Category: Issue Comments

Quadravest has announced:

North American Financial 15 Split Corp. (the “Company”) is pleased to announce that the minimum annual dividend rate for the Preferred Shares will increase to 7.00% from 5.5% for the new five year term effective December 1, 2024. The payment rate that may be reset annually, subject to the five year minimum, will be set at 8.75% (previously 9.50%) per annum effective December 1, 2024 based on the $10.00 repayment value. The Preferred shareholders have received a total of $11.38 per share in distributions since inception. The dividend policy for the Class A Shares will remain at the current targeted rate of $0.11335 per month, or $1.36 per annum.

As previously announced on March 12, 2024 the Company will extend the termination date of the Company a further five year period from December 1, 2024 to December 1, 2029. In relation to the term extension, the Company has an additional retraction right for those shareholders not wishing to continue holding their investment, allowing existing shareholders to tender one or both classes of shares and receive a retraction price based on the November 29, 2024 net asset value per unit. Alternatively, shareholders may sell their shares for the market price at any time, potentially at a higher price than would be achieved through retraction, or shareholders may take no action and continue to
hold their shares.

The Company invests in a high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows: Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto-Dominion Bank, National Bank of Canada, Manulife Financial Corporation, Sun Life Financial, Great-West Lifeco, CI Financial Corp, Bank of America, Citigroup Inc., Goldman Sachs Group, JP Morgan Chase & Co. and Wells Fargo & Co.

Notice of extension was provided last March.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Quadravest has announced:

Dividend 15 Split Corp. (the “Company”) is pleased to announce an increase in the Preferred Share dividend rate to 7.00% from 5.50% on the $10.00 repayment value for the new five-year term effective December 1, 2024. The Preferred Share monthly dividends will be $0.05833 per share or $0.70 per annum and the new distribution rate represents an increase of $0.15 per annum from the previous rate. Preferred shareholders have received a total of $10.86 per share in distributions since inception. The dividend policy for the Class A Shares will remain at the current targeted rate of $0.10 per month, or $1.20 per annum.

As previously announced on March 12, 2024 the Company will extend the termination date a further five year period from December 1, 2024 to December 1, 2029. In relation to the term extension and the Preferred Share rate increase, the Company has an additional retraction right for those shareholders not wishing to continue holding their investment, allowing existing shareholders to tender one or both classes of shares and receive a retraction price based on the November 29, 2024 net asset value per unit. Alternatively, shareholders may sell their shares for the market price at any time, potentially at a higher price than would be achieved through retraction, or shareholders may take no action and continue to hold their shares.

The Company invests in a high quality portfolio of leading Canadian dividend-yielding stocks as follows: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, TorontoDominion Bank, National Bank of Canada, CI Financial Corp., BCE Inc., Manulife Financial, Enbridge, Sun Life Financial, TELUS Corporation, Thomson Reuters Corporation, TransAlta Corporation, TC Energy Corporation.

Notice of extension of this issue was provided last May.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Enbridge Inc. has announced (long ago, I am shamed to admit: 2023-5-17):

that 1,827,695 of its outstanding Cumulative Redeemable Preference Shares, Series F (Series F Shares) were tendered for conversion, on a one-for-one basis, into Cumulative Redeemable Preference Shares, Series G of Enbridge (Series G Shares), effective on June 1, 2023. As a result, on June 1, 2023, Enbridge will have 18,172,305 Series F Shares and 1,827,695 Series G Shares issued and outstanding.

The Series F Shares will continue to be listed on the Toronto Stock Exchange (TSX) under the symbol ENB.PR.F. The TSX has conditionally approved the listing of the Series G Shares effective upon conversion. The Series G Shares will begin trading on the TSX on June 1, 2023, subject to the fulfillment of all the listing requirements of the TSX.

ENB.PR.F was issued as a 4.00%+251 FixedReset that commenced trading 2012-1-18 after being announced 2012-1-9. It reset to 4.689% in 2018. I recommended against conversion; there was no conversion. It reset to 5.538% in 2023. The issue is tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns (as of 2023-5-17; upgraded by DBRS to Pfd-2(low) in June, 2024).

