Brookfield Asset Management Inc. has announced:
that it has agreed to issue 10,000,000 Class A Preferred Shares, Series 48 on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, RBC Capital Markets, Scotiabank, and TD Securities Inc. for distribution to the public. The Preferred Shares, Series 48 will be issued at a price of C$25.00 per share, for gross proceeds of C$250,000,000. Holders of the Preferred Shares, Series 48 will be entitled to receive a cumulative quarterly fixed dividend yielding 4.75% annually for the initial period ending December 31, 2022. Thereafter, the dividend rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 3.10% and (ii) 4.75%.
Brookfield has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Preferred Shares, Series 48 which, if exercised, would increase the gross offering size to C$300,000,000. The Preferred Shares, Series 48 will be offered in all provinces of Canada by way of a supplement to Brookfield’s existing short form base shelf prospectus. The Preferred Shares, Series 48 may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.
Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 48 for general corporate purposes. The offering of Preferred Shares, Series 48 is expected to close on or about September 13, 2017.
They later announced:
that as a result of strong investor demand for its previously announced offering, the underwriters have exercised their option to increase the size of the offering to 12,000,000 Class A Preferred Shares, Series 48. The Preferred Shares, Series 48 will be issued at a price of C$25.00 per share, for gross proceeds of C$300,000,000. The Preferred Shares, Series 48 are being issued on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, RBC Capital Markets, Scotiabank and TD Securities Inc. for distribution to the public.
The Preferred Shares, Series 48 will be offered in all provinces of Canada by way of a supplement to Brookfield’s existing short form base shelf prospectus. The Preferred Shares, Series 48 may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.
Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 48 for general corporate purposes. The offering of Preferred Shares, Series 48 is expected to close on or about September 13, 2017.
It looks expensive to me! According to Implied Volatility analysis:
Click for Big
With the parameters shown, the theoretical value of the new issue is 24.20. Critics will be quick to point out that in this calculation there is zero value assigned to the minimum rate guarantee … but I’d say that’s about right!