Category: Issue Comments

EMA.PR.A is a Straight Perpetual, 4.50%, announced May 30.

The issue traded 194,975 shares today in a range of 23.28-20 (!) before closing at 23.60-65, 100×500. I assume the underwriters are taking a bath on this issue. Sadly for them, they fully exercised their greenshoe of 1-million shares, taking the issue size up to $125-million; of which about 6% has just evaporated.

EMA.PR.E will be tracked by HIMIPref™ but assigned to the Scraps index on credit concerns. Vital statistics are:

Enbridge Inc. has announced:

it has closed its previously announced public offering of Cumulative Redeemable Preference shares, Series 3 (the “Series 3 Preferred Shares”) by a syndicate of underwriters led by TD Securities Inc., CIBC, RBC Capital Markets and Scotiabank. Enbridge issued 24 million Series 3 Preferred Shares for gross proceeds of CAD $600 million. The Series 3 Preferred Shares will begin trading on the TSX today under the symbol ENB.PR.Y. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

ENB.PR.Y is a FixedReset, 4.00%+238, announced May 28.

The issue traded 1,492,004 shares today in a range of 25.03-18 before closing at 25.16-17, 67×20.

ENB.PR.Y will be tracked by HIMIPref™ and is assigned to the FixedResets subindex. Vital statistics are:

Dundee Corporation announced on May 28:

is confirming the terms of the preference shares to be issued by each of Dundee and DREAM Unlimited Corp. (“DREAM”) pursuant to the previously announced corporate restructuring of Dundee through a tax efficient plan of arrangement (the “Arrangement”).

Dundee’s First Preference Shares, Series 1 have a liquidation value of $25.00 per share. Pursuant to the Arrangement, holders of Dundee’s First Preference Shares, Series 1 will receive, for each such share held, (i) a new First Preference Share, Series 4 of Dundee with a liquidation amount of $17.84 (compared with $18.67, as previously estimated) and an annual dividend of 5%, and (ii) a First Preference Share, Series 1 of DREAM with a liquidation amount of $7.16 (compared with $6.33, as previously estimated) and an annual dividend of 7%, such shares having the redemption rights described below. The combined liquidation value of the two new shares that will be issued will equal the $25.00 original liquidation value of each of Dundee’s First Preference Shares, Series 1.

• • Dundee’s First Preference Shares, Series 4 – Redemption Rights
  • Dundee’s First Preference Shares, Series 4 will be redeemable, at the option of Dundee, at any time prior to June 30, 2013 at $18.38 per share, at any time on or after June 30, 2013 and prior to June 30, 2014 at $18.20 per share, at any time on or after June 30, 2014 and prior to June 30, 2015 at $18.02 per share, and at any time on or after June 30, 2015 at $17.84 per share. In addition, Dundee’s First Preference Shares, Series 4 will be redeemable, at the option of the holder, at any time on or after June 30, 2016 at $17.84 per share.
• • DREAM’s First Preference Shares, Series 1 – Redemption Rights
  • DREAM’s First Preference Shares, Series 1 will be redeemable, at the option of DREAM, at any time prior to June 30, 2013 at $7.37 per share, at any time on or after June 30, 2013 and prior to June 30, 2014 at $7.30 per share, at any time on or after June 30, 2014 and prior to June 30, 2015 at $7.23 per share, and at any time on or after June 30, 2015 at $7.16 per share. In addition, DREAM’s First Preference Shares, Series 1 will be redeemable, at the option of the holder, at any time on or after December 31, 2013 and prior to December 31, 2014 at $7.30 per share, at any time on or after December 31, 2014 and prior to December 31, 2015 at $7.23 per share, and at any time on or after December 31, 2015 at $7.16 per share.

Expected DREAM Capitalization

Based on the number of Class A Subordinate Voting Shares, Class B Common Shares and First Preference Shares, Series 1 of Dundee outstanding as of May 27, 2013, Dundee expects that there will be an aggregate 75,730,459 Class A Subordinate Voting Shares and Class B Common Shares of DREAM outstanding upon completion of the Arrangement, anticipated for May 30, 2013, and 6,000,000 First Preference Shares, Series 1, with an aggregate liquidation amount of approximately $43 million.

Both DC.PR.C and DRM.PR.A will be tracked by HIMIPref™ despite not having credit ratings. This is because they are derived from DC.PR.A, which used to have a credit rating, and has been grandfathered. They will be assigned to the Scraps index on credit concerns.

Vital statistics are:

Morgan Meighen & Associates has announced:

that it has completed its public offering of $75,000,000 (3,000,000 shares), 3.75% Cumulative Redeemable Class A Preference Shares, Series 4 (TSX symbol: CGI.PR.D).

The net proceeds of this offering will be used, together with available cash, to repay a short-term loan used to fund the previously announced redemption of its $75,000,000, 4.65% Cumulative Redeemable Class A Preference Shares, Series 2 (TSX symbol: CGI.PR.B), which was completed on May 29, 2013 for an aggregate amount of $75,716,610 (including accrued and unpaid dividends from March 15, 2013 to May 28, 2013). This redemption was in accordance with the terms of the governing short form prospectus.

