Category: Issue Comments

Dundee Corporation has announced:

that 1,720,615 of its 5,200,000 Cumulative 5‐Year Rate Reset First Preference Shares, Series 2 (“Series 2 Shares”) will be converted on September 30, 2014, on a one for one basis, into Cumulative Floating Rate First Preference Shares, Series 3 (“Series 3 Shares”). As a result, on September 30, 2014, Dundee will have 3,479,385 Series 2 Shares and 1,720,615 Series 3 Shares issued and outstanding. The Series 2 Shares are listed on the Toronto Stock Exchange under the symbol DC.PR.B and the Series 3 Shares will be listed on the Toronto Stock Exchange effective September 30, 2014 under the symbol DC.PR.D.

DC.PR.B was extended on August 26 and the company announced the reset to 5.688% on September 2. The issue originally closed 2009-9-15 and is a FixedReset, 6.75%+410.

Both DC.PR.B and the FloatingReset, DC.PR.D, will be tracked by HIMIPref™, but relegated to the Scraps index on credit concerns.

Standard & Poor’s has announced:

• •We are placing our ratings on Atlantic Power Corp. (APC) and affiliate Atlantic Power Ltd. Partnership (APLP), including our ‘B’ corporate credit ratings, on CreditWatch with negative implications.
• •The CreditWatch placement follows the company’s decision to cut distributions for the second time in two years, and the departure of its CEO.
• •We will conduct a review of the company’s strategic and financial plan over the next several weeks and resolve the CreditWatch over the next 60 to 90 days.

…
Atlantic Power has lowered its dividend by 70% (C$0.12 annually from C$0.40), a second distribution cut in 18-months, following a 65% reduction in February 2013. The company has also revised its distribution payments to a quarterly schedule from monthly payouts. The company has cited a reevaluation of its medium-term plan, including debt maturities and recontracting risk from 2017 onwards that have caused a change in its payout policy. Atlantic plans to focus on optimization its assets and delevering its balance sheet to improve both its cost of capital and ability to compete for new investments. In addition, the company plans to assess other potential options, including asset sales or the contribution of assets to a joint venture to raise additional capital for growth and/or debt reduction. Our review will also evaluate if the distribution reductions have the potential of weighing negatively on the company’s ability to access the markets competitively as well as its future strategy given management transition.

The company’s announcement of changes, and the effect of these changes on its equity and preferred prices, was discussed on PrefBlog on September 16. S&P’s note did not mention that the previously trumpeted sale process has been cancelled, which I consider significant.

The company has two issues of preferred shares outstanding, AZP.PR.A and AZP.PR.B.

DBRS has announced that it:

DBRS has today downgraded the Issuer Rating and Unsecured Debentures & Medium-Term Notes rating of Talisman Energy Inc. (Talisman or the Company) to BBB from BBB (high), and changed the trend to Negative. DBRS has also downgraded the Company’s Preferred Shares rating to Pfd-3 from Pfd-3 (high), with a Negative trend.

On April 16, 2014, DBRS placed the ratings of Talisman Under Review with Negative Implications. The rating action reflected DBRS’s concern about the continued challenging natural gas market environment in North America (approximately 40% of total production in H1 2014), high capital expenditures (capex) (despite a 20% reduction from 2012), ongoing operational and production reliability issues in the North Sea, and its implication on Talisman’s credit risk profile. The Company recently released its H1 2014 financial results, which remained relatively weak due to the aforementioned negative driving factors. The reduced operating performance and weakened credit metrics have resulted in a credit risk profile that is no longer consistent with a BBB (high) rating.

DBRS has changed the trend to Negative on the ratings as DBRS believes a meaningful recovery will remain challenging, largely driven by the ongoing weak natural gas market outlook in North America, continued growth capex initiatives and capex commitment associated with the North Sea operations. In the absence of much stronger commodity prices, Talisman will have to continue to execute a combination of the following to maintain an adequate financial profile: (1) growth capital spending curtailment; (2) asset sales; and (3) joint venture agreements with upfront cash receipts, with the proceeds being used to reduce leverage. While DBRS acknowledges the Company’s track record on divesting non-core assets on a timely basis, DBRS views further significant non-core asset divestitures to remain challenging, particularly the announced North Sea assets with significant decommissioning obligations and production reliability issues. Kurdistan assets (the other non-core assets announced for sale) are exposed to heightened political instability in Iraq. If Talisman is successful in returning to a free cash flow neutral position while improving its credit metrics on a sustainable basis, which would largely be influenced by the timing of the North Sea asset divestiture (the North Sea operations have continued to result in significant cash flow deficits), DBRS may consider changing the trend to Stable. However, continued weak operating performance and cash flow deficits in the absence of timely asset divestitures would result in further rating pressure.

