New Issue (Maybe): BNS Fixed-Reset 6.25%+???

This is not the usual reporting of a new issue!

Back in October, Scotia announced:

Scotiabank has agreed to purchase 104,609,895 trust units of CI from Sun Life for approximately $2.3 billion in cash representing all of Sun Life’s 37 per cent ownership stake in CI.

Today, Scotia has announced:

that the Bank plans to close its 37 per cent strategic investment in CI Financial Income Fund (“CI”; TSX: CIX.UN) next week, pending receipt of executed agreements, regulatory approvals and acceptance by the Toronto Stock Exchange.

Scotiabank is purchasing Sun Life Financial’s (“Sun Life” TSX/NYSE:SLF) stake of 104,609,895 CI trust units for $1.55 billion in cash, $500 million in common shares at $34.60 per share and $250 million in 6.25 per cent rate reset preferred shares.

That’s it. That’s all I know. None of the extant BNS Fixed-Resets have a 6.25% initial coupon, so this would be a new issue rather than a re-opening.

The Globe & Mail reports:

National Bank Financial analyst Robert Sedran said Scotiabank’s Tier 1 capital ratio, the key measure that regulator’s watch, had been expected to dip to 8.8 per cent if the deal for the stake in CI had been all-cash. With the changes, Scotiabank’s Tier 1 ratio will now be about 9.1 per cent, he said. Regulators require the ratio, which is a measure of a bank’s capital against its assets weighted by the risk they pose, to stay above 7 per cent.

Scotiabank said it will issue $500-million in common shares to Sun Life at $34.60 per share, and $250-million in 6.25 per cent rate reset preferred shares.

The $34.60 equity price is almost 7 per cent higher to yesterday’s closing price, Mr. Aiken noted.

So what is this? Will Sunlife sell the shares in a secondary offering? Will there be a primary offering by Scotia of this issue? Will the shares come with a prospectus, or is it to be a restricted private placement forever?

Stay tuned!

2 Responses to “New Issue (Maybe): BNS Fixed-Reset 6.25%+???”

  1. […] have some more information on the new issue of BNS Fixed-Resets that was previously discussed when Scotia announced the issuance as partial settlement of their purchase of a big chunk of CI […]

  2. […] odd … SunLife still hasn’t done anything with its $250-million of Series 24 FixedReset 6.25%+384 acquired in partial settlement for its stake in CI. I don’t […]

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