Category: Issue Comments

Power Financial Corporation has announced:

the successful completion and closing of an offering of 8,000,000 4.20% Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series T (the “Series T Shares”) priced at $25.00 per share to raise gross proceeds of $200 million.

The issue was bought by an underwriting syndicate co-led by BMO Capital Markets, RBC Capital Markets and Scotiabank.

The Series T Shares will be listed and posted for trading on the Toronto Stock Exchange under the symbol “PWF.PR.T”. The net proceeds from the issue will be used to supplement the Corporation’s financial resources and for general corporate purposes. The Corporation intends to redeem all of its $175 million First Preferred Shares, Series M on January 31, 2014.

PWF.PR.T is a FixedReset, 4.20%+237, announced December 2. It will be tracked by HIMIPref™ and is assigned to the FixedReset subindex.

The issue traded 728,130 shares today in a range of 25.22-35 before closing at 25.27-30, 17×96. Vital statistics are:

Fortis Inc. has announced:

that it has entered into an agreement and plan of merger to acquire UNS Energy Corporation (“UNS Energy”) (NYSE:UNS) for US$60.25 per common share in cash, representing an aggregate purchase price of approximately US$4.3 billion, including the assumption of approximately US$1.8 billion of debt on closing (the “Acquisition”). The closing of the Acquisition, which is expected to occur by the end of 2014, is subject to receipt of UNS Energy common shareholder approval and certain regulatory and government approvals, including approval by the Arizona Corporation Commission (“ACC”), Federal Energy Regulatory Commission and compliance with any applicable requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the satisfaction of customary closing conditions.

UNS Energy is a vertically integrated utility services holding company, headquartered in Tucson, Arizona, engaged through three subsidiaries in the regulated electric generation and energy delivery business, primarily in the State of Arizona. UNS Energy’s fiscal 2012 operating revenues totalled approximately US$1.5 billion and, as at September 30, 2013, UNS Energy had total assets of approximately US$4.3 billion. UNS Energy serves approximately 654,000 electricity and gas customers.

Following the Acquisition, based on pro forma financial information as at September 30, 2013, total assets of Fortis will increase by approximately 33.5% to approximately $23.5 billion and regulated utility assets will comprise approximately 92% of total assets. Regulated assets in Canada and the United States will comprise approximately 55% and 34%, respectively, of total assets. The Corporation’s consolidated rate base is expected to increase by approximately US$3 billion at the time of closing of the Acquisition. Following the Acquisition, Fortis utilities will serve more than 3,000,000 electricity and gas customers.

They also announced a big chunk of financing:

its direct wholly owned subsidiary, FortisUS Holdings Nova Scotia Limited (the “Selling Debentureholder”), has agreed to sell $1,594,000,000 aggregate principal amount of 4.00% convertible unsecured subordinated debentures (“Debentures”) of Fortis in a secondary offering on a “bought deal” basis to the public (the “Public Offering”) and separately has agreed to sell $206,000,000 aggregate principal amount of Debentures to certain institutional investors on a private placement basis (the “Private Placement” and together with the Public Offering, the “Offerings”). In connection with the Public Offering, the underwriters have also been granted an over-allotment option to purchase up to an additional $239,100,000 aggregate principal amount of Debentures at the offering price, within 30 days from the date of the closing of the Public Offering solely to cover over-allotments, if any, and for market stabilization purposes.

All Debentures are being sold on an instalment basis at a price of $1,000 per Debenture, of which $333 is payable on the closing of the Offerings and the remaining $667 is payable on a date (“Final Instalment Date”) to be fixed following satisfaction of all conditions precedent to the closing of Fortis’ acquisition of UNS Energy Corporation (NYSE:UNS).
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The Debentures will mature on January 9, 2024 and will bear interest at an annual rate of 4.00% per $1,000 principal amount of Debentures (an effective annual yield of 12.00% based on a first instalment of $333) until and including the Final Instalment Date, after which the interest rate will be 0%.

If the Final Instalment Date occurs on a day that is prior to the first anniversary of the closing of the Offering, holders of Debentures who have paid the final instalment on or before the Final Instalment Date will be entitled to receive, on the business day following the Final Instalment Date, in addition to the payment of accrued and unpaid interest to and including the Final Instalment Date, an amount equal to the interest that would have accrued from the day following the Final Instalment Date to, but excluding, the first anniversary of the closing of the Offering had the Debentures remained outstanding until such date (the “Make-Whole Payment”). No Make-Whole Payment will be payable if the Final Instalment Date occurs on or after the first anniversary of the closing of the Offering.

