Brookfield Asset Management has announced:
that it has agreed to issue 8,000,000 Class A Preferred Shares, Series 42 on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., RBC Capital Markets, CIBC and Scotiabank for distribution to the public. The Preferred Shares, Series 42 will be issued at a price of C$25.00 per share, for gross proceeds of C$200,000,000. Holders of the Preferred Shares, Series 42 will be entitled to receive a cumulative quarterly fixed dividend yielding 4.50% annually for the initial period ending June 30, 2020. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.84%.
Brookfield has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Preferred Shares, Series 42 which, if exercised, would increase the gross offering size to C$250,000,000. The Preferred Shares, Series 42 will be offered in all provinces of Canada by way of a supplement to Brookfield’s existing short form base shelf prospectus. The Preferred Shares, Series 42 may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.
Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 42 for general corporate purposes. The offering of Preferred Shares, Series 42 is expected to close on or about October 8, 2014.
Later, they further announced:
that as a result of strong investor demand for its previously announced offering it has agreed to increase the size of the offering to 12,000,000 Class A Preferred Shares, Series 42. The Preferred Shares, Series 42 will be issued at a price of C$25.00 per share, for gross proceeds of C$300,000,000. There will not be an underwriters’ option as was previously granted. The Preferred Shares, Series 42 are being offered on a bought deal basis by a syndicate of underwriters led by TD Securities Inc., RBC Capital Markets, CIBC and Scotiabank.
This issue looks fairly priced against BAM.PF.F, a FixedReset 4.50+286, that started trading in June, but looks reasonably cheap against its lower-spread siblings, according to Implied Volatility Theory:
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