Category: Issue Comments

Manulife Financial Corporation has announced:

that it does not intend to exercise its right to redeem all or any of its currently outstanding 8,000,000 Non-cumulative Rate Reset Class 1 Shares Series 3 (the “Series 3 Preferred Shares”) (TSX: MFC.PR.F) on June 19, 2016. As a result, subject to certain conditions described in the prospectus supplement dated March 7, 2011 relating to the issuance of the Series 3 Preferred Shares (the “Prospectus”), the holders of the Series 3 Preferred Shares have the right, at their option, to convert all or part of their Series 3 Preferred Shares on a one-for-one basis into Non-cumulative Floating Rate Class 1 Shares Series 4 of Manulife (the “Series 4 Preferred Shares”) on June 20, 2016. This date is the first business day following the conversion date of June 19, 2016, identified in the Prospectus, which falls on a Sunday. A formal notice of the right to convert Series 3 Preferred Shares into Series 4 Preferred Shares will be sent to the registered holders of the Series 3 Preferred Shares in accordance with the share conditions of the Series 3 Preferred Shares. Holders of Series 3 Preferred Shares are not required to elect to convert all or any part of their Series 3 Preferred Shares into Series 4 Preferred Shares. Holders who do not exercise their right to convert their Series 3 Preferred Shares into Series 4 Preferred Shares on such date will retain their Series 3 Preferred Shares, unless automatically converted in accordance with the conditions below.

The foregoing conversion right is subject to the conditions that: (i) if, after June 6, 2016, Manulife determines that there would be less than 1,000,000 Series 3 Preferred Shares outstanding on June 20, 2016, then all remaining Series 3 Preferred Shares will automatically be converted into an equal number of Series 4 Preferred Shares on June 20, 2016, and (ii) alternatively, if, after June 6, 2016, Manulife determines that there would be less than 1,000,000 Series 4 Preferred Shares outstanding on June 20, 2016, then no Series 3 Preferred Shares will be converted into Series 4 Preferred Shares. In either case, Manulife will give written notice to that effect to any registered holders of Series 3 Preferred Shares affected by the preceding minimums on or before June 13, 2016.

The dividend rate applicable to the Series 3 Preferred Shares for the 5-year period commencing on June 20, 2016, and ending on June 19, 2021, and the dividend rate applicable to the Series 4 Preferred Shares for the 3-month period commencing on June 20, 2016, and ending on September 19, 2016, will be determined and announced by way of a news release on May 24, 2016. Manulife will also give written notice of these dividend rates to the registered holders of Series 3 Preferred Shares.

Beneficial owners of Series 3 Preferred Shares who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (EDT) on June 6, 2016. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, CST Trust Company, at 1-800-387-0825.

Subject to certain conditions described in the Prospectus, Manulife may redeem the Series 3 Preferred Shares, in whole or in part, on June 19, 2021 and on June 19 every five years thereafter and may redeem the Series 4 Preferred Shares, in whole or in part, after June 20, 2016.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 4 Preferred Shares effective upon conversion. Listing of the Series 4 Preferred Shares is subject to Manulife fulfilling all the listing requirements of the TSX and, upon approval, the Series 4 Preferred Shares will be listed on the TSX under the trading symbol “MFC.PR.P”.

This is not a surprise given the low Issue Reset Spread of 141bp. I will report the reset rate when this is announced May 24.

Lowe’s Companies Inc. has announced:

that it has been granted approval under the Investment Canada Act and clearance from the Competition Bureau with respect to its pending acquisition of RONA inc. (TSX: RON, RON.PR.A, RON.PR.B) (“RONA”).

“We are very pleased that Canadian regulatory agencies have authorized the transaction and we look forward to the benefits it will bring to stakeholders across the country,” said Lowe’s Canada President Sylvain Prud’homme. “We have made significant commitments to the Canadian market overall, to Quebec and to the communities in which the company operates. We believe these commitments will serve customers, employees, dealer owners and our partners well on a long-term basis.”