At the option of investors and provided that payment of the final instalment has been made, each Debenture will be convertible into common shares of Fortis (“Common Shares”) at any time after the Final Instalment Date but prior to maturity or redemption by the Corporation at a conversion price of $30.72 per Common Share, being a conversion rate of 32.5521 Common Shares per $1,000 principal amount of Debentures, subject to adjustment in certain circumstances.

The Debentures will not be redeemable except that Fortis will redeem the Debentures at a price equal to their principal amount plus accrued and unpaid interest following the earlier of: (i) notification to holders that the conditions necessary to approve the acquisition of UNS Energy Corporation will not be satisfied; (ii) termination of the acquisition agreement; and (iii) July 2, 2015, if notice of the Final Instalment Date has not been given to investors on or before June 30, 2015. Upon any such redemption, the Corporation will pay for each Debenture: (i) $333 plus accrued and unpaid interest to the holder of the Instalment Receipt; and (ii) $667 to the Selling Debentureholder on behalf of the holder of the Instalment Receipt in satisfaction of the final instalment. In addition, after the Final Instalment Date, any Debentures not converted may be redeemed by Fortis at a price equal to their principal amount plus unpaid interest, which accrued prior to the Final Instalment Date.

At maturity, Fortis will have the right to pay the principal amount due in Common Shares, which will be valued at 95% of their weighted average trading price on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days preceding the maturity date.

Mark Chediak and Rebecca Penty of Bloomberg note:

The transaction is Fortis’s second announced purchase of a U.S. utility in the past two years. The company completed its $969 million acquisition of CH Energy Group Inc. in June, after agreeing to freeze rates for New York customers. Fortis has been focused on the U.S. for acquisitions because there are “many more opportunities” than in Canada, where most utilities are owned by the government, Chief Financial Officer Barry Perry said on a conference call last month.

DBRS has announced that it:

has today placed the A (low) Issuer Rating, A (low) Unsecured Debentures and Pfd-2 (low) Preferred Shares ratings of Fortis Inc. (Fortis or the Company) Under Review with Developing Implications. This action follows the announcement that the Company has agreed to acquire UNS Energy Corporation (UNS) for a total consideration of approximately $4.3 billion, including the assumption of $1.8 billion of debt on closing (the Acquisition). The rating action reflects DBRS’s view that the proposed Acquisition would have a modestly negative impact on Fortis’ business risk profile while the impact on the financial risk profile is uncertain since the financing plan has not been finalized.
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The focus of DBRS’s analysis is on Fortis’ non-consolidated capital structure (parent level) and cash flow from the subsidiaries to the parent to service the parent’s debt and corporate expenses. On a non-consolidated basis, the cash flow-to-interest expense ratio was strong at 9.17 times in 9M2013, while debt-to-capital was approximately 21%. DBRS notes that the non-consolidated leverage of 21% is slightly above the acceptable range for a holding company with respect to DBRS’s one-notch criteria. However, this increase is expected to be temporary and the leverage will fall in-line with the current rating category following the completion of the Waneta project. Currently, it is uncertain as to how Fortis plannts to finance the proposed Acquisition. As a result, DBRS has placed the ratings of Fortis Under Review with Developing Implications. DBRS will further review the Company’s financing plan when it is finalized. Upon final review, if the Company finances the proposed Acquisition or any cost overruns of its current projects in such a way that its non-consolidated debt-to-capital structure is significantly above 20% and its other non-consolidated credit metrics deteriorate significantly without corrective action within a reasonable time frame, then negative rating action is likely to occur.

Fortis Inc. has several preferred issues trading on the Toronto Exchange: FTS.PR.E (OperatingRetractible); FTS.PR.F and FTS.PR.J (PerpetualDiscount); and FTS.PR.G, FTS.PR.H and FTS.PR.K (FixedReset).

DBRS has announced that it:

has today discontinued its rating of Royal Bank of Canada’s (RBC) Non-Cumulative First Preferred Shares, Series W (Series W). DBRS had placed the Series W, which is convertible to common equity at the issuer’s option, Under Review with Negative Implications on August 17, 2011.