Thanks to Assiduous Reader GS for bringing this to my attention!

Partners Value Split Corp. has announced:

its intention to redeem all 4,023,763 of its outstanding Class AA Preferred Shares, Series 8 (“Preferred Shares, Series 8”) for cash on September 30, 2024 (the “Redemption Date”) in accordance with the terms of the Preferred Shares, Series 8.

The redemption price per Preferred Share, Series 8 will be equal to C$25.00 per share plus accrued and unpaid dividends of C$0.10 per share to September 30, 2024 representing total redemption price of C$25.10 per share (the “Redemption Price”).

Notice will be delivered to holders of the Preferred Shares, Series 8 in accordance with the terms of the Preferred Shares, Series 8.

From and after the Redemption Date, the Preferred Shares, Series 8 will cease to be entitled to dividends or any other participation in any distribution of the assets of the Company and the holders thereof shall not be entitled to exercise any of their rights as shareholders in respect thereof except to receive the Redemption Price (less any tax required to be deducted and withheld by the Company). After the redemption of the Preferred Shares, Series 8, the Company will consolidate the existing capital shares held by Partners Value Investments Inc. so that there are an equal number of preferred shares and capital shares outstanding.

PVS.PR.F was issued as a SplitShare, 4.80%, maturing 2024-9-30, which commenced trading 2017-9-18 after being announced 2017-09-07. There was a partial redemption effective 2024-5-31. The issue is tracked by HIMIPref™ and has been assigned to the SplitShare subindex.

Thanks to Assiduous Reader niagara for bringing this to my attention!

A little bit of fussy news here, in connection with the post relaying the news that SBN.PR.A & TXT.PR.A Merge Into PGIC, PGIC.PR.A.

I sent the following eMail to Mulvihill:

Has a September dividend been declared for SBN.PR.A or has this distribution been cancelled due to the merger?

If a dividend has been declared, what is the amount, record- and pay-date?

With commendable promptness and clarity they have replied:

The S Split Corp. September preferred share distribution was not declared.

I’ll add that holders of the Premium Global Income Split Corp as of the record date September 16, 2024 will be entitled to the monthly distribution payable September 27, 2024
The announcement is available on our fund page and a link is provided here:

https://mulvihill.com/pr/PGIC/PGIC_20240903_194949.pdf

September 13, 2024 we announced the results of the merger ration from S Split Corp int Premium Global Income Split Corp.

A link to the release is included for your review.

https://mulvihill.com/pr/SBN/SBN_20240913_100318.pdf

Holders of Class A Shares of SBN will receive 0.373815 Class A Shares of Premium Global for each Class A Share held.

Holders of Preferred Shares of SBN will receive 0.743873 Preferred Shares and 0.330689 Class A Shares for each Preferred Share held.

Mulvihill Capital Management Inc. has announced (2024-9-4):

Premium Income Corporation (the “Fund”) is pleased to announce that the term of the Fund will be extended automatically for an additional seven year period beyond November 1, 2024 to November 1, 2031 as provided for in its articles of incorporation. In addition, in connection with the new term, holders of Class A shares will continue to receive ongoing leveraged exposure to a high-quality portfolio consisting principally of common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and The Toronto-Dominion Bank, as well as attractive monthly distributions. Holders of the preferred shares are expected to continue to benefit from fixed cumulative preferential monthly distributions in the amount of $0.10625 ($1.275 per annum) per preferred share representing a yield of 8.5% on the original issue price of $15.00.

In connection with the extension of the term, holders of class A shares and preferred shares have a special retraction right (“Special Retraction Right”) to permit holders of such securities to retract such shares on November 1, 2024 on the terms on which such shares would have been redeemed had the term of the Fund not been extended. In order to exercise the Special Retraction Right, shares must be surrendered for retraction on or prior to 5:00 p.m. (Toronto time) on October 17, 2024. Depending on if more class A shares or preferred shares are retracted under the Special Retraction Right, the Fund will have to redeem preferred shares or consolidate the class A shares on a basis to ensure an equal number of class A shares and preferred shares remain outstanding.