RONA President and CEO Robert Sawyer added, “Today we have completed a major step toward the closing of the transaction, which will be very positive for the future of RONA, its employees and all of its stakeholders.”

Given that the transaction has previously been approved by RONA common shareholders, this announcement represents the last major milestone in the process and clears the way for final closing of the transaction. The Company expects to close on May 20.

Holders of RON.PR.A turned down Lowe’s offer of $20 via a plan of arrangement on March 31, while common shareholders were enthusiastic about their deal. The issue closed at 20.55-71 today; the comparators I examined while making my favourable recommendation are up more … some a lot more, some just a bit more.

Update, 2016-5-21: Closed:

Lowe’s Companies, Inc. (NYSE: LOW) (“Lowe’s” or the “Company”) today announced that it has completed its previously announced acquisition of RONA inc. (“RONA”), in a transaction valued at C$3.2 billion (US$2.4 billion).

Dundee Corporation has announced:

that it has issued a Notice of Redemption in respect of the redemption of up to a maximum of 15% of the issued and outstanding Series 5 Preferred Shares, at a price of $25.00 per Series 5 Preferred Share, plus any accrued and unpaid dividends (the “Redemption Price”), on June 30, 2016 (the “Redemption Date”) pursuant to the share provisions of the Series 5 Preferred Shares. The redemption is at the election of the beneficial holders of the Series 5 Preferred Shares, who have the right (the “Redemption Deposit Right”) to deposit and have redeemed up to a maximum of 15% of the Series 5 Preferred Shares beneficially owned by them at the Redemption Price on the
Redemption Date.

As the Series 5 Preferred Shares were issued in “book-entry only” form and are held by CDS Clearing and Depository Services Inc., a beneficial holder of the Series 5 Preferred Shares must contact their broker, dealer, bank, trust company or other nominee on or prior to 5:00 pm (Toronto time) on June 16, 2016 (the “Redemption Deposit Right Deadline”) to exercise his, her or its Redemption Deposit Right.

Holders should consult their tax advisors regarding the tax treatment to them of the redemption of the Series 5 Preferred Shares based on their particular circumstances.

Beneficial holders of the Series 5 Preferred Shares who intend to exercise their Redemption Deposit Right should ensure that they contact their broker, dealer, bank, trust company or other nominee well in advance of the Redemption Deposit Right Deadline to ensure that they understand the procedures and documentation required to exercise such right. The exercise of the Redemption Deposit Right by a holder of the Series 5 Preferred Shares in accordance with the foregoing shall be deemed to be a representation and warranty by such holder to the Corporation that such holder has exercised his, her or its Redemption Deposit Right for up to a maximum of 15% of the Series 5 Preferred Shares beneficially owned by them, and no further Series 5 Preferred Shares. Any holder of the Series 5 Preferred Shares who does not exercise his, her or its Redemption Deposit Right on or prior to the Redemption Deposit Right Deadline (or such other earlier time as may be indicated by their broker, dealer, bank, trust company or other nominee) shall not be entitled to have redeemed any Series 5 Preferred Shares beneficially owned on the Redemption Date.

Payment of the Redemption Price (less applicable withholding taxes, if any) will be made by the Corporation on or after June 30, 2016. After June 30, 2016, the former holders of the redeemed Series 5 Preferred Shares will not be entitled to dividends or to exercise any rights of holders of the Series 5 Preferred Shares in respect of such shares, except the right to receive the amount paid on redemption.

Assiduous Readers will remember that DC.PR.E came into being by exchange from DC.PR.C in a controversial reorganization.

Brookfield Investment Management Inc. has announced:

Global Resource Champions Split Corp. (the “Company”) (TSX: GRP.PR.A) announced today that it has completed its initial public offering of Class A Preferred Shares, Series 1 (the “Series 1 Shares”). The offering raised gross proceeds of $45.0 million, and was offered by a syndicate of agents led by Scotiabank, National Bank Financial Inc., CIBC, RBC Capital Markets, TD Securities Inc. and includes BMO Capital Markets, Raymond James Ltd., Canaccord Genuity Corp., Desjardins Securities Inc. and Laurentian Bank Securities Inc. (the “Agents”). A total of 1,800,000 Series 1 Shares were issued at a price of $25.00 per Series 1 Share. The Company also announced today that it has completed the issuance of 1,800,000 capital shares of the Company to Partners Value Investments Inc.

