Category: Issue Comments

DBRS Limited has announced that it:

upgraded Enbridge Inc.’s (ENB or the Company) Issuer Rating and Senior Unsecured Notes rating both to A (low), Preferred Shares rating to Pfd-2 (low), and Commercial Paper rating to R-1 (low). Morningstar DBRS also confirmed the credit rating of the existing Subordinated Notes (Existing Subordinated Notes) at BBB (low) and assigned a final credit rating of BBB to its Fixed-to-Fixed Rate Subordinated Notes due March 15, 2055, and Fixed-to-Fixed Rate Subordinated Notes due June 27, 2054 (together, the New Subordinated Notes). All trends are Stable. Morningstar DBRS also upgraded Enbridge Energy Partners, L.P.’s (EEP) Senior Unsecured Notes rating to A (low) with a Stable trend based on ENB’s guarantee; EEP in turn guarantees ENB’s Senior Unsecured Notes. ENB also guarantees the Senior Unsecured Notes of Spectra Energy Partners, L.P., which in turn guarantees ENB’s Senior Unsecured Notes. At the same time, Morningstar DBRS has removed the Under Review With Developing Implications (UR-Dev.) status of the credit ratings of ENB and EEP.

KEY CREDIT RATING CONSIDERATIONS
The credit ratings were placed UR-Dev. in September 2023 following the announcement that ENB had entered into definitive agreements (the Acquisition) with Dominion Energy, Inc. to acquire (1) East Ohio Gas Company (EOG); (2) Questar Gas Company (Questar Gas) and its related Wexpro companies (Wexpro, and collectively with Questar Gas, Questar); and (3) Public Service Company of North Carolina, Incorporated (PSNC; collectively, the Local Distribution Companies (LDCs)) for a total purchase price of USD 14.0 billion ($19 billion¿translated at USD/CAD 1.35), including the assumption of approximately USD 4.6 billion in debt. At the time, Morningstar DBRS had noted that the Acquisition should have a positive impact on ENB’s business risk profile, and should the financing plan result in minimal to no impact on the Company’s key credit metrics as of March 31, 2023 (please see Morningstar DBRS’ rating report on the Company dated June 28, 2023, for further details), Morningstar DBRS may consider a positive credit rating action.

ENB has made material progress on closing the Acquisition and the associated financing plan. The acquisition of EOG and Questar, which together account for the largest contribution to earnings from the Acquisition, closed in March 2024 and June 2024, respectively, with no material changes in terms and conditions from when the Acquisition was announced. ENB expects the acquisition of PSNC to close in Q3 2024. ENB’s financing plan is also now largely complete with the purchase price of $12.8 billion funded with equity and asset sales totaling approximately $6.2 billion and the issuance of Subordinated Notes for approximately $3.7 billion. Morningstar DBRS expects the balance to be raised from a mix of the recent issuance of the New Subordinated Notes, at-the-market equity issuance program, and/or asset sales.

Morningstar DBRS believes that the collective business risk profile of the utility assets is stronger than the weighted average of ENB’s current investment portfolio. Each LDC is state-regulated and operates under a cost-of-service framework with no exposure to natural gas price risk or volume risk. All three LDCs are allowed timely operating costs and capital expenditure recovery, subject to only modest regulatory lags. Combined, the LDCs provide natural gas distribution services to nearly 3.0 million customers with the strongest base of customers at EOG and Questar, which serve approximately 1.2 million customers each. EOG (rate base $6.0 billion in 2022) is a single-state LDC operating an extensive gas distribution system with more than 40 interconnections across nine interstate gas pipelines. EOG is anticipated to have the potential for a substantial rate base increase driven by modernization efforts. Questar (rate base $3.9 billion in 2022) largely operates in Utah and has a one-of-a-kind agreement with Wexpro that provides up to 65% of Questar’s annual gas supply on a cost-of-service arrangement. PSNC (rate base $2.6 billion in 2022) is a single-state LDC in North Carolina. Both Questar and PSNC are experiencing growth primarily driven by population expansion within their respective service territories.

Morningstar DBRS views the planned acquisition of the regulated gas utility businesses as providing a more stable source of cash flow generation with lower risk compared with ENB’s existing business risk profile. The Acquisition is expected to double the contribution of ENB’s regulated gas distribution businesses to approximately 23% of total adjusted EBITDA (Morningstar DBRS estimate for 2025) from 13% currently. ENB will benefit from greater geographic and regulatory diversification with higher regulatory returns on equity and thicker deemed equity. Finally, ENB will stand to potentially gain from synergies, as the Acquisition would form the largest natural gas distribution utility in North America, by volume, with a rate base exceeding $27 billion serving approximately 7 million customers in Canada and the U.S.