This action follows the application of the updated “DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities,” which was released earlier today. In the updated criteria, the ratings principles for contingent capital instruments (CoCo) indicate that DBRS may not rate CoCo instruments in cases where their triggers are inadequately defined, where they have poorly specified mechanisms for conversion or where the probabilities of their activation are difficult to predict and not closely tied to the issuer’s credit position. If the level of difficulty in assessing these risks is high enough, DBRS may be unable to assign a rating to the instrument.

Because the trigger for conversion into common equity is inadequately defined, DBRS has concluded it is unable to assign a rating to the Series W. Although DBRS believes conversion of the Series W is not likely, the lack of trigger control has led DBRS to conclude the instrument cannot be rated under the updated criteria. This action does not reflect any change in DBRS’s view of RBC’s credit profile and is not related to any issuer-specific credit events.

The Review-Negative was reported on PrefBlog.

As previously noted on PrefBlog, S&P does not discriminate between RY.PR.W and other RY preferred issues.

DBRS has announced that it:

has today downgraded three convertible Non-Cumulative Class A Preferred Shares, Series 26, 27 and 29 of Canadian Imperial Bank of Commerce (CIBC) to Pfd-2 from Pfd-1 (low). The Under Review with Negative Implications status has been removed and the trends are Stable. This action follows the release earlier today of the updated “DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities.”

DBRS had placed the Series 26, 27 and 29 preferred shares, which at the time were convertible to common equity at the issuer’s option, Under Review with Negative Implications on August 17, 2011. Subsequently, CIBC irrevocably passed control of the trigger to the Office of the Superintendent of Financial Institutions (OSFI) to be used only for a non-viability event under OSFI’s capital guidelines. As a result, OSFI confirmed the three series as non-viability contingent capital (NVCC) qualifying instruments.

Under the updated criteria, DBRS has determined that the OSFI NVCC trigger represents a very remote conversion probability and consequently DBRS has rated these instruments Pfd-2, which is the equivalent of four notches below CIBC’s intrinsic assessment of AA (low).

This action does not reflect any change in DBRS’s view of CIBC’s credit profile and is not related to any issuer-specific credit events.

Other rating actions taken today as a result of the criteria update are being published separately.

DBRS has published the DBRS Criteria: Rating Bank Capital Securities – Subordinated, Hybrid, Preferred & Contingent Capital Securities:

a) Notching for Preferred Securities Relative to Intrinsic Assessment

Preferred shares are equity instruments that typically pay fixed dividends or floating rate dividends linked to certain index rates. These instruments generally rank above common equity and below the various forms of sub-debt. As preferred dividends have to be approved by the Board of Directors for each payment period, preferred dividends can be halted without resulting in a default on a bank’s debt. Typically, such a halt in dividends has to be preceded by a halt in payment of dividends on common equity.

Certain hybrid instruments can be converted to preferred shares under certain conditions. Typically, these conditions are specified to occur when a bank is under significant stress and its capital position has weakened severely. DBRS treats these instruments like preferred shares in terms of notching.

As preferred shares are equity, various governments during the current crisis have acted to have banks that are under some stress exchange these instruments to bolster their common equity. In some cases, this step has been accomplished through voluntary exchanges. In other cases, banks have engaged in forced exchanges, which DBRS considers tantamount to default. In some cases, preferred shares have been wiped out. This process has helped to bolster these banks’ common equity and helped them avoid being put into receivership. Thus, while senior debt and even subordinated debt have continued to pay as agreed, preferred shares have been subject to greater risk of default. Accordingly, preferred shares and instruments that convert to preferreds are notched from the IA and the notching is wider than for sub debt. Reflecting this increased risk, preferreds are notched by three notches from a bank’s intrinsic assessment.