For further information, please contact Investor Relations at 416.681.3966, toll free at 1.800.725.7172, email at info@mulvihill.com or visit www.mulvihill.com.

Amusingly, this extension notice was published 2024-9-4, following the prior announcement of a dividend rate boost to 8.50%.

Thanks to the miracle of Canadian banking (tax the poor with excessive fees so the rich can have a good investment and politicians will have future employers) PIC / PIC.PR.A has managed to keep above the $15.00 par value of the preferreds, despite the massive distribution rate of over $0.80 per year on the Capital Units. And I end up with egg on my face yet again for not recommending PIC.PR.A despite its generous yield.

Well, I’m a glutton for punishment. I’m still not going to recommend it due to the lack of a NAV test on Capital Distributions. Some day, that’s going to catch up with the corporation … particularly with an 8.5% dividend rate on the preferreds – see here and here for a discussion of what cash drag can do to split share credit quality.

Mulvihill Capital Management Inc. announced (on 2024-8-30):

that holders of Class A Shares and Preferred Shares of SBN and holders Capital Units and Preferred Securities of TXT have approved a proposal to merge both SBN and TXT into Premium Global Income Split Corp. (“Premium Global”), all as more particularly described in the joint management information circular dated July 24, 2024 (the “Circular”), at a special meeting of the securityholders held earlier today.

The merger of TXT into Premium Global is expected to become effective on or about September 9, 2024 and the merger of SBN into Premium Global is expected to become effective on or about September 13, 2024.

Under the mergers, (a) holders of Class A Shares of SBN will become holders of Class A Shares of Premium Global, (b) holders of Preferred Shares of SBN will become holders of Class A Shares and a lesser number of Preferred Shares of Premium Global, (c) holders of Capital Units of TXT will become holders of Class A Shares of Premium Global, and (d) holders of Preferred Securities of TXT will become holders of Class A Shares and a lesser number of Preferred Shares of Premium Global. The number of shares of Premium Global to be issued to SBN and TXT securityholders will be announced once the exchange ratios have been determined, prior to implementation of the mergers.

For further information, please contact Investor Relations at 416.681.3966, toll free at 1-800-725-7172 or visit www.mulvihill.com

They further announced (on 2024-9-9):

that, following approval by holders of Capital Units and Preferred Securities of TXT at a special meeting of securityholders on August 30, 2024 of the proposal (the “Merger Proposal”) to merge TXT into Premium Global Income Split Corp. (“Premium Global”), the holders of Capital Units of TXT will receive 0.453607 Class A Shares of Premium Global for each Capital Unit held and holders of Preferred Securities of TXT will receive 0.948049 Preferred Shares of Premium Global and 0.415545 Class A Shares of Premium Global for each Preferred Security held.

The Exchange Ratios have been calculated based on the relative NAV of the Capital Units and Preferred Securities of TXT and Class A Shares and Preferred Shares of Premium Global. Fractional Class A Shares or Preferred Shares of Premium Global or cash in lieu thereof will not be issued or paid under the Merger Proposal. The Merger is expected to be completed on September 9, 2024 and holders of Capital Units and Preferred Securities of TXT need not take any action to receive the Class A Shares and Preferred Shares to which they will be entitled under the transaction.

For further information, please contact Investor Relations at 416.681.3966, toll free at 1-800-725-7172 or visit www.mulvihill.com

… and have further announced:

that, following approval by holders of Class A Shares and Preferred Shares of SBN at a special meeting of securityholders on August 30, 2024 of the proposal (the “Merger Proposal”) to merge SBN into Premium Global Income Split Corp. (“Premium Global”), the holders of Class A Shares of SBN will receive 0.373815 Class A Shares of Premium Global for each Class A Share held and holders of Preferred Shares of SBN will receive 0.743873 Preferred Shares and 0.330689 Class A Shares for each Preferred Share held.

