Category: Issue Comments

Standard & Poor’s has announced:

• •Mooresville, N.C.-based home improvement retailer Lowe’s Cos. Inc. has completed its previously announced acquisition of Quebec-based RONA Inc. for about C$3.2 billion.
• •As a result, we are raising our long-term corporate credit rating on RONA to ‘BBB+’ from ‘BB+’ and removing the company from CreditWatch, where we had placed it with positive implications Feb. 3, 2016. The outlook is stable.
• •At the same time, we are raising our issue-level rating on RONA’s senior unsecured notes to ‘BBB+’ from ‘BB+’ and our rating on its preferred shares to ‘BBB-‘ from ‘B+’.

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“In our opinion, RONA’s operations are important to Lowe’s long-term growth strategy,” said S&P Global Ratings credit analyst Alessio Di Francesco. As such, we believe Lowe’s is unlikely to sell RONA and we expect that Lowe’s would likely provide additional liquidity, capital, or risk transfer in most foreseeable circumstances. We believe the 496 stores and nine distribution centers Lowe’s acquired from RONA should improve the competitive position of its Canadian business by increasing its scale and effectively taking out a competitor. Prior to completing this acquisition, Lowe’s had only 42 stores in Canada. Furthermore, RONA offers Lowe’s an important entry into Quebec (almost 25% of the Canadian home improvement market) where Lowe’s previously had no presence.

RON.PR.A and RON.PR.B were last mentioned on PrefBlog when the effective date of the Plan of Arrangement was announced.

DBRS has not yet resolved its Review-Positive of RONA, which was announced when the plan of arrangement was proposed.

DBRS has announced that it:

has today discontinued the Issuer Rating, Medium-Term Notes and Preferred Shares – Cumulative ratings of Emera Inc. (Emera or the Company). The ratings are being discontinued at the Company’s request. Prior to the rating discontinuation, Emera’s ratings were Under Review with Developing Implications following the announcement that the Company agreed to acquire TECO Energy Incorporated on September 4, 2015.

This follows the announcement by Emera:

that in connection with the proposed offering of unsecured, subordinated notes (the “Hybrid Notes”) of Emera, it has filed a preliminary short form base shelf prospectus (the “Base Shelf”) with the Nova Scotia Securities Commission (the “NSSC”) under the United States / Canada Multijurisdictional Disclosure System and a corresponding shelf registration statement (the “Registration Statement”) with the United States Securities and Exchange Commission (the “SEC”) on Form F-10.

In addition, Emera announced today that: (i) Emera US Finance LP (the “U.S. Notes Issuer”), a limited partnership wholly-owned directly and indirectly by Emera, intends to issue multiple series of United States dollar denominated senior, unsecured notes (the “U.S. Notes”), fully and unconditionally guaranteed by Emera US Holdings Inc., a wholly-owned subsidiary of Emera (“EUSHI”) and Emera (together with EUSHI, the “Guarantors”), pursuant to an offering memorandum; and (ii) Emera intends to issue one or more series of Canadian dollar denominated senior, unsecured notes (the “Canadian Notes”), and may issue Canadian dollar denominated unsecured, subordinated notes, in each case, on a private placement basis in each of the provinces of Canada pursuant to an offering memorandum.

Emera has filed the Base Shelf and Registration Statement relating to the proposed offering of the Hybrid Notes and is separately undertaking the proposed offerings of the U.S. Notes and the Canadian Notes, and may undertake an offering of Canadian dollar denominated unsecured, subordinated notes, to raise up to approximately Cdn$6.6 billion in the aggregate as part of the financing of the previously announced acquisition of TECO Energy, Inc. (“TECO Energy”) by Emera (the “Acquisition”).
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Upon the closing of the Acquisition, Emera intends to use the net proceeds from any offering of Hybrid Notes, U.S. Notes and/or Canadian Notes to finance, directly or indirectly, part of the purchase price payable for the Acquisition (including acquisition-related expenses) and to reduce amounts outstanding under the credit facilities established in favour of Emera to fund the purchase price payable for the Acquisition, to the extent any amounts are drawn on such facilities in connection with the Acquisition. If certain of the net proceeds from any offering of Hybrid Notes, U.S. Notes or Canadian Notes are not otherwise required to complete the Acquisition, Emera intends to use such net proceeds for general corporate purposes.

If (i) the Acquisition is not consummated on or prior to the later of December 31, 2016 and the date that is no later than June 30, 2017 if the closing of the Acquisition has been extended by Emera or TECO Energy in accordance with the terms of the agreement and plan of merger relating to the Acquisition (the “Acquisition Agreement”) (as such date may be extended, the “special mandatory redemption triggering date”) or (ii) the Acquisition Agreement is terminated at any time prior to the special mandatory redemption triggering date, then Emera will be required to redeem any Hybrid Notes and may be required to redeem the Canadian Notes and the U.S. Notes Issuer will be required to redeem any U.S. Notes.

