New Issue: PVS SplitShare, 7-Year, 4.80%

Partners Value Split Corp. has announced (although not yet on their website):

that it has entered into an agreement to sell 5,000,000 Class AA Preferred Shares, Series 8 (the “Series 8 Preferred Shares”) to a syndicate of underwriters led by Scotiabank, CIBC Capital Markets, RBC Capital Markets, and TD Securities Inc. on a bought deal basis.

The Series 8 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $125,000,000. The Series 8 Preferred Shares will carry a fixed coupon of 4.80% and will have a final maturity of September 30, 2024. The Series 8 Preferred Shares have a provisional rating of Pfd-2 (low) from DBRS. The net proceeds of the offering will be used to redeem the Company’s outstanding Class AA Preferred Shares, Series 5 and to pay a special dividend to holders of the Company’s capital shares.

The Company has granted the underwriters an option, exercisable in whole or part prior to closing, to purchase up to an additional 1,000,000 Series 8 Preferred Shares at the same offering price, which, if exercised, would increase the gross offering size to $150,000,000. Closing of the offering is expected to occur on or about September 18, 2017.

The Company owns a portfolio consisting of 79,740,966 Class A Limited Voting Shares of Brookfield Asset Management Inc. (the “Brookfield Shares”) which is expected to yield quarterly dividends that are sufficient to fund quarterly fixed cumulative preferential dividends for the holders of the Company’s preferred shares and to enable the holders of the Company’s capital shares to participate in any capital appreciation of the Brookfield Shares. Brookfield Asset Management Inc. is a global alternative asset manager with over US$250 billion in assets under management. For more than 100 years Brookfield has owned and operated assets on behalf of shareholders and clients with a focus on property, renewable energy, infrastructure and private equity. Brookfield has a range of public and private investment products and services which leverage its expertise and experience. Brookfield Shares are co-listed on the New York Stock Exchange under the symbol “BAM”, the TSX under the symbol “BAM.A” and the NYSE Euronext under the symbol “BAMA”.

David Clare, Vice President, will be available at (647) 503-6516 to answer any questions regarding the offering.

The Series 5 shares which are being redeemed have the ticker PVS.PR.C, which was originally traded as BNA.PR.E, which commenced trading 2010-12-10 after being announced 2010-11-22. It has a 4.85% coupon and has 4,999,000 shares outstanding.

4.80% on the new issue looks like a very nice coupon on the new issue, compared with yields on the company’s other issues of PVS.PR.B, 4.01% to 2019-1-10; PVS.PR.D, 4.36% to 2021-10-8; and PVS.PR.E, 4.56% to maturity 2022-10-31, although the YTW scenario is a current call at 26.00 (which can be triggered if BAM is taken over). The coupon is equal to that of EIT.PR.A, quoted today at 25.00-50; 4.81-4.45%, as yesterday’s 25.45 closing bid was vaporized. Mind you, EIT.PR.A’s low on the day was 25.42 on volume of 2,713 shares.

2 Responses to “New Issue: PVS SplitShare, 7-Year, 4.80%”

  1. doubou says:

    Do you think the new issue will trade at a discount shortly after being listed for trading?

  2. jiHymas says:

    According to me, the fair price of the new issue as of the close September 8 is 24.75.

    However, new issues are always tricky, what with fashionability amongst retail investors and underwriters’ support; this is particularly the case with split shares; and particularly split shares of this issuer.

    So, while a long-term investor might well put some faith in my estimate, a speculator looking to make a quick buck should not.

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