The Series 1 Shares have been rated Pfd-2 (low) by DBRS Limited. The Series 1 Shares will commence trading today on the Toronto Stock Exchange under the symbol “GRP.PR.A”.

The Company’s investment objectives with respect to the Series 1 Shares are (i) to provide holders of Series 1 Shares with fixed cumulative preferential quarterly cash distributions in the amount of $0.390625 per Series 1 Share to yield 6.25% per annum on the original issue price of the Series 1 Shares and (ii) on or about May 25, 2023, to pay the holders of Series 1 Shares the original issue price of $25.00 of those shares, through the redemption of each Series 1 Share held on May 25, 2023. Such quarterly distributions are expected to be paid by the Company to holders of record on the last Business Day of March, June, September and December in each year with payments being made on or before the 15th day of the following month. The initial distribution will be prorated from today’s date until September 30, 2016 and is expected to be payable on or before October 15, 2016 to holders of record on September 30, 2016. The final prospectus is available on SEDAR at www.sedar.com.

Initially, the Portfolio will consist of 15 large capitalization resource companies and will be approximately equally weighted on a U.S. dollar equivalent basis.

The prospectus may be found on SEDAR at “Global Resource Champions Split Corp. Apr 27 2016 23:01:16 ET Final long form prospectus – English PDF 883 K”. The regulators will not permit me to link directly to this public document since I and my readers are all disgusting investor scum, most of whom don’t even have government jobs. Brookfield hasn’t put it up on their site because they’re lazy.

Marketting for this issue commenced on April 5, 2016.

Interesting snippets from the Top Secret Prospectus include the following:

The Series 1 Shares and the Capital Shares are being offered separately but will be issued only on the basis that an equal number of Series 1 Shares and Capital Shares will be outstanding. Partners Value Investments Inc. (formerly Partners Value Fund Inc.) (“Partners Value Investments”) will acquire all of the Capital Shares to be issued in connection with the Offering of the Series 1 Shares under this prospectus.
…
Investment Objectives:
The Company’s investment objectives with respect to the Series 1 Shares are:
(a) to provide holders of Series 1 Shares with fixed cumulative preferential quarterly cash distributions in the amount of $0.390625 per Series 1 Share to yield 6.25% per annum on the original issue price of the Series 1 Shares; and
(b) on or about May 25, 2023 (the “Final Series 1 Redemption Date”), to pay the holders of Series 1 Shares the original issue price of $25.00 per share, through the redemption of each Series 1 Share held on the Final Series 1 Redemption Date.
…
Holders of Series 1 Shares will be entitled to receive quarterly fixed cumulative preferential distributions equal to $0.390625 per Series 1 Share to yield 6.25% per annum on the original issue price of the Series 1 Shares. Such quarterly distributions are expected to be paid by the Company to holders of record on the last Business Day of March, June, September and December in each year with payments being made on or before the 15th day of the following month. The initial distribution will be prorated from the Closing Date until September 30, 2016 and is expected to be payable on or about October 15, 2016 to holders of record on September 30, 2016. See “Details of the Offering — Series 1 Shares — Dividends”.

