BPO.PR.L To Be Redeemed

Brookfield Office Properties has announced:

that it intends to redeem all 11,500,000 of its outstanding Class AAA Preference Shares, Series L (TSX: BPO.PR.L), all of which are beneficially held by CDS & Co., as nominee of CDS Clearing and Depositary Services Inc., for cash on September 30, 2014. The redemption price for each such share is C$25.00. Holders of Series L shares on the record date of September 15, 2014 are entitled to receive the regular quarterly dividend of $0.42188 per share.

Notice of Redemption has been sent to CDS & Co. Payment of the redemption price will be made to all beneficial holders of the Series L Shares on or after September 30, 2014 through the facilities of CDS & Co.

This news comes after, but not necessarily due to, my post What’s Up With BPO.PR.L? and my eMail to Investor Relations. That eMail was answered, by the way:

Hello James,

Please see the press release issued today:

[LINK]

Regards,

As noted by Assiduous Reader and New Commenter adriandunn in the comments to my earlier post, trading was halted in the morning:

Sep 3, 2014

TORONTO, Sept. 3, 2014 /CNW/ – The following issues have been halted by IIROC:

Company: Brookfield Office Property Inc. PR series ‘L’

TSX Symbol: BPO.PR.L

Reason: Pending News

Halt Time (ET): 10:50 AM ET

IIROC can make a decision to impose a temporary suspension (halt) of trading in a security of a publicly-listed company. Trading halts are implemented to ensure a fair and orderly market. IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.

SOURCE Investment Industry Regulatory Organization of Canada (IIROC)

Trading was resumed at 11:30am:

TORONTO, Sept. 3, 2014 /CNW/ – Trading resumes in:

Company: Brookfield Office Property Inc. PR series ‘L’

TSX Symbol: BPO.PR.L

Resumption: 11:30 AM ET

IIROC can make a decision to impose a temporary suspension (halt) of trading in a security of a publicly-listed company. Trading halts are implemented to ensure a fair and orderly market. IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.

SOURCE Investment Industry Regulatory Organization of Canada (IIROC)

Assiduous Reader prefQC makes an interesting suggestion later in the comments to my earlier post:

Seems that if yesterday’s big purchaser fights it, he would definitely win (after all, the prospectus is legally binding). In that case, BPO may be forced to offer a “voluntary” redemption and keep the issue alive for another 5 years for those who want to keep it (my guess that would be most everybody). Given the low downside risk and (relatively) high upside reward, maybe this would be a good time to load up on BPO.PR.L??

Well … I dunno. If we go strictly by the timing of the press release, they missed both the redemption window and the reset window, so a judge would have to determine the ‘fairest’ way to resolve the problem. The market clearly expected redemption, so I suspect that would be the decision.

Another consideration is an unusual line in their press release:

Notice of Redemption has been sent to CDS & Co.

According to the prospectus:

A book entry only certificate representing the Series L Shares distributed hereunder will be issued in registered form only to CDS Clearing and Depository Services Inc. (“CDS”) or its nominee and will be deposited with CDS on the Closing Date. The Corporation understands that a purchaser of Series L Shares will receive only a customer confirmation from the registered dealer who is a CDS participant and from or through whom the Series L Shares are purchased. See “Book Entry Only System”.

So according to the official transfer agent, there is only one owner of shares, and BPO claims that this holder received a Notice of Redemption, although they don’t spell out exactly when. If it was before the thirty-day minimum notice, then presumably complainers will find themselves without a leg to stand on.

It is highly regrettable that Brookfield and its various subsidiaries have such a culture of contempt for their ultimate shareholders – much like the culture of contempt that the TSX has for its ultimate users – in that they take a very strict definition of Clients = CDS, full stop, (or in the case of the TSX, Clients = Brokerages, full stop). Remember the ticker change from BNA to PVS? I will bet a nickel that the attitude was and is … ‘We’ve notified our client – and that’s all we need to do’; the client being in this case CDS and in the ticker-change case, the Exchange. It is also very tempting to speculate that the officers of the various firms are useless drecks who refuse to take any initiative and don’t understand why they don’t get paid as much as Brookfield’s dealmakers. But that’s just speculation, of course.

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