Given the material proceeds from equity and asset sales used in financing the Acquisition, Morningstar DBRS expects the Company’s financial risk profile to remain supportive of the credit ratings. Morningstar DBRS expects the Company will maintain its cash flow-to-debt ratio between 14% and 15% from 2025 onwards, which is likely to be the first full year after close of the Acquisition.

The Existing Subordinated Notes and the New Subordinated Notes rank equally in right of payment until the occurrence of certain bankruptcy and related events at which time the Existing Subordinated Notes would automatically convert into preferred shares. The Existing Subordinated Notes would then rank below the New Subordinated Notes. According to Morningstar DBRS’ Hierarchy Principle, as outlined in the Morningstar DBRS “Credit Ratings Global Policy,” the Existing Subordinated Notes, being subordinate to the New Subordinated Notes in the event of insolvency of the Company, should be rated one notch lower than the New Subordinated Notes (i.e., BBB (low)), hence the confirmation at BBB (low) of the Existing Subordinated Notes, despite the upgrade to the Issuer Rating

CREDIT RATING DRIVERS
A positive credit rating action is unlikely in medium term unless there is a successful resolution of the Line 5 dispute and the Company maintains its consolidated cash flow-to-debt ratio of higher than 17.5%. While unlikely in the medium term, a negative credit rating action could occur if the Company’s consolidated cash flow-to-debt ratio stays consistently less than 12.5%

EARNINGS OUTLOOK
Morningstar expects EBITDA in 2024 and 2025 to grow at around 8% primarily because of the Acquisition and commercially secured projects that are expected to come into service over the next two years.

FINANCIAL OUTLOOK
Morningstar DBRS expects cash flow from operations to also trend higher as a result of higher earnings. While overall debt levels are expected to increase as the Company funds a part of its secured capital program from debt, Morningstar DBRS expects the Company to stay within its target Debt/EBITDA range of 4.5 times (x) to 5.0x.

CREDIT RATING RATIONALE
ENB’s credit ratings are supported by (1) a high level of geographic and product-mix diversification and large scale; (2) low-risk operations that provide stable income and cash flow; and (3) strong natural gas transmission, distribution, and storage businesses, which have been enhanced materially by the Acquisition. The credit ratings are constrained by (1) pipeline competition, volume, and operational risks; (2) structural subordination at ENB; and (3) rising environmental, regulatory, and political risks

Affected issues are (deep breath): ENB.PF.A, ENB.PF.C, ENB.PF.E, ENB.PF.G, ENB.PF.K, ENB.PR.A, ENB.PR.B, ENB.PR.D, ENB.PR.F, ENB.PR.H, ENB.PR.J, ENB.PR.N, ENB.PR.P, ENB.PR.T and ENB.PR.Y.

This is a pretty big deal, for those who care about such things. ENB comprises about 11.5% of ZPR (as of mid-November, 2023) and about 8.4% of CPD (as of mid-March, 2021, according to my notes made during my PrefLetter monitoring. So measured credit quality for the preferred share market has just improved considerably! Enbridge issues have been rated P-2(low) by S&P since June, 2015.

Industrial Alliance Insurance and Financial Services Inc. has announced:

that it has sent today to all shareholders of its Non-Cumulative Class A Preferred Shares Series B (TSX: IAF.PR.B) (the “Series B Preferred Shares”) a formal notice and instructions for the redemption of the Series B Preferred Shares outstanding as of today (the “Series B Redemption”). Upon the Series B Redemption scheduled for July 29, 2024, iA Insurance will pay to the holders of the Series B Preferred Shares the redemption price consisting of $25 plus an amount equal to the cash dividend in respect of the third quarter, pro rated to the redemption date. There are 5,000,000 Series B Preferred Shares outstanding as of today.

Separately from the redemption price, the regular second quarter dividend of $0.2875 per Series B Preferred Share will be paid in the usual manner on July 2, 2024 to preferred shareholders of record on May 24, 2024. After the Series B Preferred Shares are redeemed, holders of Series B Preferred Shares will cease to be entitled to distributions of dividends and will not be entitled to exercise any rights as holders other than to receive the redemption price.