The dividends on the Preferred Shares are expected to be funded from the dividends received on the Portfolio Securities. If, for any reason, the dividends received by the Company on the Portfolio Securities are insufficient to fully fund the Preferred Share dividends, the Company may sell Portfolio Securities, borrow under the Revolving Credit Facility or Margin Facility, as applicable, or write covered call options on such shares to the extent necessary to fund any shortfall. Any portion of the dividends on the Preferred Shares which is derived from the proceeds of sale of the Portfolio Securities will consist of Ordinary Dividends or a combination of a Capital Gains Dividend and Ordinary Dividends. Any option premium received in a year (other than in respect of options outstanding at year end or options that are subject to the DFA Rules (as defined below)) will be distributed as a Capital Gains Dividend in the year on the Preferred Shares. There can be no assurance that the Company will be able to pay dividends to the holders of Preferred Shares. See “Dividend Policy”.
…
If the Company is not permitted to issue Debentures at any time pursuant to the terms of the Indenture and a purchaser cannot be found pursuant to the terms of the Remarketing Agreement or the retracting holder has withheld its consent, holders who surrender Series 1 Shares for retraction will receive cash in an amount equal to the Series 1 Share Retraction Price. See “Details of the Offering – Series 1 Shares – Retraction.” The Series 1 Share Retraction Price will be equal to the least of (i) 95% of the Net Asset Value per Unit on the Retraction Valuation Date, (ii) 95% of the VWAP of the Series 1 Shares for the three Business Days ending on the Deposit Date and (iii) $23.75.
…
Series 1 Shares may be redeemed by the Company at any time at a price (the “Series 1 Share Redemption Price”) equal to (i) $25.00 per share plus accrued and unpaid dividends if the date specified for redemption is prior to the Final Series 1 Redemption Date; and (ii) the lesser of (x) $25.00 plus accrued and unpaid dividends and (y) the Net Asset Value per Unit on the Final Series 1 Redemption Date if the date specified for redemption is the Final Series 1 Redemption Date. See “Details of the Offering — Series 1 Shares — Redemption”.
…
The Series 1 Shares have been provisionally rated Pfd-2 (low) by DBRS Limited. See “Details of the Offering — Series 1 Shares — Ratings”.
…
No distributions will be paid on the Capital Shares if (i) the distributions payable on the Series 1 Shares or the payment of interest on any Debentures issued by the Company are in arrears, or (ii) after the payment of the distribution by the Company, the NAV per Unit would be less than $36.00. See “Calculation of Net Asset Value”.
…
In the case of a holder that is an individual, Ordinary Dividends will be subject to the gross-up and dividend tax credit rules under the Tax Act normally applicable to taxable dividends received from a taxable Canadian corporation. Such Ordinary Dividends will be eligible for the enhanced gross-up and dividend tax credit if the Company designates the Ordinary Dividends as “eligible dividends”. There may be limitations on the Company’s ability to designate Ordinary Dividends as eligible dividends.

GRP.PR.A will be tracked by HIMIPref™ and has been assigned to the SplitShare subindex.

The issue traded 49,135 shares today in a range of 24.76-94 before closing at 24.76-80, 3×5. Vital statistics are:

Update, 2016-5-9: DBRS finalizes Pfd-2(low) rating:

The initial downside protection available to the holders of the Preferred Shares is expected to be greater than 54% (after offering expenses). Downside protection available to the Pre¬ferred Shares consists of the NAV of the Capital Shares. Upon maturity, the holders of the Preferred Shares will be en¬titled to the value of the Portfolio Securities, up to the face value of the Preferred Shares, in priority to the holders of the Capital Shares (but behind any secured creditors and other senior indebtedness). The holders of the Capital Shares will be entitled to the distribu¬tion in the excess of dividend income on the Portfolio Securities beyond what is required to pay the holders of the Preferred Shares, as well as all capital appreciation.

The Pfd-2 (low) rating of the Preferred Shares is primarily based on the expected level of downside protection and dividend coverage available to holders of the Preferred Shares, as well as the credit quality and consistency of dividend distributions of the Portfolio holdings.

CU Inc. has announced:

that it has notified the registered shareholder of its Cumulative Redeemable Preferred Shares Series 4 (“Series 4 Preferred Shares”) of a conversion privilege and applicable dividend rates. As a result, subject to certain conditions, the holders of Series 4 Preferred Shares will have the right to choose one of the following options with regard to their shares:
1. To retain any or all of their Series 4 Preferred Shares and continue to receive a fixed rate quarterly dividend; or
2. To convert, on a one-for-one basis, any or all of their Series 4 Preferred Shares into Cumulative Redeemable Preferred Shares Series 5 (“Series 5 Preferred Shares”) of CU Inc. and receive a floating rate quarterly dividend.