The Exchange Ratios have been calculated based on the relative NAV of the Class A Shares and Preferred Shares of SBN and Class A Shares and Preferred Shares of Premium Global. Fractional Class A Shares or Preferred Shares of Premium Global or cash in lieu thereof will not be issued or paid under the Merger Proposal. The Merger is expected to be completed on September 13, 2024 and holders of Class A Shares and Preferred Shares of SBN need not take any action to receive the Class A Shares and Preferred Shares to which they will be entitled under the transaction.

For further information, please contact Investor Relations at 416.681.3966, toll free at 1-800-725-7172 or visit www.mulvihill.com

I can’t say I’m very impressed. As I noted when WFS.PR.A became PGIC.PR.A:

But anyway, with such a small float, no credit rating (discontinued in 2010) and no NAV test for Capital Unit distributions … I’m finally dropping this issue from HIMIPref™ coverage.

… and then I followed up in the comments with:

For example, the fact that there is a small float and no credit rating is not a deal breaker for me.

If any single issue should be a dealbreaker, it should be the lack of an NAV test on Capital Unit distributions – see here and here. The Capital Units have a Current Yield slightly in excess of 14% p.a. … at that rate, together with a 7.5% preferred share yield, the 40% downside protection you cite has a pretty short life expectancy.

The lack of a credit rating means that if bad times come, there will be less pressure on management and the board to batten down the hatches.

I will note that at the time I last calculated it (as of 2024-8-8, when preparing the August PrefLetter), SBN / SBN.PR.A had Investment Coverage (NAVPU divided by preferred share bid price) of only 1.28; I haven’t bothered tracking TXT.PR.A for a long time.

Update, 2024-9-17: There will be no September dividend declared for SBN.PR.A. New and extant holders of PGIC / PGIC.PR.A as of September 16 will receive a distribution from the continuing company, with record date 2024-9-16.

AltaGas Ltd. has announced that it:

is providing updated and final pricing for the reset rates on its currently outstanding Cumulative Redeemable Five-Year Rate Reset Preferred Shares, Series G (the “Series G Shares”) (TSX: ALA.PR.G) and the Cumulative Redeemable Floating Rate Preferred Shares, Series H (the “Series H Shares”) (TSX: ALA.PR.H) as per the prospectus’ dated June 25, 2014. As disclosed in AltaGas’ August 30, 2024 News Release, the Company does not intend to exercise its right to redeem any or all of the currently outstanding Series G or Series H preferred shares on September 30, 2024 (the “Conversion Date”).

As a result, subject to certain conditions, the holders of the Series G Shares have the right to convert all or part of their Series G Shares on a one-for-one basis into Series H Shares on the Conversion Date. Holders who do not exercise their right to convert their Series G Shares into Series H Shares will, subject to automatic conversion in the circumstances described below, retain their Series G Shares. In addition, on the Conversion Date the holders of the Series H Shares have the right to convert all or part of their Series H Shares on a one-for-one basis into Series G Shares. Holders who do not exercise their right to convert their Series H Shares into Series G Shares will, subject to automatic conversion in the circumstances described below, retain their Series H Shares.

With respect to any Series G Shares that are outstanding after the Conversion Date, holders shall be entitled to receive, as and when declared by the Board of Directors of AltaGas, fixed cumulative preferential cash dividends, payable quarterly. The new annual dividend rate applicable to the Series G Shares for the five-year period commencing on and including September 30, 2024 to, but excluding September 30, 2029, will be 6.017 percent. The new dividend rate is equal to the five-year Government of Canada bond yield of 2.957 percent (determined as of today’s final pricing) plus 3.060 percent. This dividend rate is slightly below the estimated dividend rate that was disclosed on August 30, 2024, to reflect the modest decrease in the five-year Government of Canada bond yield.