TLM.PR.A was last mentioned on PrefBlog when the underwriters held a clearance sale. This issue is a FixedReset, 4.20%+277, announced 2011-12-5. It is tracked by HIMIPref™, but relegated to the Scraps index on credit concerns.

Pembina Pipeline Corporation has announced:

that it has closed its previously announced public offering of 10,000,000 cumulative redeemable rate reset class A preferred shares, series 7 (the “Series 7 Preferred Shares”) for aggregate gross proceeds of $250 million (the “Offering”).

The Offering was announced on September 2, 2014 when Pembina entered into an agreement with a syndicate of underwriters. Due to strong investor demand, the size of the Offering was increased from an originally proposed offering of 6,000,000 Series 7 Preferred Shares plus an underwriters’ option to purchase up to an additional 2,000,000 Series 7 Preferred Shares (for aggregate gross proceeds of $200 million assuming the underwriters’ option had been exercised in full).

The proceeds from the offering will be used to help fund a portion of Pembina’s proposed purchase of the Vantage pipeline system and the Saskatchewan Ethane Extraction Plant from Mistral Midstream Inc. and other entities affiliated with Riverstone Holdings LLC (the “Transaction”), as well as to fund a portion of the remainder of the Company’s 2014 capital expenditure program and for general corporate purposes. The Transaction is subject to regulatory approvals including approval of the National Energy Board and under the Competition Act (Canada) and the Canada Transportation Act, required consents and other customary closing conditions, including the approval of the Toronto Stock Exchange. Further details about the Transaction are set out in a separate press release from Pembina dated September 2, 2014, and which may be found on Pembina’s SEDAR profile at www.sedar.com.

The Series 7 Preferred Shares will begin trading on the Toronto Stock Exchange today under the symbol PPL.PR.G.

Dividends on the Series 7 Preferred Shares are expected to be $0.2813 quarterly, or $1.125 per share on an annualized basis, payable 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 December 1, 2019.

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

PPL.PR.G is a FixedReset, 4.50%+294, announced 2009-9-2 2014-9-2. It will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

The issue traded 1,451,885 shares today (consolidated exchanges) in a range of 25.05-19 before closing at 25.10-11, 1×70. Vital statistics are:

Transcontinental Inc. has announced:

that it will exercise its right to redeem all of its 4 million outstanding Cumulative 5-Year Rate Reset First Preferred Shares, Series D on October 15, 2014 at the price per share of $25.00, for an aggregate total of $100 million. The Corporation intends to finance the share redemption through its revolving credit facility.

The quarterly dividend of $0.4253 per Series D Shares will be the final dividend on the Series D Shares, and will be paid in the usual manner on October 15, 2014 to shareholders of record on October 15, 2014. After October 15, 2014, the Series D Shares will cease to be entitled to dividends and the holders of such shares will not be entitled to exercise any right in respect thereof except that of receiving the redemption amount.

Instruction with respect to receipt of the redemption amount will be set out in the Letter of Transmittal to be transmitted to registered holders of the Series D Shares shortly. Inquiries should be directed to our Registrar and Transfer Agent, CST Trust Company, at 1‑800‑387‑0825 (or in Toronto 416‑682‑3860). Beneficial holders who are not directly the registered holders of these 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.

No surprises here! TCL.PR.D is a FixedReset, 6.75%+416, that closed 2009-10-2 after being announced 2009-9-21.

Quadravest has announced:

Dividend 15 Split Corp. II (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 TD Securities Inc., BMO Capital Markets, GMP Securities L.P., Canaccord Genuity Corp. and Raymond James.

The Preferred Shares will be offered at a price of $10.00 per Preferred Share to yield 5.25% on the issue price and the Class A Shares will be offered at a price of $8.75 per Class A Share to yield 13.71% on the issue price. The closing price on the TSX of each of the Preferred Shares and the Class A Shares on September 8, 2014 was $9.18 and $10.19, respectively.

Since inception of the Company, the aggregate dividends paid on the Preferred Shares have been $4.05 per share and the aggregate dividends paid on the Class A Shares have been $8.40 per share, for a combined total of $12.45. All distributions to date have been made in tax advantage eligible Canadian dividends or capital gains dividends.

The net proceeds of the secondary offering will be used by the Company to invest in an actively managed portfolio of dividend-yielding common shares which includes each of the 15 Canadian companies listed below:

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 $0.04375 per Preferred Share to yield 5.25% per annum on the original issue price; and
ii. on or about December 1, 2019, to pay the holders of the Preferred Shares the original issue price of those shares.

Class A Shares:
i. to provide holders of the Class A Shares with regular monthly cash dividends initially targeted to be $0.10 per Class A; and
ii. on or about termination, to pay the 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 September 10, 2014.