Effective June 1, 2016, the annual dividend rate for the Series 4 Preferred Shares is set at 2.24% for the next five-year period and the dividend rate for the Series 5 Preferred Shares is set at an annual rate of 1.90% for the three-month period commencing June 1, 2016 to but excluding September 1, 2016. The dividend rate for the Series 5 Preferred Shares will be reset each quarter. Both rates were calculated according to the terms described in the short form prospectus of CU Inc. dated November 24, 2010.

Beneficial owners of Series 4 Preferred Shares who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to meet the deadline to exercise such right, which is 3 p.m. (Calgary time) / 5 p.m. (Toronto time) on May 17, 2016. Any notices received after this deadline will not be valid. As such, it is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary with time to complete the necessary steps. The foregoing conversions are subject to the conditions that: (i) if CU Inc. determines that there would be less than 1,000,000 Series 4 Preferred Shares outstanding on June 1, 2016, then all remaining Series 4 Preferred Shares will automatically be converted into Series 5 Preferred Shares on June 1, 2016, and (ii) alternatively, if CU Inc. determines that there would be less than 1,000,000 Series 5 Preferred Shares outstanding on June 1, 2016 after giving effect to conversion notices received, no Series 4 Preferred Shares will be converted into Series 5 Preferred Shares. If either of these scenarios occurs, CU Inc. will issue a news release to that effect on or before May 24, 2016.

Holders of the Series 4 Preferred Shares and the Series 5 Preferred Shares will have the opportunity to convert their shares again on June 1, 2021, and every five years thereafter as long as the shares remain outstanding.

For more information on the terms of, and risks associated with an investment in, the Series 4 Preferred Shares and the Series 5 Preferred Shares, please see CU Inc.’s short form prospectus dated November 24, 2010, which can be found under CU Inc.’s profile on SEDAR at www.sedar.com.

CIU.PR.C is a FixedReset, 3.80%+136, that commenced trading 2010-12-2 after being announced 2010-11-16.

The new rate therefore represents a 41% cut in dividends. Ouch!

As noted, the deadline to notify the company is 5 p.m. (Toronto time) on May 17, 2016.; brokers will have internal deadlines a day or two in advance.

I will post a recommendation regarding whether or not to convert closer to the deadline.

BCE Inc. has announced:

that 5,884,470 of its 10,841,056 fixed-rate Cumulative Redeemable First Preferred Shares, Series AG (“Series AG Preferred Shares”) have been tendered for conversion on May 1, 2016, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AH (“Series AH Preferred Shares”). In addition, 28,765 of its 3,158,944 Series AH Preferred Shares have been tendered for conversion on May 1, 2016, on a one-for-one basis, into Series AG Preferred Shares. Consequently, on May 1, 2016, BCE will have 4,985,351 Series AG Preferred Shares and 9,014,649 Series AH Preferred Shares issued and outstanding. The Series AG Preferred Shares and the Series AH Preferred Shares will continue to be listed on the Toronto Stock Exchange under the symbols BCE.PR.G and BCE.PR.H, respectively.

The Series AG Preferred Shares will pay on a quarterly basis, for the five-year period beginning on May 1, 2016, as and when declared by the Board of Directors of BCE, a fixed cash dividend based on an annual fixed dividend rate of 2.80%.

The Series AH Preferred Shares will continue to pay a monthly floating adjustable cash dividend for the five-year period beginning on May 1, 2016, as and when declared by the Board of Directors of BCE. The monthly floating adjustable dividend for any particular month will continue to be calculated based on the prime rate for such month and using the Designated Percentage for such month representing the sum of an adjustment factor (based on the market price of the Series AH Preferred Shares in the preceding month) and the Designated Percentage for the preceding month.

