Category: Issue Comments

Canadian Banc Corp. has released its Annual Report to November 30, 2013.

Figures of interest are:

MER: 1.43% of the whole unit value, excluding one time initial offering expenses.

Average Net Assets: We need this to calculate portfolio yield; unfortunately the number of units changesd, which makes it more approximate. The Total Assets of the fund at year end was $134.0-million, compared to $129.5-million a year prior, so call it an average of $132.25-million. Total Preferred Share Distribution in 2013 was $3.152-million, at $0.50/share implies an average of 6.304-million units, at an average NAV of ((22.33 + 19.93) / 2 = 20.83, so call it $131.3-million. Close enough! Call the Average Net Assets $132-million.

Underlying Portfolio Yield: Investment income of $4.905-million received divided by average net assets of $132-million is 3.7%.

Income Coverage: Net investment income of $4.905-million less expenses before issuance fees of $1.868-million is $3.038-million, to cover preferred dividends of 3.152-million is about 96%.

Financial 15 Split Corp. II has announced:

that a special meeting of shareholders will be held at 12:00 p.m. (Eastern standard time) on May 14, 2014.

The primary purpose of the meeting is to consider a special resolution to allow shareholders to continue their investment beyond the currently scheduled termination date of December 1, 2014. Under the primary proposal, the initial termination date would be extended by 5 years to December 1, 2019 (subject to further extensions of 5 years each thereafter).

Full details of the meeting will be contained in the Notice of Meeting and Management Information Circular which will be mailed on April 17, 2014 to all shareholders of record on April 9, 2014.

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 Income Fund, Bank of America, Citigroup Inc., Goldman Sachs Group, JP Morgan Chase & Co. and Wells Fargo & Co.

I will discuss the matter further when more details are available.

Financial 15 Split Corp has announced:

that a special meeting of shareholders will be held at 11:30 a.m. (Eastern standard time) on May 14, 2014.

The primary purpose of the meeting is to consider a special resolution to allow shareholders to continue their investment beyond the currently scheduled termination date of December 1, 2015. Under the primary proposal, the initial termination date would be extended by 5 years to December 1, 2020 (subject to further extensions of 5 years each thereafter).

Full details of the meeting will be contained in the Notice of Meeting and Management Information Circular which will be mailed on April 17, 2014 to all shareholders of record on April 9, 2014.

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 Income Fund, Bank of America, Citigroup Inc., Goldman Sachs Group, JP Morgan Chase & Co. and Wells Fargo & Co.

I will discuss this vote further when more details become available.

Dividend 15 Split Corp. II has released its Annual Report to November 30, 2013.

Using the S&P TSX 60 index rather than “Dividend Aristocrats” seems a little odd to me – but we’ll let them choose their benchmark!

Figures of interest are:

MER: 1.28% of the whole unit value (estimated from 2012 values; the 2013 figure is not comparable due to a secondary share offering that spanned 2013 year end).

Average Net Assets: We need this to calculate portfolio yield. No change in Number of Units Outstanding, so the average of the beginning and end of year figures can be used: $81.2-million

Underlying Portfolio Yield: Dividends received of 3,075,803 divided by average net assets of 81.2-million is 3.8%

Income Coverage: Net Investment Income of 1,757,682 divided by Preferred Share Distributions of 2,670,393 is 66%.

Laurentian Bank of Canada has announced:

that it has closed its previously announced public offering, on a bought deal basis, of 5,000,000 Basel III-compliant Non-Cumulative Class A Preferred Shares, Series 13 (the “Preferred Shares Series 13”), at a price of $25.00 per share for gross proceeds of $125 million (the “Offering”).

The Offering was underwritten by a syndicate led by RBC Dominion Securities Inc., BMO Capital Markets and Laurentian Bank Securities Inc.

The Preferred Shares Series 13 will commence trading on the Toronto Stock Exchange today under the ticker symbol “LB.PR.H.”.

The Preferred Shares Series 13 were issued pursuant to a prospectus supplement dated March 27, 2014 to Laurentian Bank’s short form base shelf prospectus dated October 10, 2012.

LB.PR.H is a NVCC-compliant FixedReset, 4.30%+255, announced March 25; since it is NVCC-compliant, I have not imposed a Deemed Maturity onto the call schedule. This issue will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

DBRS finalized its rating at Pfd-3(low), one notch below other issues due to the uncertainty caused by NVCC.

The issue traded 697,638 shares today in a range of 24.91-99 before closing at 24.96-99, 125×12. Vital statistics are:

DBRS has announced that it:

has today confirmed its rating of the Cumulative Preferred Shares of Canaccord Genuity Group Inc. (Canaccord or the Company) at Pfd-3 (low). The trend was restored to Stable (from Negative) largely on the strength of integration success and because improved geographic diversity has demonstrated a strengthening of Canaccord’s through-the-cycle resilience in the extended weak market environment in Canada. Results in U.K. and Europe, in particular, have counterbalanced poor results in Canada. The return to a Stable trend reflects DBRS’s belief that a negative rating action is less likely to occur in the very near term.

Canaccord’s leverage, as measured by total debt plus preferred shares-to-capitalization, of around 20% is acceptable to DBRS, as are the coverage ratios that have rebounded from recent periods. DBRS does recognize that the current environment represents a low point in the cycle and thus metrics are expected to be in the weaker end of the ranges; nevertheless, any deterioration will be unfavourable for the rating.

