New Issue: CWB FixedReset 4.40%+276

Canadian Western Bank has announced:

its intent to issue $100 million of Basel III-compliant non-cumulative 5-year rate reset First Preferred Shares Series 5 (the “Series 5 Preferred Shares”). The offering will be underwritten on a bought deal basis by a syndicate led by National Bank Financial Inc. The expected closing date is February 10, 2014.

Under the terms of the offering, CWB will issue 4,000,000 Series 5 Preferred Shares at a price of $25.00 per share. CWB has also granted the underwriters an option, exercisable in whole or in part, to purchase on the same terms up to an additional 600,000 Series 5 Preferred Shares at any time up to two business days prior to closing.

Should the underwriters choose to exercise this option in full, the maximum gross proceeds raised under the offering will be $115 million.

Holders of the Series 5 Preferred Shares will be entitled to receive a non-cumulative fixed dividend in the amount of $1.10 annually, payable quarterly, as and when declared by the Board of Directors of CWB, for the initial period ending April 30, 2019. The quarterly dividend represents an annual yield of 4.40% based on the stated issue price per share. Thereafter, the dividend rate will reset every five years at a level of 276 basis points over the then 5-year Government of Canada bond yield. CWB maintains the right to redeem, subject to the approval of the Office of the Superintendent of Financial Institutions (“OSFI”), up to all of the then outstanding Series 5 Preferred Shares on April 30, 2019, and on April 30 every five years thereafter at a price of $25.00 per share.

Should CWB choose not to exercise its right to redeem the Series 5 Preferred Shares, holders of these shares will have the right to convert their shares into an equal number of Basel III-compliant non-cumulative floating rate First Preferred Shares Series 6 (the “Series 6 Preferred Shares”), subject to certain conditions, on April 30, 2019, and on April 30 every five years thereafter. Holders of the Series 6 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of CWB, equal to the 90-day Government of Canada Treasury Bill rate plus 276 basis points.

Net proceeds from the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for CWB. This offering is made pursuant to the terms outlined in the prospectus supplement to CWB’s January 30, 2014 base shelf prospectus that will subsequently be filed. CWB will make an application to list the Series 5 Preferred Shares on the Toronto Stock Exchange as of the expected closing date.

Subject to the approval of OSFI, CWB intends to redeem the currently outstanding non-cumulative 5-year rate reset First Preferred Shares Series 3 on April 30, 2014 in accordance with the terms of such shares.

Later in the day, they announced:

that as a result of
strong investor demand for its previously announced domestic public offering of Basel III-compliant noncumulative 5-year rate reset First Preferred Shares Series 5, the size of the offering has been increased to 5 million shares. The gross proceeds of the offering will now be $125 million. The offering will be underwritten on a bought deal basis by a syndicate led by National Bank Financial Inc. The expected closing date is February 10, 2014.

Net proceeds from the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for CWB.

They are provisionally rated Pfd-3 by DBRS (emphasis added):

DBRS has today assigned a provisional rating to Canadian Western Bank’s (the Bank or CWB) Non-Cumulative 5-year Rate Reset First Preferred Shares Series 5 (NVCC Preferred Shares Series 5 or Series 5) of Pfd-3 with a Stable trend.

DBRS assigned the NVCC Preferred Shares Series 5 a rating equal to that of the Bank’s intrinsic assessment less four rating notches, as the Series 5 has only an Office of the Superintendent of Financial Institutions (OSFI)-compliant non-viable contingent capital (NVCC) trigger, which is consistent with the OSFI requirements for NVCC instrumentsDBRS has today assigned a provisional rating to Canadian Western Bank’s (the Bank or CWB) Non-Cumulative 5-year Rate Reset First Preferred Shares Series 5 (NVCC Preferred Shares Series 5 or Series 5) of Pfd-3 with a Stable trend.

DBRS assigned the NVCC Preferred Shares Series 5 a rating equal to that of the Bank’s intrinsic assessment less four rating notches, as the Series 5 has only an Office of the Superintendent of Financial Institutions (OSFI)-compliant non-viable contingent capital (NVCC) trigger, which is consistent with the OSFI requirements for NVCC instruments, and no additional triggers.

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