a domestic public offering of 9 million cumulative redeemable convertible Second Preferred Shares, Series A (the “Preferred Shares Series A”) at a price of $25.00 per share, to yield 5.95% per annum, for an aggregate gross amount of $225 million.

Loblaw has agreed to sell the Preferred Shares Series A to a syndicate of underwriters co-led by RBC Dominion Securities Inc. and CIBC World Markets Inc. on a bought deal basis. Loblaw has granted to the underwriters an option to purchase an additional $75 million of the Preferred Shares Series A at any time up to 48 hours prior to closing.

The Preferred Shares Series A will be offered by way of prospectus supplement under the short form base shelf prospectus of Loblaw Companies Limited dated June 5, 2008. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the issue will be added to the general funds of Loblaw Companies Limited and used for general corporate purposes. The offering is expected to close on or about June 20, 2008.

Issue: Loblaw Companies Limited 5.95% Cumulative Redeemable Second Preferred Shares, Series A

Size: 9-million shares @ $25 (= $225-million) + greenshoe of 3-million shares (= $75-million) exercisable prior to closing.

Dividends: $1.4875 p.a., payable quarterly; long first dividend of $0.5394 payable 2008-10-31

Redemption: Redeemable at $25.75 commencing 2013-7-31; redemption price declines to $25.50 commencing 2014-7-31; declines to $25.00 if redeemed on or after 2015-7-31. Redemption price may be satisfied with shares of Loblaw at 95% of market (as defined).

Retraction: At $25 into shares of Loblaw at 95% of market (as defined), commencing 2015-7-31. Company can substitute cash at its option.

Ratings: S&P: P-3(high); DBRS Pfd-3 (negative trend)

Closing: 2008-6-20

Well, it’s certainly nice to see an operating-retractible issue offered in size; sadly, the ratings will keep it out of the HIMIPref™ indices and many portfolios. More later.

Update: This issue looks expensive.

This entry was posted on Wednesday, June 11th, 2008 at 12:43 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.