With respect to any Series H Shares that are outstanding after the Conversion Date, holders shall be entitled to receive, as and when declared by the Board of Directors of AltaGas, quarterly floating rate cumulative preferential cash dividends. The dividend rate applicable to the Series H Shares for the three-month floating rate period commencing on and including September 30, 2024 to, but excluding December 31, 2024, will be 7.265 percent (the “Floating Quarterly Dividend Rate”). This dividend rate is equal to the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 4.205 percent plus 3.060 percent. This dividend rate is unchanged from the rate disclosed in the August 30, 2024 News Release. The Floating Quarterly Dividend Rate will be reset every quarter.

AltaGas reminds the beneficial holders of Series G Shares and Series H Shares who wish to exercise their right of conversion to do so during the updated conversion period from August 31, 2024 to September 13, 2024 until 5:00 pm Eastern Time. As outlined in AltaGas’ August 30, 2024 News Release, beneficial holders should instruct their broker or other nominee to exercise such right accordingly.

ALA.PR.G was issued as a FixedReset, 4.75%+306, that commenced trading 2014-7-3 after being announced 2014-6-23. Notice of extension was announced 2019-8-29. The issue reset at 4.242% effective 2019-9-30. I recommended against conversion. News that some were converted was reported on 2019-9-24; there was, in fact a 14% conversion. A very confused notice of extension was issued on 2024-8-30 and resulted in an exchange of eMails with Investor Relations. The issue is tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns. In December, 2018, the issue was downgraded to Pfd-3(low) by DBRS and to P-3 by S&P. DBRS withdrew its rating in November 2021. S&P continues to rate the ALA preferreds at P-3.

ALA.PR.H is a FloatingReset, Bills+306, that arose through a 14% conversion from ALA.PR.G in September, 2019.

Thanks to Assiduous Reader IrateAR for bringing this to my attention.

As noted by Assiduous Reader DR, the company has used a GOC-5 yield of 2.957%, a lower rate than the other issues that reset on 2024-9-3:

Accordingly, I have sent the following eMail to Investor Relations:

I see that you have issued a new press release at https://www.altagas.ca/newsroom/news-releases/altagas-provides-final-pricing-and-dividend-reset-rates-series-g-and-series that corrects your erroneous press release of 2024-8-30 and assume that you also withdraw the information you supplied by eMail on 2024-9-3 (appended below).

However, the revised rate of 6.017% that you have announced implies, as noted in the 2024-9-3 press release, an underlying “five-year Government of Canada bond yield of 2.957 percent (determined as of today’s final pricing)”
I am perplexed by the wording of this information: you refer to the “today’s final pricing”, which is ambiguous regarding the precise time of the measurement. This seems a little odd because the yield you quote, 2.957%, differs from that used by Brookfield Corporation [2.973%, see https://bn.brookfield.com/press-releases/brookfield-announces-reset-dividend-rate-its-series-40-preference-shares ] and Transalta Corporation [also 2.973%, see https://transalta.com/newsroom/transalta-announces-dividend-rates-on-series-g-preferred-shares-and-series-h-preferred-shares/ ].

As you know “Government of Canada Yield” is a defined term in the prospectus:
““Government of Canada Yield” on any date means the yield to maturity on such date (assuming semi-annual compounding) of a Canadian dollar denominated non-callable Government of Canada bond with a term to maturity of five years as quoted as of 10:00 a.m. (Toronto time) on such date and that appears on the Bloomberg Screen GCAN5YR Page on such date; provided that if such rate does not appear on the Bloomberg Screen GCAN5YR Page on such date, then the Government of Canada Yield shall mean the arithmetic average of the yields quoted to AltaGas by two registered Canadian investment dealers selected by AltaGas as being the annual yield to maturity on such date, compounded semi-annually, that a non-callable Government of Canada bond would carry if issued, in Canadian dollars, at 100% of its principal amount on such date with a term to maturity of five years.”