Readers will remember that BCE.PR.G reset to 2.80%, a cut of about 38% in the dividend. BCE.PR.H, the RatchetRate preferred that currently pays 100% of Prime (which can be reduced as low as 50%, but this is dependent upon the issue trading above par for an extended period, which seems unlikely in the current environment), has suffered much less over the past five years, as Prime was 3.00% on May 1, 2011 and is now 2.70%.

As for the future:

Today’s bid prices of 13.52 for BCE.PR.G and 14.20 for BCE.PR.H imply that Prime must average 3.48% over the next five years for the two issues to realize equal total returns, which is not unreasonable and is in line with other pairs.

BCE Inc. has announced:

• Transaction enterprise value of approximately $3.9 billion: BCE to acquire all issued and outstanding common shares of MTS for approximately $3.1 billion and assume outstanding net debt of approximately $0.8 billion
• $40 per common share value represents a significant premium for MTS shareholders; transaction unanimously recommended by the MTS Board of Directors
• Bell MTS team will serve customers across Manitoba, Winnipeg head office will become Bell’s Western Canada headquarters
• $1-billion, 5-year capital investment commitment to expand broadband wireless and wireline networks in urban and rural locations throughout Manitoba
• Free cash flow accretion supports Bell’s broadband leadership strategy, dividend growth objective

MONTRÉAL and WINNIPEG, May 2, 2016 /CNW Telbec/ – BCE Inc. (Bell) (TSX: BCE) (NYSE: BCE) today announced that it will acquire all of the issued and outstanding common shares of Manitoba Telecom Services Inc. (MTS) (TSX: MBT) in a transaction valued at approximately $3.9 billion.
…
Bell plans to invest $1 billion in capital over 5 years after the transaction closes to expand its broadband networks and services throughout Manitoba, including:

• Gigabit Fibe Internet availability, delivering Internet speeds on average up to 20 times faster than those currently offered to MTS customers, within 12 months after the transaction closes.
• the rollout of Fibe TV, Bell’s innovative broadband television service.
• accelerated expansion of the company’s award-winning LTE wireless network throughout the province, with average data speeds twice as fast as those now available to MTS customers.
• integration of MTS’s Winnipeg data centre with Bell’s existing national network of 27 data and cloud computing centres, Canada’s largest, and the country’s most extensive broadband fibre network footprint.

…
BCE will fund the cash component of the transaction from available sources of liquidity and will issue approximately 28 million common shares for the equity portion of the transaction, which offers MTS shareholders access to BCE’s dividend growth potential. The BCE dividend has been increased 12 times, representing an aggregate increase of 87%, since Q4 2008 and currently delivers an attractive 4.6% yield. When the transaction is completed, MTS shareholders will own approximately 3% of pro forma BCE common equity.

They later announced:

that it will divest one-third of the postpaid wireless subscribers of Manitoba Telecom Services Inc. (MTS) (TSX: MBT) to TELUS Corp. (TSX: T, NYSE: TU) following the completion of Bell’s acquisition of MTS announced earlier today. As part of the transaction, Bell will also assign one-third of MTS dealer locations in Manitoba to TELUS.

“This transaction with TELUS enhances wireless competition to the benefit of Manitobans while reducing the cost of our acquisition of MTS,” said George Cope, President and CEO of BCE and Bell Canada.

The Bell-TELUS transaction is subject to regulatory approvals and customary closing conditions. The Bell-MTS transaction is not conditional on completion of the Bell-TELUS transaction.