Standard & Poor’s has announced:

• •Nova Scotia-based electric utility Emera Inc. has announced its intention to issue subordinated hybrid notes and senior unsecured notes to finance in part its purchase of TECO Energy.
• •At the same time, Emera has announced its intention to issue senior unsecured notes in the U.S. through its wholly owned and unconditionally guaranteed subsidiary, Emera US Finance LP.
• •We are assigning our ‘BBB’ issue-level rating to the senior unsecured notes of Emera and Emera US Finance L.P., and our ‘BBB-‘ issue-level rating to Emera’s subordinated hybrid notes.

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S&P Global Ratings today said it assigned its ‘BBB’ issue-level rating to Emera Inc. and Emera US Finance L.P.’s proposed senior unsecured notes. We expect that total issuance between the two entities of senior unsecured notes will be approximately US$3.4 billion. In addition, we have assigned our ‘BBB-‘ issue-level rating to Emera’s proposed subordinated hybrid note issuance. We expect that total issuance of hybrid notes will be up to approximately US$1.25 billion. These issuances are to finance in part Emera’s purchase of TECO Energy.

EMA had been rated Pfd-3(high) by DBRS; it is rated P-2(low) by S&P.

Affected issues are EMA.PR.A, EMA.PR.B, EMA.PR.C, EMA.PR.E and EMA.PR.F.

Quadravest has announced:

Dividend 15 Split Corp. (the “Company”) is pleased to announce it has filed a preliminary short form prospectus in each of the provinces of Canada with respect to an offering of Preferred Shares and Class A Shares of the Company. The offering will be co-led by National Bank Financial Inc., CIBC, RBC Capital Markets, and will also include Scotia Capital Inc., TD Securities Inc., BMO Capital Markets, GMP Securities L.P., Canaccord Genuity Corp., Raymond James, Desjardins Securities Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

The Preferred Shares will be offered at a price of $10.00 per Preferred Share to yield 5.25% and the Class A Shares will be offered at a price of $10.50 per Class A Share to yield 11.43%. The closing price on the TSX of each of the Preferred Shares and the Class A Shares on May 31, 2016 was $10.16 and $10.87, respectively.

Since inception of the Company, the aggregate dividends declared on the Preferred Shares have been $6.41 per share and the aggregate dividends declared on the Class A Shares have been $18.10 per share (including five special distributions of $0.25 per share, one special distribution of $0.50 per share and one special stock dividend of $1.75 per share), for a combined total of $24.51 per unit. All distributions to date have been made in tax advantage eligible Canadian dividends or capital gains dividends.

The net proceeds of the offering will be used by the Company to invest in an actively managed, high quality portfolio consisting of 15 dividend yielding Canadian companies as follows:

Bank of Montreal	Enbridge Inc.	TELUS Corporation
The Bank of Nova Scotia	Manulife Financial Corp.	Thomson-Reuters Corporation
BCE Inc.	National Bank of Canada	The Toronto-Dominion Bank
Canadian Imperial Bank of Commerce	Royal Bank of Canada	TransAlta Corporation
CI Financial Corp.	Sun Life Financial Inc.	TransCanada Corporation

The Company’s investment objectives are:
Preferred Shares:
i. to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends in the amount of 5.25% annually; and
ii. on or about the termination date, currently December 1, 2019 (subject to further 5 year extensions thereafter), to pay the holders of the Preferred Shares $10.00 per Preferred Share.

Class A Shares:
i. to provide holders of the Class A Shares with regular monthly cash dividends currently targeted to be $0.10 per share; and
ii. on or about the termination date, currently December 1, 2019 (subject to further 5 year extensions thereafter) to pay holders of Class A Shares at least the original issue price of those shares.

The sales period of this overnight offering will end at 9:00 a.m. EST on June 2, 2016.

DFN.PR.A was last mentioned on PrefBlog when it successfully concluded a $94-million treasury offering in May, 2015.

Update, 2016-6-13: Raised $47.7-million:

Dividend 15 Split Corp. (the “Company”) is pleased to announce it has completed the overnight marketing of up to 2,328,000 Preferred Shares and up to 2,328,000 Class A Shares of the Company. The total proceeds of the offering are expected to be approximately $47.7 million.

Update, 2016-6-16: Closed:

Dividend 15 Split Corp. (the “Company”) is pleased to announce it has completed the overnight offering of 2,328,000 Preferred Shares and 2,328,000 Class A Shares of the Company. Total proceeds of the offering were $47.7 million, bringing the Company’s net asset to approximately $580.6 million. The shares will trade on the Toronto Stock Exchange under the existing symbols of DFN.PR.A (Preferred Shares) and DFN (Class A Shares).

