New Issue: PWI.PR.A, SplitShare, Five-Year, 5.00%

Brompton Funds Limited has announced (on 2021-4-26):

that Sustainable Power & Infrastructure Split Corp. (the “Company”) has filed a preliminary prospectus dated March 31, 2021 in respect of an initial public offering of class A shares and preferred shares (the “Preliminary Prospectus”).

The Company will invest in a globally diversified and actively managed portfolio (the “Portfolio”) consisting primarily of dividend-paying securities of power and infrastructure companies, whose assets, products and services the Manager believes are facilitating the multi-decade transition toward decarbonization and environmental sustainability. The Portfolio will include investments in companies operating in the areas of renewable power, green transportation, energy efficiency, and communications, among others (“Sustainable Power and Infrastructure Companies”). In seeking to achieve its investment objectives, the Company intends to target investments in Sustainable Power and Infrastructure Companies that have positive and/or improving environmental, social and governance (“ESG”) characteristics as identified by the Manager.

The class A shares will be offered at a price of $10.00 per share. The investment objectives for the class A shares are to provide holders with regular monthly non-cumulative cash distributions and the opportunity for capital appreciation through exposure to the Portfolio. The monthly cash distribution is targeted to be $0.06667 per class A share representing a yield on the issue price of the class A shares of 8.0% per annum.

The preferred shares will be offered at a price of $10.00 per share. The investment objectives for the preferred shares are to provide holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on May 29, 2026, subject to extension for successive terms of up to five years as determined by the board of directors of the Company. The quarterly cash distribution will be $0.1250 per preferred share ($0.50 per annum, or 5.0% per annum on the issue price of $10.00 per preferred share), until May 29, 2026. The preferred shares have been provisionally rated Pfd-3 by DBRS Limited.

Prospective purchasers investing in the Company will have the option of paying for shares in cash or paying for class A shares or units by an exchange of freely-tradable listed securities of any eligible issuers listed in the Preliminary Prospectus (the “Exchange Option”). Prospective purchasers who utilize the Exchange Option are required to deposit their securities of exchange eligible issuers by no later than 5:00 p.m. (Toronto time) on April 22, 2021 through CDS. Please contact your investment advisor or refer to the Preliminary Prospectus for detailed information on how to participate in the offering by way of either cash purchase or the exchange option.

The syndicate of agents for the offering is being led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank and includes BMO Capital Markets, TD Securities Inc., Hampton Securities Limited, Canaccord Genuity Corp., Raymond James Ltd., Richardson Wealth Limited, Echelon Wealth Partners Inc., iA Private Wealth Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

The offering went well:

Brompton Funds Limited (the “Manager”) is pleased to announce that Sustainable Power & Infrastructure Split Corp. (the “Company”) has completed its initial public offering of 3,221,666 Class A Shares and 3,221,666 Preferred Shares for total gross proceeds of $64.4 million. The Class A Shares and Preferred Shares will commence trading today on the Toronto Stock Exchange under the symbols PWI and PWI.PR.A, respectively.

Important extracts from the prospectus include:

The investment objectives for the Preferred Shares are to provide their holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on May 29, 2026 (the “Maturity Date”), subject to extension for successive terms of up to five years as determined by the board of directors of the Company.

The Preferred Shares have been provisionally rated Pfd-3 by DBRS Limited. See “Description of the Securities — Rating of the Preferred Shares”

Holders of record of Preferred Shares on the last Business Day of each of March, June, September and December will be entitled to receive fixed cumulative preferential quarterly cash distributions equal to $0.1250 per Preferred Share until May 29, 2026. On an annualized basis, this would represent a yield on the Preferred Share offering price of approximately 5.0%. Such quarterly distributions are expected to be paid by the Company on or
before the tenth Business Day of the month following the period in respect of which the distribution was payable. The first distribution will be pro-rated to reflect the period from the Closing Date to June 30, 2021. Based on the expected Closing Date (defined herein), the initial distribution will be $0.05632 per Preferred Share and is expected to be payable to the holders of Preferred Shares of record on June 30, 2021.

Preferred Shares may be surrendered at any time for retraction to TSX Trust Company (the “Registrar and Transfer Agent”), the Company’s registrar and transfer agent, but will be retracted only on the second last Business Day of a month (the “Retraction Date”). Preferred Shares surrendered for retraction by 5:00 p.m. (Toronto time) on the tenth Business Day prior to the Retraction Date will be retracted on such Retraction Date and the holder will be paid on or before the tenth Business Day of the following month (the “Retraction Payment Date”). Holders of Preferred Shares whose Preferred Shares are surrendered for retraction will be entitled to receive a retraction price per Preferred Share equal to 96% of the lesser of (i) the Net Asset Value per Unit determined as of such Retraction Date, less the cost to the Company of the purchase of a Class A Share for cancellation; and (ii) $10.00.

No distributions will be paid on the Class A Shares if (i) the distributions payable on the Preferred Shares are in arrears, or (ii) following cash distributions by the Company, the NAV per Unit would be less than $15.00.

DBRS finalized the rating on 2021-5-21:

The fixed distributions of dividends on the Preferred Shares will be funded from the dividends received on the common shares in the Portfolio, which are expected to cover approximately 0.7 times the annual Preferred Share distributions.

The initial downside protection available to holders of the Preferred Shares is approximately 48% (after offering expenses).

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