DBRS currently has BCE’s preferred shares at Pfd-3(high) and says that it:

has today placed all ratings of Bell Canada (the Company) and its parent company BCE Inc. (BCE) Under Review with Negative Implications, following the Company’s announcement that it has entered into a definitive arrangement agreement to acquire all of the issued and outstanding shares of Manitoba Telecom Services Inc. (MTS; rated BBB with a Stable trend by DBRS).
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DBRS forecasts that pro forma debt should peak at $22.3 billion upon closing of the Transaction, compared to $20.4 billion at the end of Q1 2016. As such, gross debt-to-EBITDA is expected to increase moderately to between 2.4x and 2.5x, from 2.36x in LTM Q1 2016. While this Transaction, in and of itself, is not viewed as materially negative to the Company’s financial risk profile, DBRS believes that the Company’s prolonged period of elevated financial leverage, coupled with continually mounting risks within the communications industry, has gradually eroded flexibility in the current rating levels. DBRS notes that the Company has completed several largely debt-financed acquisitions since in recent years, including: CTVglobemedia Inc. in 2011, Maple Leafs Sports and Entertainment Ltd. in 2012, Astral Media Inc. in 2013 and the minority interest in Bell Aliant in 2014, as well as over $1 billion in spectrum acquisitions in 2014 and 2015. This contributed to Bell Canada remaining above its internal financial leverage target (net debt-to-EBITDA of 1.75x to 2.25x) and a range suitable for the A (low) rating category.

DBRS had chosen to see through elevated leverage associated with previous acquisitions, based on the combination of benefits to the Company’s business profile and expectations of deleveraging to levels appropriate for an A (low) category within a reasonable time frame. In its most recent confirmation and following the Bell Aliant transaction, DBRS stated that it expected the Company to reduce gross debt-to-EBITDA toward 2.0x by mid-2017, and that failure to do so could result in a negative rating action. DBRS estimates that this previously understood schedule for deleveraging could be delayed by 12 to 18 months as a result of the MTS acquisition.

DBRS is reluctant to extend the deleveraging time frame once again due to the protracted period of elevated financial leverage, combined with intensifying competition in the wireless market, and increased risks in the media business, including structural (cord shaving/cord cutting and over-the-top video streaming) and regulatory changes (pick and pay) affecting television broadcasting, coupled with weakness in advertising. Furthermore, DBRS estimates that the Company’s pro forma free cash flow (after dividends) to total debt will remain below 5% over the near to medium term, which could limit management’s ability to deleverage by an adequate degree.

Meanwhile S&P states:

that BCE Inc.’s announcement that it would acquire Manitoba Telecom Services Inc. (MTS) does not affect its rating or outlook on BCE (BBB+/Stable/–). We expect that the C$3.9 billion acquisition, which is about 45% equity funded, would preserve BCE’s debt leverage below our key 3.0x adjusted debt to EBITDA threshold for rating pressure.
…
We estimate that the proposed transaction would be modestly leveraging under our base-case forecasts for BCE and MTS, holding BCE’s pro forma adjusted debt to EBITDA at about 2.8x in 2016 before improving slowly to about 2.7x in 2017. Moreover, we estimate that funds from operations to debt would remain below 30% until 2018, which is weak for the rating. That said, our adjusted leverage estimate is only 0.1x higher because of this transaction, which accounts for less than 5% of BCE’s enterprise value.

S&P Global Ratings believes that the acquisition has limited potential to improve BCE’s profitability and returns, despite MTS’ higher EBITDA margins, given the multiple paid, reflecting MTS’ unique wireline and wireless franchise in Manitoba, as well as the modest geographic or operational overlap with BCE’s assets.

S&P rates the BCE preferreds at P-2(low).

Affected issues are: BCE.PR.A, BCE.PR.B, BCE.PR.C, BCE.PR.D, BCE.PR.E, BCE.PR.F, BCE.PR.G, BCE.PR.H, BCE.PR.I, BCE.PR.J, BCE.PR.K, BCE.PR.M, BCE.PR.N, BCE.PR.O, BCE.PR.Q, BCE.PR.R, BCE.PR.S, BCE.PR.T, BCE.PR.Y and BCE.PR.Z.

Pembina Pipeline Corporation has announced:

that it has closed its previously announced public offering of 10,000,000 cumulative redeemable minimum rate reset class A preferred shares, Series 13 (the “Series 13 Preferred Shares”) for aggregate gross proceeds of $250 million (the “Offering”). The Offering was announced on April 18, 2016 when Pembina entered into an agreement with a syndicate of underwriters co-led by RBC Capital Markets and Scotiabank.