The Preferred Shares were offered at a price of $10.00 per Preferred Share to yield 5.25% and the Class A Shares were offered at a price of $10.50 per Class A Share to yield 11.43%.

The offering was co-led by National Bank Financial Inc., CIBC, RBC Capital Markets, and also included Scotia Capital Inc., TD Securities Inc., BMO Capital Markets, GMP Securities L.P., Canaccord Genuity Corp., Raymond James, Desjardins Securities Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

DBRS has announced:

has today downgraded the Cumulative Preferred Shares rating of GMP Capital Inc. (GMP or the Company) to Pfd-4 (high) from Pfd-3 (low). The trend is now Stable. This concludes the review of the rating that was initiated on January 14, 2016, following GMP’s announcement that it is undertaking a series of fundamental organizational changes.

The downgrade reflects DBRS’s view that GMP’s franchise positioning and earnings are weakened relative to past levels at a time when the headwinds facing GMP remain challenging. Indeed, GMP has reported net losses attributable to common shareholders in three out of the past four fiscal years, as well as a loss in Q1 2016. To cope with the difficult operating environment, the Company is executing a restructuring plan to reduce costs and refocus its franchise on its core competencies and markets. While DBRS views the restructuring as prudent, it reduces the scope of the Company’s capital markets franchise and diversity of its revenue streams, both of which had previously supported the rating. Moreover, DBRS expects that the Company will continue to face significant headwinds given its focus on commodities-related sectors, limiting the Company’s ability to generate capital through retained earnings.

The Stable trend reflects DBRS’s view that the restructuring, combined with the run-off of certain guaranteed compensation arrangements in 2016, has better positioned GMP’s franchise to return to sustainable profitability.

This downgrade has been in the wind since the January 2016 restructuring announcement and DBRS Review-Negative. There was recently a 22% conversion from GMP.PR.B to GMP.PR.C.

Manulife Financial Corporation has announced:

the applicable dividend rates for its Non-cumulative Rate Reset Class 1 Shares Series 3 (the “Series 3 Preferred Shares”) (TSX: MFC.PR.F) and Non-cumulative Floating Rate Class 1 Shares Series 4 (the “Series 4 Preferred Shares”).

With respect to any Series 3 Preferred Shares that remain outstanding after June 20, 2016, commencing as of such date, holders thereof will be entitled to receive fixed rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the five-year period commencing on June 20, 2016, and ending on June 19, 2021, will be 2.17800% per annum or $0.136125 per share per quarter, being equal to the sum of the five-year Government of Canada bond yield as at May 24, 2016, plus 1.41%, as determined in accordance with the terms of the Series 3 Preferred Shares.

With respect to any Series 4 Preferred Shares that may be issued on June 20, 2016 in connection with the conversion of the Series 3 Preferred Shares into the Series 4 Preferred Shares, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, calculated on the basis of actual number of days elapsed in each quarterly floating rate period divided by 365, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the three-month period commencing on June 20, 2016, and ending on September 19, 2016, will be 0.49125% (1.94900% on an annualized basis) or $0.122814 per share, being equal to the sum of the three-month Government of Canada Treasury bill yield as at May 24, 2016, plus 1.41%, as determined in accordance with the terms of the Series 4 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. The news release announcing such conversion right was issued on May 9, 2016 and can be viewed on SEDAR or Manulife’s website. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, CST Trust Company, at 1-800-387-0825.

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”.

The earlier announcement of the extension was reported on PrefBlog.

MFC.PR.F is a FixedReset, 4.20%+141, that commenced trading 2011-3-11 after being announced 2011-3-7

The new rate therefore represents a 48% cut in dividends. Ouch!

As noted, the deadline to notify the company is 5 p.m. (Toronto time) on June 6, 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.

CU Inc. has announced:

that after having taken into account all election notices following the May 17, 2016 conversion deadline for the Cumulative Redeemable Preferred Shares Series 4 (“Series 4 Preferred Shares”) tendered for conversion into Cumulative Redeemable Preferred Shares Series 5 (“Series 5 Preferred Shares”), the holders of Series 4 Preferred Shares are not entitled to convert their Series 4 Preferred Shares into Series 5 Preferred Shares. There were approximately 204,540 Series 4 Preferred Shares tendered for conversion, which is less than the one million shares required to give effect to conversions into Series 5 Preferred Shares.

The Series 4 Preferred Shares will continue to pay on a quarterly basis, for the five-year period beginning on June 1, 2016, as and when declared by the Board of Directors of CU Inc., a fixed dividend based on an annual dividend rate of 2.24%.

For more information on the terms of, and risks associated with an investment in, the Series 4 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.

It will be remembered that CIU.PR.C is a FixedReset that commenced trading 2010-12-2 after being announced 2010-11-16. It resets at +136 and will commence paying 2.24% on 2016-6-1.

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.