Veresen Inc. has announced:
it has agreed to issue 8,000,000 Cumulative Redeemable Preferred Shares, Series E (“Series E Preferred Shares”) at a price of $25.00 per share for total gross proceeds of $200 million on a bought deal basis. The Series E Preferred Shares will be offered to the public through a syndicate of underwriters co-led by Scotiabank, TD Securities Inc. and RBC Capital Markets.
The holders of Series E Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of 5.00%, representing $1.25 per share, payable quarterly for an initial period up to but excluding June 30, 2020, as and when declared by the Board of Directors of Veresen. The first quarterly dividend payment date is scheduled for June 30, 2015. The dividend rate will reset on June 30, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 4.27%.
Subject to regulatory approval, the Series E Preferred Shares are redeemable by Veresen, in whole or in part, on June 30, 2020 and on June 30 of every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.
The holders of Series E Preferred Shares will have the right to convert all or any part of their shares into Cumulative Redeemable Preferred Shares, Series F (“Series F Preferred Shares”), subject to certain conditions, on June 30, 2020, and on June 30 of every fifth year thereafter. The holders of Series F Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Veresen, at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 4.27%.
The offering is expected to close on or about April 1, 2015, subject to customary closing conditions. Net proceeds from the offering will be used to repay amounts outstanding under the credit facility that Veresen entered into for purposes of financing its acquisition of a 50% convertible preferred interest in Ruby Pipeline Holding Company, L.L.C., the entity which indirectly owns the Ruby pipeline system.
The Series E Preferred Shares will be issued pursuant to a prospectus supplement that will be filed with the securities regulatory authority in each of the provinces of Canada under Veresen’s short form base shelf prospectus dated September 20, 2013. An application has been made to list the Series E Preferred Shares and the Series F Preferred Shares on the Toronto Stock Exchange.
This issue will join VSN.PR.A, a FixedReset 4.40%+292 that commenced trading 2012-2-14 and VSN.PR.E, a FixedReset 5.00%+301 that commenced trading 2013-10-21. One more and I can start calculating Implied Volatility!
Both extant issues were hit hard on the day: VSN.PR.A closed at 21.45-55, with the bid down 1.7% on the day, while VSN.PR.C closed at 24.00-12, with the bid down 3.7%.