The Company intends to use the net proceeds from the Offering for capital expenditures and working capital requirements in connection with the Company’s 2016 capital program and to reduce indebtedness under the Company’s credit facilities.

The Series 13 Preferred Shares will begin trading on the Toronto Stock Exchange today under the symbol PPL.PR.M.

Dividends on the Series 13 Preferred Shares are expected to be $1.4375 per share annually, payable quarterly on the 1st day of March, June, September and December, as and when declared by the Board of Directors of Pembina, for the initial fixed rate period to but excluding June 1, 2021. The first dividend, if declared, will be payable September 1, 2016, in the amount of $0.5002 per share.

All of Pembina’s dividends are designated “eligible dividends” for Canadian income tax purposes.

PPL.PR.M is a FixedReset, 5.75%+496M575, announced April 18. The issue will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

The issue traded 1,037,730 shares today (consolidated exchanges) in a range of 24.93-10 before closing at 24.99-04, 1×105. This should be considered “soft”, given that the TXPL total return index returned +1.45% from April 18 to April 27. Vital statistics are:

Implied Volatility analysis continues to show a high level of Implied Volatility, with the spread widening since announcement day:

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Brookfield Office Properties Inc., a subsidiary of Brookfield Property Partners, has announced:

the completion of its previously announced Preferred Shares, Series CC issue in the amount C$200 million. The offering was underwritten by a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank. On April 18, 2016, the syndicate agreed to purchase 6,000,000 Preferred Shares, Series CC at C$25.00 per share and has since exercised its option in full to purchase an additional 2,000,000 shares at the same offering price.

The Preferred Shares, Series CC will yield 6.00% annually for the initial period ending June 30, 2021. Net proceeds from the issue will be added to the general funds of Brookfield Office Properties and be used for general corporate purposes, including, but not limited to, redemption of existing preferred shares, repayment of revolving debt, acquisitions, capital expenditures and working capital needs.

The Preferred Shares, Series CC will commence trading on the Toronto Stock Exchange on April 27, 2016 under the ticker symbol BPO.PR.C.

BPO.PR.C is a FixedReset, 6.00%+518M600, announced April 18. The issue will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

The issue traded 898,337 shares today (consolidated exchanges) in a range of 25.10-25 before closing at 25.18-21, 26×25. This is reasonably close to the expected value, given that the TXPL total return index returned +1.45% from April 18 to April 27. Vital statistics are:

Implied Volatility analysis shows the same peculiar behaviour as was noted on the announcement date, with BPO.PR.N (resetting at +307 on 2016-6-30) and BPO.PR.R (+348 on 2016-9-30) both showing a far higher Expected Future Current Yield than the new issue, despite the new issue’s far higher Issue Reset Spread.

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Brookfield Office Properties Inc., a subsidiary of Brookfield Property Partners, has announced:

that it intends to redeem all 8,000,000 of its outstanding Class AAA Preference Shares, Series H (TSX: BPO.PR.H), all of which are beneficially held by CDS & Co., as nominee of CDS Clearing and Depositary Services Inc., for cash on May 23, 2016. The redemption price for each such share will be C$25.00 plus accrued and unpaid dividends thereon.

Notice of Redemption has been sent to CDS & Co. Payment of the redemption price will be made to all beneficial holders of the Series H Shares on or after May 23, 2016 through the facilities of CDS & Co.

BPO.PR.H is an interesting issue since, pursuant to a Plan of Arrangement announced in May, 2014, some holders exchanged their shares for preferred shares of Brookfield Property Split Corp. (symbol BPS):

56.8% of the BPO preference shares series H that holders elected (or are deemed to have elected) to exchange for BOP Split preferred shares were exchanged … In aggregate, $25 million of each of the four series of BOP Split preferred shares were issued.

BOP Split still does not have its own website; shareholders are serviced via the Brookfield Office Properties site and SEDAR.