CGI.PR.D is a SplitShare, 10-Year Retractible, 3.75%, announced April 29. The issue will be tracked by HIMIPref™ and is assigned to the SplitShares subindex.

CGI.PR.D traded 435,750 shares today in a range of 25.20-30 before closing at 25.25-35, 76×30. Vital statistics are:

Royal Bank of Canada has announced:

its intention, subject to the approval of the Office of the Superintendent of Financial Institutions (OSFI), to redeem all of its issued and outstanding Non-Cumulative First Preferred Shares Series AH (the “Series AH shares”) on July 2, 2013, for cash at a redemption price of $26.00 per share. This is comprised of the $25.00 per share original issue price plus a $1.00 per share redemption premium.

In addition, the Bank has also declared a 39-day dividend of $0.150925 per Series AH share covering the period from May 24, 2013 (the date of the last dividend payment), up to but excluding the redemption date of July 2, 2013. This results in a total amount of $26.150925 per share to be paid upon surrender of the Series AH shares.

There are 8,500,000 shares of Series AH outstanding, representing $212.5 million of capital. The redemption of the Series AH shares will be financed out of the general corporate funds of Royal Bank of Canada.

Please visit www.rbc.com/investorrelations/share-information to view tax Questions & Answers relating to this redemption.

The tax Questions & Answers make the point that for tax purposes the redemption price is $25.00 with a $1.00 Deemed Dividend; for many individuals this will make a big difference in their decision as to whether to hold the issue until redemption or to sell it into the market.

Update, 2013-6-25: Removed from TXPR.

DBRS has announced that it:

has today placed the Issuer Rating and the Senior Unsecured Debt & Medium-Term Notes rating, both BB, of Atlantic Power Limited Partnership (APLP) and the Cumulative Preferred Shares rating of Pdf-4 of Atlantic Power Preferred Equity Ltd. Under Review with Negative Implications. The ratings of APLP are based on the credit quality of Atlantic Power Corporation (ATP or the Company; not rated by DBRS) given that APLP guarantees the majority of ATP’s debt at the holding company level (24% of consolidated debt as at April 20, 2013).

The rating action reflects DBRS’s concern over the deterioration of ATP’s credit metrics this past year, which are no longer commensurate with the current ratings, and the challenges facing the Company with respect to carrying out its long-term strategy given its limited financial flexibility. There is a possibility that ATP could breach the consolidated EBITDA-to-interest covenant of 2.25 times (x) and net debt-to-consolidated EBITDA covenant (total leverage ratio) of 7.50x for one or more quarters in 2013 and early 2014, respectively, under its senior credit facility, which could further constrain liquidity. The Company is currently in discussion with the lenders for a waiver to the senior credit facility. ATP also plans to seek a broader amendment to take into account changes in its long-term business development plans after successfully concluding the current discussions. Even if the Company successfully obtains a waiver and/or amendment, DBRS believes that the Company still faces a number of challenges in implementing its long-term business strategy of deleveraging the consolidated balance sheet and financing future project development with 50% debt and 50% equity in the midst of a weak wholesale pricing environment. If the current bank discussions are not successful, the Company plans to cash collateralize the outstanding letters of credit under the facility and terminate the facility prior to any default, in which case, a negative rating action could immediately follow.

DBRS acknowledges that the Company benefits from long-term power contracts (over 90% of ATP’s generation assets), providing cash flow stability. In addition, during 2013, ATP completed the sale of certain projects (see the rating report for more detail). DBRS views the divestitures as a moderately positive factor as the majority of the projects sold had power purchase agreements expiring in 2013 and a portion of the proceeds were used to repay the outstanding borrowings under the senior credit facility.

This follows a similar announcement by S&P.

AZP.PR.A and AZP.PR.B are both tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

Brookfield Asset Management has announced:

its intention to redeem all of its outstanding Class A Preference Shares, Series 21 (“Preferred Shares, Series 21”) (TSX:BAM.PR.O) for cash on June 30, 2013. The redemption price for each share will be C$25.00. Holders of Preferred Shares, Series 21 will separately receive all accrued and unpaid interest outstanding on the redemption date. Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 37 to redeem its Preferred Shares, Series 21 and, to the extent the underwriters’ option is exercised, for general corporate purposes.

The issue of the Series 37 shares has been reported on PrefBlog.

So … they’re refunding a 5.00% Retractible with a 4.90% Straight Perpetual. A nice day’s work!

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 21 (the “Preferred Shares Series 21”), on August 16, 2013, being, pursuant to the share conditions, the first date the Bank may, at its option, redeem the Preferred Shares Series 21 at a price equal to $25.00 per share, together with all declared and unpaid dividends.

Formal notice will be issued toshareholders in accordance with the share conditions. The redemption of the Preferred Shares Series 21 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.

NA.PR.N was one of the first FixedResets brought to market and has a now irrelevant Issue Reset Spread of +205bp. There are less than 3.5-million shares outstanding, as a tender offer in 2011 attracted more than half the float.

NA.PR.N is tracked by HIMIPref™ and is a member of the FixedReset sub-index.