The trend has been negative for a long time! CF.PR.A was last mentioned on PrefBlog when the trend was revised to negative by DBRS in December 2011; CF.PR.C started trading in April 2012.

Quadravest has announced:

Dividend 15 Split Corp. II (the “Company”) is pleased to announce that 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 BMO Capital Markets, TD Securities Inc., GMP Securities L.P. and Canaccord Genuity Corp.

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 $8.50 per Class A Share to yield 14.12% on the issue price. The closing price on the TSX of each of the Preferred Shares and the Class A Shares on March 25, 2014 was $10.14 and $9.08, respectively.

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 December 1, 2019, 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. (Toronto time) on March 27, 2014.

The pricing on this is interesting … as may be seen from the press release, the new units are being offered at a nice discount to market. Discerning investors will, however, note that the NAVPU on March 14 was 16.55 and that a reasonable proxy, XDV, is up only about 60bp since then … so the estimated current NAVPU is about 16.64 and the unit price for the offering is 18.50. Some bargain!

DF.PR.A was last mentioned on PrefBlog when it got bigger last November. DF.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

Update, 2014-4-29: On April 10, Quadravest announced:

Dividend 15 Split Corp. II (the “Company”) is pleased to announce it has completed an overnight offering of 2,225,250 Preferred Shares and 2,225,250 Class A Shares. Total gross proceeds of the offering were $41.2 million, bringing the Company’s net assets to approximately $153.7 million. Shares will trade on the Toronto Stock Exchange under the existing symbol DF.PR.A (Preferred Shares) and DF (Class A shares).

The Preferred Shares were offered at a price of $10.00 per share to yield 5.25% annually and the Class A Shares were offered at a price of $8.50 per share targeting to yield 14.1%, based on the current distribution policy.

The offering was co-led by National Bank Financial Inc., CIBC and RBC Capital Markets and also included BMO Capital Markets, TD Securities Inc., GMP Securities L.P. and Canaccord Genuity Corp.

Scotia Managed Companies has announced:

NewGrowth Corp. (the “Company”) announced today that holders of its Class A Capital Shares (“Capital Shares”) have overwhelmingly approved a share capital reorganization (the “Reorganization”) allowing holders of Capital Shares, at their option, to retain their investment in the Company after the scheduled redemption date of June 26, 2014. The Reorganization will permit holders of Capital Shares to extend their investment in the Company beyond the redemption date of June 26, 2014 for up to an additional 5 years. The Class B Preferred Shares, Series 2 will be redeemed on the same terms originally contemplated in their share provisions on June 26, 2014. In order to maintain the leveraged “split share” structure of the Company, the Company expects to create and issue a new series of Class B preferred shares on or about June 26, 2014.

Holders of Capital Shares electing to retain their investment in the Company will continue to enjoy the benefit of a leveraged participation in the capital appreciation of the Company’s portfolio while potentially deferring any capital gains tax liability which would otherwise be realized on the redemption of their Capital Shares. As part of the Reorganization, the Company’s portfolio of common shares of Canadian chartered banks, telecommunication, utility and pipeline companies will be expanded to include selected issuers in the oil and gas sector and will be rebalanced to equal weight.

Holders of Capital Shares who do not wish to continue their investment in the Company after June 26, 2014 must give notice that they wish to exercise their special retraction right and how they wish to be paid for their shares on or prior to April 18, 2014. Holders of Capital Shares who retract their Capital Shares will be paid on June 26, 2014. The Reorganization will become effective provided that holders of at least 1,287,000 Capital Shares retain their Capital Shares and do not exercise the special retraction right.

The proposal for the Capital Unit term extension was reported on PrefBlog. NEW.PR.C is tracked by HIMIPref™ but is assigned to the Scraps index on volume concerns.

The Toronto-Dominion Bank has announced:

that it will exercise its right to redeem all of its 12 million outstanding Non-cumulative 5-Year Rate Reset Preferred Shares, Series AE (the “Series AE Shares”) on April 30, 2014 at the price per share of $25.00, for an aggregate total of approximately $300 million.

TD also announced it will exercise its right to redeem all of its 15 million outstanding Non-cumulative 5-Year Rate Reset Preferred Shares, Series AG (the “Series AG Shares”) on April 30, 2014 at the price per share of $25.00, for an aggregate total of approximately $375 million.

On February 27, 2014, the Board of Directors of TD declared quarterly dividends of $0.390625 per Series AE Share and $0.390625 per Series AG Share. These will be the final dividends on the Series AE Shares and Series AG Shares, respectively, and will be paid in the usual manner on April 30, 2014 to shareholders of record on April 8, 2014, as previously announced. After April 30, 2014, the Series AE Shares and Series AG 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.

Instructions with respect to receipt of the redemption amount will be set out in the Letter of Transmittal to be mailed to registered holders of the Series AE Shares and Series AG 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 holder 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.

There should be no surprise at these redemptions. TD.PR.E is a FixedReset, 6.25%+437, which commenced trading 2009-1-14 and TD.PR.G is a FixedReset, 6.25%+438, which commenced trading 2009-1-30.

Laurentian Bank of Canada has announced (as part of their previously reported new issue announcement):

that it intends to redeem, on June 16, 2014, all of its 4,400,000 issued and outstanding Non-Cumulative Class A Preferred Shares, Series 10 (the “Preferred Shares Series 10”), at a price of $25.00 per share for an aggregate consideration of $110 million.

LB.PR.E is a Straight Perpetual with a 5.25% coupon that commenced trading 2004-4-15.