BK.PR.A To Get Bigger

Quadravest has announced:

Canadian Banc Corp. (the “Company’) is pleased to announce it has filed a preliminary short form prospectus in each of the provinces of Canada with respect to an offering of Preferred Shares and Class A Shares of the Company. The offering will be co-led by National Bank Financial Inc., CIBC, RBC Capital Markets and will also include Scotia Capital Inc., TD Securities Inc., BMO Capital Markets, GMP Securities L.P., Canaccord Genuity Corp., Dundee Securities, Raymond James, Desjardins Securities Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

The Preferred Shares will be offered at a price of $10.00 per Preferred Share to yield 5% and the Class A Shares will be offered at a price of $13.25 per Class A Share to yield 10%. The closing price on the TSX of each of the Preferred Shares and the Class A Shares on March 31, 2015 was $10.30 and $13.75, respectively.

Since inception of the Company, the aggregate dividends paid on the Preferred Shares have been $5.27 per share and the aggregate dividends paid on the Class A Shares have been $8.89 per share, for a combined total of $14.16 per unit (inclusive of the March 31, 2015 distribution payable on April 10, 2015). All distributions to date have been made in tax advantage eligible Canadian dividends or capital gains dividends.

The net proceeds of the offering will be used by the Company to invest in a portfolio of six publicly traded Canadian Banks as follows: [images of corporate logos for BMO, BNS, CM, NA, RY and TD]

The Company’s investment objectives are to:

  • Preferred Shares:
    • i. provide holders with cumulative preferential floating rate monthly cash dividends at a rate per annum equal to the prevailing Canadian prime rate plus 0.75%(minimum annual rate of 5.0% and maximum annual rate of 7%) based on original issue price; and
    • ii. On or about December 1, 2018 or such other date as the Company may determine (the “termination date”) to pay holders the original $10 issue price of those shares.
  • Class A Shares:
    • i. provide holders with regular monthly cash distributions currently targeted to be at the annualized rate of 10% based upon the volume-weighted average trading price of the Class A Shares on the TSX for the last three trading days of the preceding month; and
    • ii. On the termination date to pay holders the original $15 issue price of those shares.

The sales period of this overnight offering will end at 9:00 a.m. EST on April 2, 2015.

Given that the NAVPU on March 31, 2015 was 21.47, the unit price of $23.25 for the offering is pretty good! It’s nice when you can simultaneously increase your assets under management and improve returns .. when the SplitShare business works, it works really well!

BK.PR.A was last mentioned on PrefBlog when there was a rights offering in September 2014. BK.PR.A is tracked by HIMIPref™ but relegated to the Scraps index on both credit and volume concerns.

Leave a Reply

You must be logged in to post a comment.