New Issue: GWO Straight Perpetual, 4.80%

Great-West Lifeco Inc. has announced:

has today entered into an agreement with a syndicate of underwriters co-led by BMO Capital Markets, RBC Capital Markets and Scotiabank, under which the underwriters have agreed to buy, on a bought deal basis, 6,000,000 Non-Cumulative First Preferred Shares, Series R (the “Series R Shares”) from Lifeco for sale to the public at a price of $25.00 per Series R Share, representing aggregate gross proceeds of $150 million.

Lifeco has granted the underwriters an underwriters’ option to purchase an additional 2,000,000 Series R Shares at the same offering price. Should the underwriters’ option be fully exercised, the total gross proceeds of the Series R Shares offering will be $200 million.

The Series R Shares will yield 4.80% per annum, payable quarterly, as and when declared by the Board of Directors of the Company. The Series R Shares will not be redeemable prior to December 31, 2017. On and after December 31, 2017, the Company may, on not less than 30 nor more than 60 days’ notice, redeem the Series R Shares in whole or in part, at the Company’s option, by the payment in cash of $26.00 per Series R Share if redeemed prior to December 31, 2018, of $25.75 per Series R Share if redeemed on or after December 31, 2018 but prior to December 31, 2019, of $25.50 per Series R Share if redeemed on or after December 31, 2019 but prior to December 31, 2020, of $25.25 per Series R Share if redeemed on or after December 31, 2020 but prior to December 31, 2021 and of $25.00 per Series R Share if redeemed on or after December 31, 2021, in each case together with all declared and unpaid dividends up to but excluding the date fixed for redemption.

The Series R Share offering is expected to close on October 11, 2012. The net proceeds will be used for general corporate purposes and to augment Lifeco’s current liquidity position.

It’s very nice to see a Straight issued! It is my opinion that issuing straights is just another example of GWO’s superior management that has served it so well in the past five years. Their eyes aren’t getting big and round at the prospect of issuing a FixedReset at maybe 4.00% … instead they’re making a hard-nosed decision to lock in financing costs. FixedResets involve a certain amount of wrong-way risk for financial issuers.

This issue lacks a NVCC clause and will therefore be considered to be a DeemedRetractible, with a Deemed Maturity date of 2022-1-31. I wish OSFI would get off its duff about insurance regulation.

3 Responses to “New Issue: GWO Straight Perpetual, 4.80%”

  1. like_to_retire says:

    Really pleased to see a straight being issued.

    I was beginning to wonder if fixed resets would become the only choice.

  2. dudsy says:

    It looks like OSFI plans to issue a draft Definition of Capital paper for public consultation in late 2012 or early 2013. See p.13 of the following:

    http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/guidelines/LIRF_e.pdf

    The implementation timelines appear quite lengthy.

  3. […] is a Straight Perpetual, 4.80%, announced October 3. As it is issued by an Insurance Holding Company and does not have a NVCC clause, it is considered […]

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