iA Financial Corporation Inc. has announced:
that it is considering an offering of Limited Recourse Capital Notes (the “Notes”) under its short form base shelf prospectus dated April 25, 2024 (the “Offering”).
Industrial Alliance Insurance and Financial Services Inc. (TSX: IAF) (“Industrial Alliance”), a subsidiary of the Company, announced that if the Offering is completed it intends to redeem its issued and outstanding Non-Cumulative Class A Preferred Shares Series B (the “Preferred Shares”) pursuant to their terms.
There is no certainty that the Company will ultimately complete the Offering being considered or as to the timing or terms on which such an offering might be completed and no certainty that Industrial Alliance will redeem the Preferred Shares.
The affected issue is IAF.PR.B. This issue closed the day at a price of 24.92, up 17.22% from Friday’s close of 21.26, on volume of 91,010 – large by any non-new-issue standards, and huge by the standards of this sleepy little preferred.
I’m pretty mad about this. I presume that word got out about the potential redemption of IAF.PR.B from the ‘intended use of proceeds’ section of whatever pre-marketting material’s going around, assuming that nobody who was approached had already figured out that IAF.PR.B was a prime candidate for a redemption of this nature. It is, after all, one of the last (if not the last) preferred shares issued by an actual insurer rather than an insurance holding company.
So why didn’t Industrial Alliance get a trading halt on the issue prior to all this? Other companies have been scrupulous in announcing their intention to try to refinance a preferred issue on the day before going to market. And, given that Industrial Alliance did not do this, why didn’t CIRO halt trading ‘pending an announcement from the company’? The price had gained about $1 from the opening by about 1pm; after that it really took off. It was something like 45-60 minutes before the announcement finally appeared on the company website.
How’s this from CIRO’s/IIROC’s website?
If IIROC staff notice erratic price moves in stocks, they will contact the issuer to see if it has information to explain the movement. Staff may ask the company to issue a news release if they believe that material information is leaking into the market or if they believe rumours are affecting the stock price.
Bad work, Industrial Alliance! Bad work, CIRO!
Update, 2024-6-18 This just in, although it is dated 2024-6-17 … must have been very late last night or not posted until this morning … iA Financial Corporation Inc. has announced:
that it intends to issue $350 million aggregate principal amount of 6.921% Limited Recourse Capital Notes Series 2024-1 (Subordinated Indebtedness) (the “Notes”) due September 30, 2084 (the “Offering”).
The Offering is expected to close on or about June 25, 2024. The Company intends to use the net proceeds from the sale of the Notes for general corporate purposes, which may include investments in subsidiaries and repayment of indebtedness.
The Notes will mature on September 30, 2084. Interest on the Notes at the rate of 6.921% per annum will be payable in semi-annual installments in arrears on March 31 and September 30 in each year, commencing on September 30, 2024 and continuing until September 30, 2029. Starting on September 30, 2029 and on every fifth anniversary of such date thereafter until September 30, 2079 (each such date an “Interest Reset Date”), the interest rate on the Notes will be reset at an interest rate per annum equal to the prevailing 5-year Government of Canada Yield on the business day prior to such Interest Reset Date, plus 3.600%.
In connection with the issuance of the Notes, the Company will issue 350,000 Non-Cumulative 5-Year Rate Reset Class A Preferred Shares, Series B (the “Series B Shares”). These shares will be held by Computershare Trust Company of Canada, as trustee of iA Financial Corporation LRCN Trust (the “Limited Recourse Trust”). In the event of a non-payment of interest or of the principal amount on the Notes when due, the recourse of each holder of Notes shall be limited to that holder’s pro rata share of the assets of the Limited Recourse Trust, which assets will consist of the Series B Shares, except in certain limited circumstances.
Subject to the prior approval of the Autorité des marchés financiers, the Company may redeem the Notes during the period from August 31 to and including September 30, commencing in 2029 and every five years thereafter, in whole or in part, on not less than 10 days’ and not more than 60 days’ prior written notice from the Company, at a redemption price which is equal to the aggregate of the principal amount of the Notes to be redeemed and any accrued and unpaid interest on such Notes up to, but excluding, the date of the redemption. The Offering is being done on a best efforts agency basis by a syndicate of agents co-led by CIBC Capital Markets, National Bank Financial Markets and RBC Capital Markets. The Notes will be offered in each of the provinces of Canada under a shelf prospectus supplement (the “Prospectus Supplement”) to the Company’s short form base shelf prospectus dated April 25, 2024 (the “Shelf Prospectus”).
Access to the Prospectus Supplement, the Shelf Prospectus and any amendments to the documents 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 to the documents. The Shelf Prospectus is, and the Prospectus Supplement will be (within two business days), accessible on SEDAR+ at www.sedarplus.com.
An electronic or paper copy of the Prospectus Supplement, the Shelf Prospectus and any amendment to the documents may be obtained, without charge, from CIBC Capital Markets by contacting mailbox.cibcdebtsyndication@cibc.com, from National Bank Financial Inc. by contacting syndicate@nbc.ca or RBC Dominion Securities Inc. by contacting torontosyndicate@rbccm.com, by providing the contact with an email address or address, as applicable.