New Issue: IGM 5.90% Straight

IGM Financial has announced:

that it has agreed to issue 6,000,000 Non-Cumulative First Preferred Shares, Series B (the “Series B Shares”) on a bought deal basis, for gross proceeds of $150 million. The Series B Shares will be priced at $25.00 per share and will carry an annual dividend yield of 5.90%. Closing is expected on or about December 8, 2009. The issue will be underwritten by a syndicate of underwriters co-led by BMO Capital Markets and by RBC Capital Markets.

IGM Financial has also granted the underwriters an option to purchase an additional 2,000,000 Series B Shares at the same offering price, exercisable up to 48 hours prior to closing. Should the underwriters’ option be exercised fully, the total gross proceeds of the Series B Share offering will be $200 million.

Proceeds from the issue will be used to supplement IGM Financial’s financial resources and for general corporate purposes.

The first dividend is anticipated (based on 2009-12-8 closing) to be 0.57788, payable 2010-4-30.

Redemption terms are standard for straights: redeemable for 26.00 commencing 2014-12-31; redemption price declines by 0.25 p.a. until 2018-12-31; redeemable at 25.00 thereafter.

It’s quite interesting that these are non-cumulative. There is no direct reason for them to be so; IGM is not regulated as a bank or insurer and doesn’t need to qualify them for Tier 1 Capital. I can only imagine – so far – two explanations: (i) that they have decided that making it non-cumulative won’t cost them anything (in other words, that the current spreads observed for cumulativity exist only as a proxy for “non-financial”, and not for any other reason), or (ii) that they are preparing in some way for their parent, PWF, to be regulated due to its position as owner of an insurer, GWO, and there might be a need to qualify this issue as Tier 1 on the consolidated books of PWF. But all that’s merely speculation.

3 Responses to “New Issue: IGM 5.90% Straight”

  1. blue says:

    This issue will not have any voting rights until 8 unpaid dividends, is this an unusual term?

  2. jiHymas says:

    The provisions in respect of unpaid dividends is not something I record systematically, so you’ll have to rely on a brief survey:

    CM.PR.M One quarter

    GWO.PR.L One quarter

    BAM.PR.P Eight quarters

    TCL.PR.D Six quarters

  3. […] It still looks expensive to me! The issue was announced on November 30. […]

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