The time of 10:00 a.m. on the Calculation Date is standard for all issues of the same type as ALA.PR.G.

Please let me know precisely how the rate of 2.957% that you used was calculated; if you could send me a screenshot of the applicable GCAN5YR Bloomberg page, that would be appreciated.

Sincerely,

Update, 2024-9-4: I received the following reply:

thanks for your follow up.

The rate quoted was pulled from Bloomberg for the 10 am EST timeline that is standard as you point out.

Here is the screenshot:

and the embedded image was:

Well, I don’t see anything on that image that says “10am”, but regret that I am insufficiently familiar with Bloomberg to know all the various conventions underlying their screen.

Update, 2024-9-6: I have responded to ALA’s Investor Relations with the following eMail:

Thank you for this, but I confess that I am perplexed by your claim that this represents the 10am EST time that is specified in the ALA.PR.G prospectus.

The time stamp near the upper left-hand corner is for 8:18, which is presumably Calgary time and therefore 10:18am EST, significantly after the claimed time. It is of interest that the yield reported in the fourth row of the screenshot (2.958%) differs slightly from that reported in the table (2.957%); it is not clear to me why one figure should be preferred over the other.

I have been advised that the HP (historical price) function for that page is reported for the current day as a snapshot of the then-current time, eighteen minutes-odd after the required time. The prior reset for this issue was also determined in an unusual way (see attached file, ALA_Bloomberg_190903A.jpg) but at least had the saving grace of a 10:00:18 timestamp.

I attach three other screenshots displaying various views of the GCAN5YR page that were available and used by various companies five years ago; I am confident that these, or equivalent, views remain accessible today. You will note that while Bloomberg reports slightly different results for each of the methods chosen, it is clear in each case that the data has been reported as of 10:00am.

Can you provide more support for your claim that this screenshot provides an accurate quote for “the 10 am EST timeline that is standard as you point out”?

Sincerely,

The four screenshots I attached were all taken from the post FixedReset Prospectuses Are Imprecise!.

I have no intention of taking this any further and going to war with the company – Assiduous Readers will have to take the data I’ve reported and do what they will with it!

Update, 2024-9-10: I have received the following from ALA Investor Relations:

Apologies for the confusion around the timestamp for the rate. To further clarify, we connected with the Treasury team and confirmed details. Attached is the Bloomberg screenshot that shows the pricing breakdown which was used for the pref reset. We utilized pricing for 10am EST using the 15 min interval price, which equates to 2.957% that was quoted as the Government of Canada 5-year bond rate in the press release dated September 3, 2024.

Let us know if you have any follow up.

The attached PDF may be inspected by CLICKING HERE.

Mulvihill Capital Management Inc. has announced (on 2024-8-30):

Premium Income Corporation (the “Fund”) is pleased to announce the Preferred Share distribution rate for the fiscal year beginning November 1, 2024, will increase to 8.50% from 5.75% on their $15.00 redemption value and will move to paying a monthly distribution from a quarterly distribution. Monthly distributions will be $0.10625 per share or $1.275 per share per annum.

Premium Income Corporation is a mutual fund corporation, which invests in a portfolio consisting principally of common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and the Toronto Dominion Bank. The Fund employs an active covered call writing strategy to enhance the income generated by the portfolio and to reduce volatility. In addition, the Fund may write cash covered put options in respect of securities in which it is permitted to invest.

The investment portfolio of the Fund is managed by its investment manager, Mulvihill Capital Management Inc. The Fund’s Preferred and Class A shares are listed on Toronto Stock Exchange under the symbols PIC.PR.A and PIC.A respectively.

This represents an increase from the 5.75% that has been effective since the last extension in 2017.