This issue was originally issued as IAG.PR.A as a 4.60% Straight Perpetual and commenced trading 2006-2-4, before PrefBlog was invented. The ticker changed to IAF.PR.B on 2019-1-4. This redemption was foreshadowed by the announcement of an LRCN issue by the holding company.

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

The Toronto-Dominion Bank has announced:

that it will exercise its right to redeem all of its 18,000,000 outstanding Non-Cumulative 5-Year Rate Reset Class A First Preferred Shares, Series 24 (Non-Viability Contingent Capital) (the “Series 24 Shares”) on July 31, 2024 at the price of $25.00 per Series 24 Share for an aggregate total of approximately $450 million. The redemption has been approved by the Office of the Superintendent of Financial Institutions.

On May 23, 2024, TD announced that dividends of $0.31875 per Series 24 Share had been declared. These will be the final dividends on the Series 24 Shares, and will be paid in the usual manner on July 31, 2024 to shareholders of record on July 10, 2024, as previously announced. After July 31, 2024, the Series 24 Shares will cease to be entitled to dividends and the only remaining rights of holders of such shares will be to receive payment of the redemption amount.

Beneficial holders who are not directly the registered holder of Series 24 Shares should contact the financial institution, broker or other intermediary through which they hold these shares to confirm how they will receive their redemption proceeds. Inquiries should be directed to our Registrar and Transfer Agent, TSX Trust Company, at 1-800-387-0825 (or in Toronto 416-682-3860).

TD.PF.M was issued as a FixedReset 5.10%+356, NVCC, that commenced trading 2019-6-4 after being announced 2019-5-24. This redemption was foreshadowed by a large LRCN issue. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Premium) subindex.

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

The Toronto-Dominion Bank has announced:

that it will exercise its right to redeem all of its 20,000,000 outstanding Non-Cumulative 5-Year Rate Reset Class A First Preferred Shares, Series 3 (Non-Viability Contingent Capital) (the “Series 3 Shares”) on July 31, 2024 at the price of $25.00 per Series 3 Share for an aggregate total of approximately $500 million. The redemption has been approved by the Office of the Superintendent of Financial Institutions.

On May 23, 2024, TD announced that dividends of $0.2300625 per Series 3 Share had been declared. These will be the final dividends on the Series 3 Shares, and will be paid in the usual manner on July 31, 2024 to shareholders of record on July 10, 2024, as previously announced. After July 31, 2024, the Series 3 Shares will cease to be entitled to dividends and the only remaining rights of holders of such shares will be to receive payment of the redemption amount.

Beneficial holders who are not directly the registered holder of Series 3 Shares should contact the financial institution, broker or other intermediary through which they hold these shares to confirm how they will receive their redemption proceeds. Inquiries should be directed to our Registrar and Transfer Agent, TSX Trust Company, at 1-800-387-0825 (or in Toronto 416-682-3860).

TD.PF.B was issued as a FixedReset 3.80%+227, NVCC-compliant, issue that commenced trading 2014-7-31 after being announced 2014-7-22. TD provided notice of extension on 2019-6-25. The issue reset At 3.681% effective 2019-7-31. I recommended against conversion and there was no conversion. This redemption was foreshadowed by a big LRCN issue. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

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

The Toronto-Dominion Bank has announced:

the pricing of a U.S. public offering of US$750 million 7.250% Fixed Rate Reset Limited Recourse Capital Notes, Series 4 (Non-Viability Contingent Capital (NVCC)) (the “LRCNs”). The LRCNs will be registered with the U.S. Securities and Exchange Commission (the “SEC”).

The LRCNs will bear interest at a rate of 7.250 per cent annually, payable quarterly, for the initial period ending on, but excluding, July 31, 2029. Thereafter, the interest rate on the LRCNs will reset every five years at a rate equal to the prevailing U.S. Treasury Rate plus 2.977 per cent. The LRCNs will mature on July 31, 2084. The expected closing date of the offering is July 3, 2024, subject to customary closing conditions.

Concurrently with the issuance of the LRCNs, TD will issue 750,000 Non-Cumulative 7.250% Fixed Rate Reset Preferred Shares, Series 31 (Non-Viability Contingent Capital (NVCC)) (“Preferred Shares Series 31”) to be held by Computershare Trust Company of Canada, as trustee for TD LRCN Limited Recourse Trust™ (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the LRCNs when due, the recourse of each LRCN holder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets, which will consist of Preferred Shares Series 31 except in limited circumstances.