While the base notching as discussed above is the starting point for rating bank preferred shares, DBRS policy permits wider notching than this base notching to reflect any unique characteristics of individual banks. Various factors may be considered. Notching could be increased by a weaker capital structure, including a higher proportion of preferred shares. Actions taken to reduce or halt common dividends (recognizing that these actions are the first buffer) could also increase notching. Other unique stresses within the domestic financial system, such as expected actions by external parties (regulators, governments) could also add notches.

b) Higher Risk of Nonpayment or Loss on Bank Preferreds Compared to Corporate Preferreds

Compared to other corporate issuers, banks are highly leveraged and may face greater losses relative to the size of their capital bases. Banks therefore may more readily resort to actions to generate common equity; including halting preferred dividends combined with exchange offers. In some cases, regulators or government authorities may require banks to take adverse action against preferreds as a condition of receiving support. Differences in the regimes for resolving distressed banks are also a factor, as these regimes often differ from the bankruptcy laws governing distressed corporates, particularly in giving the resolution authority more powers during resolution. Such actions can include halting preferred dividends or forced exchanges for common shares and/or cash2. Given these differences, DBRS typically notches bank preferred share securities three notches rather than the two notches typically used for non-banking entities.

Due to the NVCC status, S&P downgraded CM.PR.D and CM.PR.E in 2011 (it does not rate CM.PR.G). The action of DBRS in placing the issues on Watch-Negative was reported on PrefBlog.

CM.PR.D, CM.PR.E and CM.PR.G are all tracked by HIMIPref™ all are included in the PerpetualPremium (not DeemedRetractible!) subindex.

The National Bank of Canada has announced:

its intention to redeem all of its remaining issued and outstanding Non-Cumulative 5-Year Rate Reset First Preferred Shares Series 24 (the “Preferred Shares Series 24”) together with all of its remaining issued and outstanding Non-Cumulative 5-Year Rate Reset First Preferred Shares Series 26 (the “Preferred Shares Series 26”) on February 15, 2014 (the “Redemption Date”).

Pursuant to the share conditions, on the Redemption Date, the Bank may, at its option, redeem the Preferred Shares Series 24 and the Preferred Shares Series 26 at a price equal to $25.00 per share together with all declared and unpaid dividends. The declared dividends payable on February 15, 2014 will be paid to shareholders of record on January 10, 2014.

Formal notice will be issued to shareholders in accordance with the share conditions. The redemption of the Preferred Shares Series 24 and the Preferred Shares Series 26 is subject to the approval of the Office of the Superintendent of Financial Institutions and is part of the Bank’s ongoing management of its regulatory capital.

The Bank recommends shareholders consult with their tax advisors to determine the appropriate treatment and impact of the redemptions.
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This press release includes certain forward-looking statements. These forward-looking statements include the Bank’s intentions regarding the redemption of the Preferred Shares Series 24 and the Preferred Shares Series 26. These statements are inherently subject to significant risks, uncertainties and changes in circumstances, many of which are beyond the control of the Bank, including the obtaining of regulatory approval required to complete the proposed redemption. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.

NA.PR.O was last mentioned on PrefBlog when it was removed from TXPR following a substantial issuer bid. It was a FixedReset, 6.60%+463, announced 2009-1-5.

NA.PR.P was also a subject of the issuer bid. It was a FixedReset, 6.60%+479, announced 2009-1-22.

In June, 2013, a shareholders’ vote was scheduled:

The purpose of the meeting is to consider and vote upon a special resolution that would allow the merger of STREAMS III into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013 while still allowing any STREAMS III shareholders, should they choose, to retract their shares on the existing scheduled termination date on the same terms as originally contemplated.

A vote FOR the proposal will give you two options at the December 1, 2013 termination date:
1) Capital Yield and Equity Dividend shareholders will be able to have their shares exchanged (based on relative net asset values) for an equal dollar amount of units of Dividend 15 through the merger of STREAMS III into Dividend 15, OR
2) Capital Yield shares would receive $25 per share and Equity Dividend shares would receive the NAV less $25 (to a maximum of $15 per share) under the existing termination formula as originally contemplated.

If this proposal is approved, shareholders will not be required to make a decision on this choice until early in November, 2013 when further information will be provided.

The vote was favourable:

The Board of Directors of Income STREAMS III Corporation (“STREAMS III”) is pleased to announce that Equity Dividend Shareholders voted 97% in favour and Capital Yield Shareholders voted 89% in favour of a proposal that would allow the merger of STREAMS III into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013.

Approximate values were announced in November:

Based on the November 15, 2013 net asset value (NAV) exchange ratios (as adjusted for the DFN and DFN.PR.A November declared dividends) and the market value of a Dividend 15 unit (as at November 15, 2013) STQ shareholders would receive the equivalent of $26.17 in market value of Dividend 15 units for each STQ share exchanged. STQ.E shareholders would receive the equivalent of $8.06 in market value of Dividend 15 units for each STQ.E share exchanged.

