PrefBlog

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell eight million Cumulative Redeemable Preference Shares, Series 5 (the “Series 5 Preferred Shares”) at a price of US$25.00 per share for distribution to the public. Closing of the offering is expected on September 27, 2013.

The holders of Series 5 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of US$1.10 per share, payable quarterly on the 1st day of March, June, September and December, as and when declared by the Board of Directors of Enbridge, yielding 4.40 per cent per annum, for the initial fixed rate period to but excluding March 1, 2019. The first quarterly dividend payment date is scheduled for December 1, 2013. The dividend rate will reset on March 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year United States Government bond yield plus 2.82 per cent. The Series 5 Preferred Shares are redeemable by Enbridge, at its option, on March 1, 2019 and on March 1 of every fifth year thereafter.

The holders of Series 5 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 6 (the “Series 6 Preferred Shares”), subject to certain conditions, on March 1, 2019 and on March 1 of every fifth year thereafter. The holders of Series 6 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the then 3-month US Treasury Bill rate plus 2.82 per cent.

Enbridge has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2 million Series 5 Preferred Shares at a price of US$25.00 per share.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Corporation dated June 6, 2013. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is led by CIBC, RBC Capital Markets, Scotiabank and TD Securities Inc.

This joins Enbridge’s other US-Pay FixedResets:

Given what’s available on the market,this offering looks grossly over-priced! Fortunately for the company, its underwriters and the underwriters’ salesmen, most people will stop paying attention after the “4.40%” part.

As this issue is USD denominated, it will not be tracked by HIMIPref™.

This entry was posted on Thursday, September 19th, 2013 at 4:38 pm and is filed under New Issues, US Pay. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.