TD may redeem the LRCNs on July 31, 2029, and once every quarter-end thereafter, with the prior written approval of the Superintendent of Financial Institutions (Canada), in whole or in part on not less than 10 days’ and not more than 60 days’ prior notice to the LRCN holders.

The net proceeds from this transaction will be used for general corporate purposes, which may include the redemption of outstanding capital securities and/or the repayment of other outstanding liabilities. The proceeds from this transaction are expected to qualify as “Additional Tier 1” capital of TD for regulatory purposes.

TD Securities, Citigroup, Goldman Sachs & Co. LLC, Wells Fargo Securities, Truist Securities and US Bancorp are the joint book-running managers on the issue.

A registration statement relating to the offering has been filed with the SEC and is effective. This press release does not constitute an offer to sell, or a solicitation of an offer to buy, these securities in the United States or in any other jurisdiction where such offer, solicitation or sale would be unlawful. The offering may be made only by means of a prospectus supplement and the accompanying prospectus.

Copies of the preliminary prospectus supplement and the accompanying prospectus for the offering may be obtained free of charge by visiting EDGAR on the SEC’s website at www.sec.gov. Alternatively, copies of the final prospectus supplement, when available, and the accompanying prospectus may also be obtained by contacting TD Securities (USA) LLC at 1-855-495-9846, Citigroup Global Markets Inc. at 1-800-831-9146, Goldman Sachs & Co. LLC at 1-866-471-2526, Wells Fargo Securities, LLC at 1-800-645-3751, Truist Securities, Inc. at 1-800-685-4786 and U.S. Bancorp Investments, Inc. at 1-877-558-2607.

As noted by Assiduous Reade IrateAR, this is sufficient size to redeem both TD.PF.M (18-million shares = CAD 450-million par value) and TD.PF.B (20-million shares = 500-million par value), given that USD 750-million comes to just over CAD 1-billion at current exchange rates. Both issues are redeemable 2024-7-31. TD.PF.M will come as no surprise at all, given its Issue Reset Spread of +356, but TD.PF.B … well, it’s Issue Reset Spread is a mere +227 and while it’s been trading at a much lower yield to perpetuity than its siblings for some time, it was nevertheless up 2.21% on the day (close/close). A nice win for the speculators!

I will, however, note that TD was careful not to name any specific issues when disclosing that uses for the funds raised “may include the redemption of outstanding capital securities” and nothing specific regarding either of the two issues identified as possible redemption fodder has yet been announced. So don’t get too excited just yet.

However, I continue to be encouraged by this LRCN issuance … every issue that comes out reinforces the belief that the preferred share market is cheap, cheap, cheap!

Canadian Imperial Bank of Commerce has announced:

its intention to redeem all of its issued and outstanding Non-cumulative Rate Reset Class A Preferred Shares Series 51 (Non-viability contingent capital (NVCC)) (Series 51 shares) (TSX: CM.PR.Y), for cash. The redemption will occur on July 31, 2024. The redemption price is $25.00 per Series 51 share.

The $0.321875 quarterly dividend announced on May 30, 2024 will be the final dividend on the Series 51 shares and will be paid on July 29, 2024, covering the period to July 31, 2024, to shareholders of record on June 28, 2024.

Holders of the Series 51 shares should contact the financial institution, broker or other intermediary through which they hold the shares to confirm how they will receive their redemption proceeds.

CM.PR.Y was issued as a FixedReset, 5.15%+362, NVCC, that commenced trading 2019-6-4 after being announced 2019-5-24. This redemption was foreshadowed by CM’s issuance of LRCNs “for general corporate purposes, which may include the redemption of outstanding capital securities of CIBC”, which was interpreted by the Street as meaning redemption of CM.PR.O and CM.PR.Y – although CM.PR.Y, with its Issue Reset Spread of +362bp, has long been considered a prime candidate for redemption. It is tracked by HIMIPref™ and has been assigned to the FixedReset (Discount) subindex.

Thanks to Assiduous Readers PS and IrateAR for bringing this to my attention!

Canadian Imperial Bank of Commerce has announced:

its intention to redeem all of its issued and outstanding Non-cumulative Rate Reset Class A Preferred Shares Series 39 (Non-viability contingent capital (NVCC)) (Series 39 shares) (TSX: CM.PR.O), for cash. The redemption will occur on July 31, 2024. The redemption price is $25.00 per Series 39 share.