Precise exchange ratios were announced November 29:

Income STREAMS III Corp. (“IS STREAMS”) provides the final exchange ratio and other details relating to the merger of IS STREAMS into Dividend 15 Split Corp (“Dividend 15”).

All Capital Yield (TSX symbol STQ) and Equity Dividend (TSX symbol STQ.E) shares outstanding on December 1, 2013 will automatically be exchanged into an equal dollar amount of Dividend 15 units based on the November 28 net asset value (NAV) exchange ratios. One unit of Dividend 15 is comprised of one Class A share (TSX symbol DFN) and one Preferred share (TSX symbol DFN.PR.A).

The final exchange ratios are as follows:

1 STQ share will be exchanged into 1.22352296 DFN shares and 1.22352296 DFN.PR.A shares

1 STQ.E share will be exchanged into 0.37682901 DFN shares and 0.37682901 DFN.PR.A shares

(Fractional shares will not be issued)

It is expected that STQ and STQ.E shares will be halted for trading by the TSX before the opening of trading on December 3, 2013 and delisted from the TSX on that day. Any STQ or STQ.E purchased prior to the halt of these shares will receive the applicable number of DFN and DFN.PR.A shares upon settlement. The exchange of STQ and STQ.E into DFN and DFN.PR.A shares will occur automatically and no further action is required by STQ or STQ.E shareholders. This exchange is a non taxable event.

Based on the November 28, 2013 NAV exchange ratios and the market value of a Dividend 15 unit (as at November 28, 2013), STQ shareholders will receive the equivalent of $25.69 in market value of Dividend 15 units for each STQ share exchanged. STQ.E shareholders would receive the equivalent of $7.91 in market value of Dividend 15 units for each STQ.E share exchanged.

Well, the recovery of about $7.91 on STQ.E is a far cry from the par value of $15! STQ.E was last mentioned on PrefBlog when the credit rating was discontinued in February 2008. STQ.E has been tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

In June, 2013, Quadravest sent CGQ & CGQ.E unitholders a management information circular:

The purpose of the meeting is to consider and vote upon a special resolution that would allow the merger of CG STREAMS into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013 while still allowing any CG STREAMS shareholders, should they choose, to retract their shares on the existing scheduled termination date on the same terms as originally contemplated.

A vote FOR the proposal will give you two options at the December 1, 2013 termination date:
1) Capital Yield and Equity Dividend shareholders will be able to have their shares exchanged (based on relative net asset values) for an equal dollar amount of units of Dividend 15 through the merger of CG STREAMS into Dividend 15, OR
2) Capital Yield shares would receive $25 per share and Equity Dividend shares would receive the NAV less $25 (to a maximum of $15 per share) under the existing termination formula as originally contemplated.

If this proposal is approved, shareholders will not be required to make a decision on this choice until early in November 2013
when further information will be provided.

Shareholders approved the proposal in July, 2013:

The Board of Directors of Capital Gains Income STREAMS (“CG STREAMS”) is pleased to announce that both classes of shareholders have voted over 94% in favour of a proposal that would allow the merger of CG STREAMS into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013.

On November 29, final exchange ratios were announced:

Capital Gains Income STREAMS (“CG STREAMS”) provides the final exchange ratio and other details relating to the merger of CG STREAMS into Dividend 15 Split Corp (“Dividend 15”).

All Capital Yield (TSX symbol CGQ) and Equity Dividend (TSX symbol CGQ.E) shares outstanding on December 1, 2013 will automatically be exchanged into an equal dollar amount of Dividend 15 units based on the November 28 net asset value (NAV) exchange ratios. One unit of Dividend 15 is comprised of one Class A share (TSX symbol DFN) and one Preferred share (TSX symbol DFN.PR.A).

The final exchange ratios are as follows:

1 CGQ share will be exchanged into 1.22352296 DFN shares and 1.22352296 DFN.PR.A shares

1 CGQ.E share will be exchanged into 0.19516249 DFN shares and 0.19516249 DFN.PR.A shares

(Fractional shares will not be issued)

It is expected that CGQ and CGQ.E shares will be halted for trading by the TSX before the opening of trading on December 3, 2013 and delisted from the TSX on that day. Any CGQ or CGQ.E purchased prior to the halt of these shares will receive the applicable number of DFN and DFN.PR.A shares upon settlement. The exchange of CGQ and CGQ.E into DFN and DFN.PR.A shares will occur automatically and no further action is required by CGQ or CGQ.E shareholders. This exchange is a non taxable event.

