Dundee Wealth Management has announced (via CCN Matthews) that:
it has entered into a “bought deal” agreement to sell to a syndicate of underwriters led by Scotia Capital Inc. and Dundee Securities Corporation, 6,000,000 4.75% Cumulative Redeemable First Preference Shares, Series 1 (the “Series 1 Shares”) at a price of $25.00 per Series 1 Share for gross proceeds to Dundee Wealth of $150 million. The underwriters also have an over-allotment option, exercisable at any time prior to 30 days after the closing date, to acquire an additional 900,000 Series 1 Shares at the issue price of $25.00 per Series 1 Share. The offering is expected to close on or about March 13, 2007.
DBRS has rated this issue Pfd-3.
I am advised that this issue is a 10-year retractible – but I have not yet been advised in writing! This issue is of sufficient size to be added to the HIMIPref™ database. I will provide more details and analysis when it becomes available.
Update & Bump : I have received a term sheet.
Annual dividends are $1.1875 per share per annum. The first dividend is intended to be payable June 30, 2007 and be $0.35625, based on the anticipated closing date of March 13, 2007.
The redemption schedule is:
| If called during the 12 months commencing March 13, | Redemption Price |
| 2007 | 27.25 |
| 2008 | 27.00 |
| 2009 | 26.75 |
| 2010 | 26.50 |
| 2011 | 26.25 |
| 2012 | 26.00 |
| 2013 | 25.75 |
| 2014 | 25.50 |
| 2015 | 25.25 |
| Or any time after March 13, 2016 | $25.00 |
Any redemption before March 13, 2012 is limited to circumstances where the Series 1 Shares are entitled to vote separately as a class or series by law.
The shares are retractible for cash at the option of the holder on and after March 13, 2017 at $25.00.
Another Update & Bump!
I have prepared the following table with some comparatives:
| Dundee Wealth New Issue & Comparitives | |||
| Data | DW.PR.? | BAM.PR.J | DC.PR.A |
| Price due to base-rate | 24.63 | 26.51 | 25.17 |
| Price due to short-term | -0.55 | -0.57 | -0.53 |
| Price due to long-term | 1.71 | 1.77 | 1.64 |
| Price to to Cumulative Dividends | 0.00 | 0.00 | 0.00 |
| Price due to SplitShareCorp | 0.00 | 0.00 | 0.00 |
| Price due to Retractibility | 1.26 | 1.40 | 1.16 |
| Price due to Liquidity | 0.77 | -0.11 | 0.03 |
| Price due to Floating Rate | 0.00 | 0.00 | 0.00 |
| Price due to Credit Spread (2) | 0.00 | -0.33 | 0.00 |
| Price due to Credit Spread (3) | -0.94 | 0.00 | -0.86 |
| Price due to Credit Spread (High) | 0.00 | 0.00 | 0.00 |
| Price due to Credit Spread (Low) | 0.00 | -0.29 | -0.24 |
| Price due to error | 0.02 | 0.04 | 0.07 |
| Curve Price (Taxable Curve) | 26.90 | 28.42 | 26.44 |
| Quote 2/22 | 25.00 Issue |
27.82-86 | 25.55-70 |
| YTW (after tax) | 3.77% | 3.34% | 3.84% |
| YTW Date | 2017-3-12 | 2014-4-30 | 2016-6-29 |
| Credit Rating (DBRS) | Pfd-3 | Pfd-2(low) | Pfd-3(low) |
| YTW (Pre-Tax) | 4.75% | 4.20% | 4.83% |
| YTW Modified Duration (Pre-Tax) | 7.98 | 5.98 | 7.40 |
| YTW Pseudo-Convexity (Pre-Tax) | 0.2 | -11.9 | 0.2 |
Note that the BAM.PR.J has a soft-maturity 2018-3-30 at $25.00 to yield 3.35% – it’s right on the bubble, which is why the pseudoConvexityWorst is both large and negative.
This new issue looks attractive when valued in strict accordance to the yield curve. But as I warned in my post about the YPG New Issue:
As credit quality decreases, so does the quality of HIMIPref™’s yield curve analysis. I do not recommend that these prefs be considered for more than 5% of a diversified preferred share portfolio.
[…] The new issue from Dundee Wealth Management, announced February 22, settled with a sigh today, closing at 24.80-90 on volume of 125,850 shares. It opened at 24.75 and managed to recover to 24.95 before finding its level. Scotia provided an afternoon flourish by crossing 50,000 shares at 24.90. […]
[…] Dundee Wealth has a ten-year retractible, DW.PR.A, in the preferred share market, rated Pfd-3 by DBRS. The issue soared on the news, presumably on market speculation that it is effectively an obligation of Scotiabank now and therefore of much higher quality. […]