The $0.232063 quarterly dividend announced on May 30, 2024 will be the final dividend on the Series 39 shares and will be paid on July 29, 2024, covering the period to July 31, 2024, to shareholders of record on June 28, 2024.

Holders of the Series 39 shares should contact the financial institution, broker or other intermediary through which they hold the shares to confirm how they will receive their redemption proceeds.

CM.PR.O was issued as a FixedReset, 3.90%+232, NVCC-compliant, that commenced trading 2014-6-11 after being announced 2014-6-2. The extension was announced 2019-6-12. The issue reset At 3.713% effective July 31, 2019. I recommended against conversion and there was no conversion. This redemption was foreshadowed by CM’s issuance of LRCNs “for general corporate purposes, which may include the redemption of outstanding capital securities of CIBC”, which was interpreted by the Street as meaning redemption of CM.PR.O and CM.PR.Y. CM.PR.O is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

Thanks to Assiduous Readers PS and IrateAR for bringing this to my attention!

Canadian Imperial Bank of Commerce has announced:

a domestic public offering of $500 million of 6.987% Limited Recourse Capital Notes Series 4 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) (the “LRCNs”). The LRCNs will be sold through a dealer syndicate led by CIBC Capital Markets.

The LRCNs will bear interest at a rate of 6.987% annually, payable semi-annually, for the initial period ending on, but excluding, July 28, 2029. Thereafter, the interest rate on the LRCNs will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 3.70%. The LRCNs will mature on July 28, 2084. The expected closing date of the offering is June 25, 2024.

In connection with the issuance of the LRCNs, CIBC will issue Non-Cumulative 5-Year Fixed Rate Reset Class A Preferred Shares Series 58 (Non-Viability Contingent Capital (NVCC)) (the “Series 58 Shares”) to be held by Computershare Trust Company of Canada as trustee of CIBC LRCN Limited Recourse Trust (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the LRCNs when due, the recourse of each LRCN holder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets held in respect of the LRCNs, which will consist of Series 58 Shares except in limited circumstances.

CIBC may redeem the LRCNs during the period from June 28 to and including July 28, commencing on June 28, 2029 and every five years thereafter with the prior written approval of the Superintendent of Financial Institutions Canada, in whole or in part on not less than 10 nor more than 60 days’ prior notice.

The net proceeds to CIBC from the sale of the LRCNs will be used for general corporate purposes, which may include the redemption of outstanding capital securities of CIBC, and/or the repayment of other outstanding liabilities of CIBC.

The LRCNs will be offered by way of a prospectus supplement to the bank’s short form base shelf prospectus dated September 23, 2022, to be filed on or about June 19, 2024 with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada.

Access to the prospectus supplement, the corresponding base shelf prospectus and any amendment thereto in connection with this offering is provided in accordance with securities legislation relating to procedures for providing access to a shelf prospectus supplement, a base shelf prospectus and any amendment thereto. The prospectus supplement, the base shelf prospectus and any amendment thereto in connection with this offering will be accessible within two business days at www.sedarplus.com.

An electronic or paper copy of the shelf prospectus supplement, the corresponding base shelf prospectus and any amendment to the documents may be obtained, without charge, from CIBC World Markets Inc., by contacting 416-594-8515 or email at Mailbox.CIBCDebtSyndication@cibc.com, by providing the contact with an email address or address, as applicable.

This came as pleasant news to holders of CM.PR.O, scheduled to reset at +232 effective 2024-7-31: it closed today at 24.88, up 2.77% from yesterday’s close. Market reaction for CM.PR.Y, scheduled to reset at +362 on 2024-7-31, was much more restrained: it closed at 25.10, up 0.32%; but, of course, with an Issue Reset Spread of +362, redemption has been considered pretty likely for a while.

In either case, it isn’t over until the fat lady sings, so don’t nobody go mortgaging any farms to try and squeeze a nickel out of the potential for redemption!

Thanks to Assiduous Readers IrateAR and niagara for bringing this to my attention!