PIC.PR.A is tracked by HIMIPref™ but is not considered eligible for recommendation as:

• No credit rating
• No NAV test on Capital Unit distributions
• Relatively thin asset coverage

As I always say – most recently on August 29, but that issue wasn’t even tracked:

This issue is unrated and will not be tracked by HIMIPref™. This is not because I worship the Credit Rating Agencies and am unable to do anything without them; it is because I feel that a public announcement by the CRAs of imminent downgrades do an admirable job of concentrating the minds of management and the directors on fixing the problem. Such announcements by Hymas Investment Management Inc. or Joe Blogger do not carry the same weight.

The recent comment by Assiduous Reader niagara is worth passing along:

Re PIC.PR.A

So there is only about 19.3% downside protection (based on Aug 30 NAVs), the capital shares are paid $0.80 in dividends per annum with no NAV trigger to pause dividends on the capital shares (please correct me if I am wrong about this) and now pref divvys of $1.275 per annum, so total div of $2.075 per annum for the fund. Huge grind here I would imagine.

Better hope that the bank shares do damn well and that the fund managers don’t give away all that upside by selling too many calls.

I will pass on this.

See HERE for a yield calculator and HERE for a credit quality calculator.

Thanks to Assiduous Reader newbiepref for bringing this to my attention.

Brookfield Corporation has announced:

that it has determined the fixed dividend rate on its Cumulative Class A Preference Shares, Series 40 (“Series 40 Shares”) (TSX: BN.PF.F) for the five years commencing October 1, 2024 and ending September 30, 2029.

If declared, the fixed quarterly dividends on the Series 40 Shares during the five years commencing October 1, 2024 will be paid at an annual rate of 5.833% ($0.3645625 per share per quarter).

Holders of Series 40 Shares have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on September 16, 2024, to convert all or part of their Series 40 Shares, on a one-for-one basis, into Cumulative Class A Preference Shares, Series 41 (the “Series 41 Shares”), effective September 30, 2024. The quarterly floating rate dividends on the Series 41 Shares will be paid at an annual rate, calculated for each quarter, of 2.86% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly dividend rate in respect of the October 1, 2024 to December 31, 2024 dividend period for the Series 41 Shares will be 1.78077% (7.065% on an annualized basis) and the dividend, if declared, for such dividend period will be $0.4451925 per share, payable on December 31, 2024.

Holders of Series 40 Shares are not required to elect to convert all or any part of their Series 40 Shares into Series 41 Shares.

As provided in the share conditions of the Series 40 Shares, (i) if Brookfield determines that there would be fewer than 1,000,000 Series 40 Shares outstanding after September 30, 2024, all remaining Series 40 Shares will be automatically converted into Series 41 Shares on a one-for-one basis effective September 30, 2024; and (ii) if Brookfield determines that there would be fewer than 1,000,000 Series 41 Shares outstanding after September 30, 2024, no Series 40 Shares will be permitted to be converted into Series 41 Shares. There are currently 11,841,025 Series 40 Shares outstanding.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 41 Shares effective upon conversion. Listing of the Series 41 Shares is subject to Brookfield fulfilling all the listing requirements of the TSX.

BN.PF.F was issued as a FixedReset, 4.50%+286, that commenced trading 2014-6-5 under the ticker symbol BAM.PF.F after being announced 2014-5-27. The issue reset at 4.029% effective October 1, 2019. I recommended against conversion and there was no conversion. The ticker changed to BN.PF.F in late 2022. BN.PF.F is tracked by HIMIPref™ and is assigned to the FixedReset – Discount subindex.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Update, 2024-10-2: No conversion (announced 2024-9-20):

Brookfield Corporation (NYSE: BN, TSX: BN) today announced that after having taken into account all election notices received by the deadline for the conversion of its Cumulative Class A Preference Shares, Series 40 (the “Series 40 Shares”) (TSX: BN.PF.F) into Cumulative Class A Preference Shares, Series 41 (the “Series 41 Shares”), there were 29,920 Series 40 Shares tendered for conversion, which is less than the one million shares required to give effect to conversion into Series 41 Shares. Accordingly, there will be no conversion of Series 40 Shares into Series 41 Shares and holders of Series 40 Shares will retain their Series 40 Shares.