New Issue: CU FixedReset 4.00%+240

Canadian Utilities first announced:

it has entered into an agreement with a syndicate of underwriters co-led by RBC Capital Markets and BMO Capital Markets, and including TD Securities Inc. and Scotia Capital Inc. The underwriters have agreed to buy 8 million 4.00% Cumulative Redeemable Second Preferred Shares Series Y at a price of $25.00 per share for aggregate gross proceeds of $200 million. The proceeds will be used for capital expenditures, to repay indebtedness and for other general corporate purposes.

Canadian Utilities Limited has granted the underwriters an option to purchase at the offering price an additional 2 million Series Y Preferred Shares exercisable in whole or in part at any time up to 9:00 AM on the date that is 2 days prior to closing. Should the option be fully exercised, the total gross proceeds of the Series Y Preferred Share offering will be $250 million.

The Series Y Preferred Shares will be issued to the public at a price of $25.00 per share and holders will be entitled to receive fixed cumulative preferential cash dividends, payable quarterly for an initial period of five and a half years, as and when declared by the Board of Directors of the Corporation, at an annual rate of $1.00 per share, to yield 4.00% annually. Thereafter, the dividend rate will reset every five years to the then current 5-Year Government of Canada Bond yield plus 2.40%. On June 1, 2017, and on June 1 of every fifth year thereafter, the Corporation may redeem the Series Y Preferred Shares in whole or in part at par.

Holders may elect to convert any or all of their Series Y Preferred Shares into an equal number of Cumulative Redeemable Second Preferred Shares Series Z on June 1, 2017, and on June 1 of every fifth year thereafter.

Holders of the Series Z Preferred Shares will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of the Corporation, equal to the then current 3-month Government of Canada Treasury Bill yield plus 2.40%. On June 1 of every fifth year after conversion, the Corporation may redeem the Series Z Preferred Shares in whole or in part at par; on any other date, the Corporation may redeem the Series Z Preferred Shares in whole or in part by the payment of $25.50 for each share to be redeemed.

The offering is being made only in the provinces of Canada by means of a prospectus supplement and the closing date of the issue is expected to be on or about September 21, 2011.

They later announced:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Second Preferred Shares Series Y, the size of the offering has been increased to 11 million shares. The aggregate gross proceeds will now be $275 million. The proceeds will be used for capital expenditures, to repay indebtedness and for other general corporate purposes.

Canadian Utilities Limited has granted the underwriters an option to purchase at the offering price an additional 2 million Series Y Preferred Shares exercisable in whole or in part at any time up to 9:00 AM on the date that is 2 days prior to closing. Should the option be fully exercised, the total gross proceeds of the Series Y Preferred Share offering will be $325 million.

Update, 2011-9-15: DBRS assigns Pfd-2(high).

One Response to “New Issue: CU FixedReset 4.00%+240”

  1. […] is a FixedReset 4.00%+240 announced September 13. It is tracked by HIMIPref™ and is assigned to the FixedReset […]

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