Lynx-eyed readers will find some amusement in the fact that they got their closing prices for the two classes reversed, even when using the word “respectively”.

The NAVPU was 17.43 as of September 8, so the Capital Units are trading at a nice premium to intrinsic value, which provides a great deal of incentive for the fund to issue more units.

DF.PR.A was last mentioned on PrefBlog when they released their 2014 Semi-Annual Report. They also got bigger last March. DF.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

Update, 2014-10-13: The offering was successful, according to a Quadravest announcement:

Dividend 15 Split Corp. II (the “Company”) is pleased to announce it has completed an overnight offering of 2,350,000 Preferred Shares and 2,350,000 Class A Shares. Total proceeds of the offering were $44.0 million, bringing the Company’s net assets to approximately $198.6 million. The shares will trade on the Toronto Stock Exchange under the existing symbols of DF.PR.A (Preferred shares) and DF (Class A shares).

The Preferred Shares were offered at a price of $10.00 per Preferred Share to yield 5.25% on the issue price and the Class A Shares were offered at a price of $8.75 per Class A Share to yield 13.71% on the issue price.

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. and Raymond James.

The net proceeds of the secondary offering will be used by the Company to invest in an actively managed portfolio of dividend-yielding common shares which includes each of the 15 Canadian companies listed below:

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

Scotia Managed Companies has announced:

BNS Split Corp. II (the “Company”) announced today that it has called 73,625 Preferred Shares for cash redemption on September 22, 2014 (in accordance with the Company’s Articles) representing approximately 10.35% of the outstanding Preferred Shares as a result of the special annual retraction of 150,950 Capital Shares by the holders thereof. The Preferred Shares shall be redeemed on a pro rata basis, so that each holder of Preferred Shares of record on September 18, 2014 will have approximately 10.35% of their Preferred Shares redeemed. The redemption price for the Preferred Shares will be $18.85 per share.

In addition, holders of a further 3,700 Capital Shares and 1,850 Preferred Shares have deposited such shares concurrently for retraction on September 22, 2014. As a result, a total of 150,950 Capital Shares and 75,475 Preferred Shares, or approximately 10.58% of both classes of shares currently outstanding, will be redeemed.

Holders of Preferred Shares that are on record for dividends but have been called for redemption will be entitled to receive dividends thereon which have been declared but remain unpaid up to but not including September 22, 2014.

Payment of the amount due to holders of Preferred Shares will be made by the Company on September 22, 2014. From and after September 22, 2014 the holders of Preferred Shares that have been called for redemption will not be entitled to dividends or to exercise any right in respect of such shares except to receive the amount due on redemption.

BNS Split Corp. II is a mutual fund corporation whose principal undertaking is to invest in common shares of The Bank of Nova Scotia. Capital Shares and Preferred Shares of BNS Split Corp. II are listed for trading on The Toronto Stock Exchange under the symbols BSC and BSC.PR.B respectively.

BSC.PR.B was last mentioned on PrefBlog when it was upgraded to Pfd-2 by DBRS. BSC.PR.B is tracked by HIMIPref™ but is relegated to the Scraps index on volume concerns.

Quadravest has announced:

Canadian Banc Corp. (the “Company”) announces that it will issue Rights to all Class A Shareholders thereby allowing existing shareholders to increase their investment in the Company. Each Class A Shareholder will be entitled to receive one Right for each Class A Share held as of the record date of August 25, 2014. Six Rights will entitle the holder to purchase a Unit consisting of one Class A Share at $14.18 and one Preferred Share at $10.00 for the total subscription price of $24.18. The Rights are exercisable at any time once issued and will expire at 5:00 p.m. (EST) on October 6, 2014.

The net proceeds from the subscription of Units will be used to acquire additional securities in accordance with the Company’s investment objectives. The exercise price is consistent with current trading prices and accretive to the most recently published net asset value per Unit. The offering is expected to increase the trading liquidity of the Company and reduce the management expense ratio.

Both the Preferred Shares and Class A Shares trade on the Toronto Stock Exchange (the “TSX”) under the symbol “BK.PR.A” and “BK” respectively. The Rights will be listed and will trade on the TSX until 12:00 noon (EST) on October 6, 2014. The Rights will be eligible for exercise on and following August 26, 2014.

The Company invests in a portfolio of six publicly traded Canadian Banks as follows: Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank.

Separately, in a review of the credit of six Split Share Corporations:

Of the six structured Preferred Share ratings updated today by DBRS, one has been upgraded and five have been confirmed. Equity performance has been strong over the past year, with the S&P/TSX Composite Index rising by 22.8% from July 31, 2013, to July 31, 2014. All six Issuers experienced increasing net asset values (NAVs) over that same period. Notwithstanding the positive performance over the past year, the ratings assigned to the many of the Preferred Shares continue to be constrained by distributions paid to holders of the Capital Shares, which depress NAVs and downside protection levels. Other key rating factors include the downside protection volatility in recent months, the credit quality and diversification of each Portfolio and the expected maturity date of the Preferred Shares of each Issuer.