National Bank of Canada has announced:

• Aligned with National Bank’s strategic plan to accelerate growth across all its business lines in Canada
• Provides customers an expanded product and service offering nationally, extensive banking centre network and common customer experience culture
• Maintains branch footprint and Edmonton-based executive and operational presence
• Combination creates stronger competitor, and provides more choice for Canadians
• Concurrent subscription receipt offering of $1 billion

National Bank of Canada (“National Bank”) (TSX: NA) and Canadian Western Bank (“CWB”) (TSX: CWB) today announced they have entered into a definitive agreement (the “Agreement”) for National Bank to acquire CWB, a diversified financial services institution based in Edmonton, Alberta. The transaction brings together two complementary banks with growing businesses, enabling the united bank to enhance services to customers by offering a comprehensive product and service platform at national scale, with a regionally focused service model.

National Bank will acquire all of the issued and outstanding common shares of CWB (the “CWB Shares”) by way of a share exchange (the “Transaction”), valuing CWB at approximately $5.0 billion (the “CWB Equity Value”).
…
Each CWB Share, other than those held by National Bank, will be exchanged for 0.450 of a common share (the “National Bank Shares”) of National Bank (the “Exchange Ratio”). Based on the 20-day volume weighted average trading price of the National Bank Shares on the TSX as of June 11, 2024, the Exchange Ratio values each CWB Share at $52.24, representing a 110% premium to the closing price of the CWB Shares on the TSX of $24.89 as of June 11, 2024, and a 100% premium to the volume weighted average trading price of the CWB Shares over the last 20 days. The National Bank Shares to be issued upon closing of the Transaction will represent a pro forma ownership of approximately 10.5% of National Bank by CWB shareholders, taking into account the Private Placement and the Public Offering (as defined below).

The Transaction is subject to approval of 662/3% of the votes cast by CWB shareholders at a special meeting of shareholders (the “Meeting”) expected to be held in September 2024 to approve an amendment to CWB’s by-laws to provide for the share exchange.
…
Each CWB Share, other than those held by National Bank, will be exchanged for 0.450 of a common share (the “National Bank Shares”) of National Bank (the “Exchange Ratio”). Based on the 20-day volume weighted average trading price of the National Bank Shares on the TSX as of June 11, 2024, the Exchange Ratio values each CWB Share at $52.24, representing a 110% premium to the closing price of the CWB Shares on the TSX of $24.89 as of June 11, 2024, and a 100% premium to the volume weighted average trading price of the CWB Shares over the last 20 days. The National Bank Shares to be issued upon closing of the Transaction will represent a pro forma ownership of approximately 10.5% of National Bank by CWB shareholders, taking into account the Private Placement and the Public Offering (as defined below).

The Transaction is subject to approval of 662/3% of the votes cast by CWB shareholders at a special meeting of shareholders (the “Meeting”) expected to be held in September 2024 to approve an amendment to CWB’s by-laws to provide for the share exchange.
…
ACQUISITION FINANCING

National Bank also announced today that it intends to complete an equity financing in connection with the Transaction. The equity financing is comprised of a public offering (the “Public Offering”) and concurrent private placement (the “Private Placement”) of subscription receipts (the “Subscription Receipts”) for gross proceeds totaling approximately $1.0 billion before giving effect to the Over-Allotment Option and the Additional Subscription Option (as defined below).

Pursuant to the Public Offering, National Bank has agreed to issue and sell 4,453,000 Subscription Receipts at a price of $112.30 for total gross proceeds of approximately $500 million. The Public Offering is being underwritten on a bought-deal basis by a syndicate of underwriters led by National Bank Financial Inc. (“NBF”). National Bank has granted the underwriters an option (the “Over-Allotment Option”) to purchase up to an additional 667,950 Subscription Receipts at the public offering price exercisable up to 30 days after closing of the public offering.

Pursuant to the concurrent Private Placement, National Bank has agreed to issue and sell 4,453,000 Subscription Receipts at the public offering price to Caisse de dépôt et placement du Québec or an affiliate thereof (“CDPQ”) for gross proceeds of approximately $500 million. All of CDPQ’s Subscription Receipts will be subject to a statutory hold period of four months plus one day from the date of their issuance. CDPQ will have the right to purchase up to an additional 667,950 Subscription Receipts, to maintain its pro-rata ownership and subject to, and in the same proportion as, the Over-Allotment Option being exercised by the underwriters (the “Additional Subscription Option”).

National Bank intends to use the net proceeds from the equity financing to support strong regulatory capital ratios following the closing of the Transaction, to fund any cash consideration under the terms of the Transaction and to pay the Transaction expenses.

Affected issues are CWB.PR.B and CWB.PR.D.

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