Based on the November 28, 2013 NAV exchange ratios and the market value of a Dividend 15 unit (as at November 28, 2013), CGQ shareholders will receive the equivalent of $ 25.69 in market value of Dividend 15 units for each CGQ share exchanged. CGQ.E shareholders would receive the equivalent of $4.10 in market value of Dividend 15 units for each CGQ.E share exchanged.

Well, the recovery of about $4.17 on CGQ.E is a far cry from the par value of $15! CGQ.E was last mentioned on PrefBlog when the credit rating was discontinued in February 2008. CGQ.E has been tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

As noted in the new issue report, Power Financial Corporation has announced:

The Corporation intends to redeem all of its $175 million First Preferred Shares, Series M on January 31, 2014 upon completion of the Series T offering.

Nice! PWF.PR.M is a FixedReset, 6.00%+320 (announced in November, 2008, when the market was going vertical and not in a nice way), while the new issue is 4.20%+237 … so the company is saving 180bp on the difference in initial dividend and will save 93bp on all future resets.

Standard & Poor’s has announced:

• We are raising our long-term corporate credit rating on Northland Power Inc. (NPI) to ‘BBB’ from ‘BBB-‘.
• We are also raising our global scale and Canada scale preferred stock ratings on NPI to ‘BB+’ and ‘P-3(High)’ from ‘BB’ and ‘P-3’, respectively.
• As well, we are affirming our ‘BBB’ issue-level rating on the company’s senior secured debt.
• The upgrade reflects our assessment of NPI’s consistent cash flow generation, coupled with the completion of its North Battleford project on time and within budget.
• The stable outlook reflects our belief that the company will continue to perform as it has been, maintaining its credit metrics commensurate with the higher rating over the next two years.

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The stable outlook reflects our view of NPI’s partially consolidated financial measures, which we believe will remain at or above 30% parent-only cash flow (POCF)-to-debt, and our expectation that the company will continue to finance its projects with nonrecourse project debt. The outlook also reflects our expectation that NPI’s long-term contracted power generation businesses will continue to produce stable and predictable cash flows with a quality of cash flow score of 5. We believe there will be a modest improvement in its diversity with respect to asset concentration, counterparty, and fuel type as its various projects come online on time and budget.

Given the potential for additional financial commitments to the Gemini project in addition to what the company has already committed to, we don’t expect an upgrade during the next two-to-three years.

Conversely, if the Gemini project should experience material unanticipated delays or cost increases or POCF-to-debt consistently falls below 22% on a partially deconsolidated basis, we would consider a downgrade.

NPI has two series of preferred shares outstanding, NPI.PR.A and NPI.PR.C, both FixedResets at +280 and +346 respectively. NPI.PR.A was last mentioned on PrefBlog when the ticker changed from NPP.PR.A in January 2011; NPI.PR.C was last mentioned when the issue closed in May, 2012. Both issues are tracked b HIMIPref™; both are relegated to the Scraps subindex on credit concerns.

Quadravest has announced:

Dividend 15 Split Corp. II (“Dividend 15 II”) is pleased to announce that it has filed a short form prospectus in each of the provinces of Canada with respect to an additional offering of Preferred Shares and Class A Shares of the Company. The offering will be co-led by National Bank Financial Inc., CIBC World Markets Inc. and RBC Capital Markets.

The Preferred Shares will be offered at a price of $10.00 per Preferred Share to yield 5.25% and the Class A Shares will be offered at a price of $8.25 per Class A Share to yield 13.51%. The closing price of each of the Preferred Shares and the Class A Shares on November 15, 2013 on the TSX was $8.88 and $10.12, respectively.

The proceeds of the secondary offering, net of expenses and the Agents’ fee, 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. These are currently among the highest dividend-yielding securities in the S&P/TSX 60 Index:

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. EST on November 19, 2013.

A copy of the preliminary short form prospectus is available from the syndicate of underwriters.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Investors should read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

DF.PR.A was last mentioned on PrefBlog when it was confirmed at Pfd-3(low) by DBRS. DF.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.