One Preferred Share was upgraded, primarily based on the level and stability of the downside protection over the past year.

The upgrade was for BK.PR.A, which has a Unit Value of 24.16 as of 2014-8-29, implying Asset Coverage of 2.4+:1. It is now rated Pfd-3(high), one notch higher than the confirmation in 2013.

Brookfield Office Properties has announced:

that it intends to redeem all 11,500,000 of its outstanding Class AAA Preference Shares, Series L (TSX: BPO.PR.L), all of which are beneficially held by CDS & Co., as nominee of CDS Clearing and Depositary Services Inc., for cash on September 30, 2014. The redemption price for each such share is C$25.00. Holders of Series L shares on the record date of September 15, 2014 are entitled to receive the regular quarterly dividend of $0.42188 per share.

Notice of Redemption has been sent to CDS & Co. Payment of the redemption price will be made to all beneficial holders of the Series L Shares on or after September 30, 2014 through the facilities of CDS & Co.

This news comes after, but not necessarily due to, my post What’s Up With BPO.PR.L? and my eMail to Investor Relations. That eMail was answered, by the way:

Hello James,

Please see the press release issued today:

[LINK]

Regards,

As noted by Assiduous Reader and New Commenter adriandunn in the comments to my earlier post, trading was halted in the morning:

Sep 3, 2014

TORONTO, Sept. 3, 2014 /CNW/ – The following issues have been halted by IIROC:

Company: Brookfield Office Property Inc. PR series ‘L’

TSX Symbol: BPO.PR.L

Reason: Pending News

Halt Time (ET): 10:50 AM ET

IIROC can make a decision to impose a temporary suspension (halt) of trading in a security of a publicly-listed company. Trading halts are implemented to ensure a fair and orderly market. IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.

SOURCE Investment Industry Regulatory Organization of Canada (IIROC)

Trading was resumed at 11:30am:

TORONTO, Sept. 3, 2014 /CNW/ – Trading resumes in:

Company: Brookfield Office Property Inc. PR series ‘L’

TSX Symbol: BPO.PR.L

Resumption: 11:30 AM ET

IIROC can make a decision to impose a temporary suspension (halt) of trading in a security of a publicly-listed company. Trading halts are implemented to ensure a fair and orderly market. IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.

SOURCE Investment Industry Regulatory Organization of Canada (IIROC)

Assiduous Reader prefQC makes an interesting suggestion later in the comments to my earlier post:

Seems that if yesterday’s big purchaser fights it, he would definitely win (after all, the prospectus is legally binding). In that case, BPO may be forced to offer a “voluntary” redemption and keep the issue alive for another 5 years for those who want to keep it (my guess that would be most everybody). Given the low downside risk and (relatively) high upside reward, maybe this would be a good time to load up on BPO.PR.L??

Well … I dunno. If we go strictly by the timing of the press release, they missed both the redemption window and the reset window, so a judge would have to determine the ‘fairest’ way to resolve the problem. The market clearly expected redemption, so I suspect that would be the decision.

Another consideration is an unusual line in their press release:

Notice of Redemption has been sent to CDS & Co.

According to the prospectus:

A book entry only certificate representing the Series L Shares distributed hereunder will be issued in registered form only to CDS Clearing and Depository Services Inc. (“CDS”) or its nominee and will be deposited with CDS on the Closing Date. The Corporation understands that a purchaser of Series L Shares will receive only a customer confirmation from the registered dealer who is a CDS participant and from or through whom the Series L Shares are purchased. See “Book Entry Only System”.

So according to the official transfer agent, there is only one owner of shares, and BPO claims that this holder received a Notice of Redemption, although they don’t spell out exactly when. If it was before the thirty-day minimum notice, then presumably complainers will find themselves without a leg to stand on.

It is highly regrettable that Brookfield and its various subsidiaries have such a culture of contempt for their ultimate shareholders – much like the culture of contempt that the TSX has for its ultimate users – in that they take a very strict definition of Clients = CDS, full stop, (or in the case of the TSX, Clients = Brokerages, full stop). Remember the ticker change from BNA to PVS? I will bet a nickel that the attitude was and is … ‘We’ve notified our client – and that’s all we need to do’; the client being in this case CDS and in the ticker-change case, the Exchange. It is also very tempting to speculate that the officers of the various firms are useless drecks who refuse to take any initiative and don’t understand why they don’t get paid as much as Brookfield’s dealmakers. But that’s just speculation, of course.