Category: Issue Comments

Issue Comments

MFC.PR.K To Reset To 6.35%

Manulife Financial Corporation has announced (but not yet on their website because, well, it’s Manulife):

the applicable dividend rates for its Non-cumulative Rate Reset Class 1 Shares Series 13 (the “Series 13 Preferred Shares”) (TSX: MFC.PR.K) and Non-cumulative Floating Rate Class 1 Shares Series 14 (the “Series 14 Preferred Shares”).

With respect to any Series 13 Preferred Shares that remain outstanding after September 19, 2023, holders thereof will be entitled to receive fixed rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the five-year period commencing on September 20, 2023, and ending on September 19, 2028, will be 6.35000% per annum or $0.396875 per share per quarter, being equal to the sum of the five-year Government of Canada bond yield as at August 21, 2023, plus 2.22%, as determined in accordance with the terms of the Series 13 Preferred Shares.

With respect to any Series 14 Preferred Shares that may be issued in connection with the conversion of the Series 13 Preferred Shares into the Series 14 Preferred Shares, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, calculated on the basis of the actual number of days elapsed in each quarterly floating rate period divided by 365, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the three-month period commencing on September 20, 2023, and ending on December 19, 2023, will be 1.83022% (7.34100% on an annualized basis) or $0.457555 per share, being equal to the sum of the three-month Government of Canada Treasury bill yield as at August 21, 2023, plus 2.22%, as determined in accordance with the terms of the Series 14 Preferred Shares.

Beneficial owners of Series 13 Preferred Shares who wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (Toronto time) on September 5, 2023. Such date of September 5, 2023 represents a change from the date of September 4, 2023 referred to in the news release issued by Manulife on July 26, 2023 announcing such conversion right, which news release can be viewed on SEDAR+ or Manulife’s website. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, TSX Trust Company, at 1‑800‑783‑9495.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 14 Preferred Shares effective upon conversion. Listing of the Series 14 Preferred Shares is subject to Manulife fulfilling all the listing requirements of the TSX and, upon approval, the Series 14 Preferred Shares will be listed on the TSX under the trading symbol “MFC.PR.S”.

MFC.PR.K is a FixedReset, 3.80%+222, that commenced trading 2013-6-21 after being announced 2013-6-17. A announcement of extension was given in 2018 and the issue reset to 4.414%. There was no conversion. The issue is tracked by HIMIPref™ and is assigned to the FixedReset – Insurance subindex.

Thanks to Assiduous Reader Fuzzybear for bringing this to my attention!

Issue Comments

SBC.PR.A Downgraded To Pfd-3 By DBRS

DBRS has announced:

BRS Limited (DBRS Morningstar) downgraded its rating on the Preferred Shares issued by Brompton Split Banc Corp. (the Company) to Pfd-3 from Pfd-3 (high). The Preferred Shares have experienced a drop in downside protection (to 46.8% in July 2023 from 50.2% in July 2022) as a result of the decline in the portfolio’s net asset value (NAV) in response to the volatility in the stock market, which was triggered by the mix of the global high inflationary environment, tighter monetary policies, and various geopolitical events, such as the Russia-Ukraine war.

The Company invests in a portfolio of common shares (the Portfolio) issued by the six major banks in Canada—Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and The Toronto-Dominion Bank—and one exchange-traded fund (ETF), Brompton North American Financials Dividend ETF. Up to 10% of the Portfolio may be invested in global financial companies from time to time. The Portfolio portion allocated to the major banks remains approximately equally weighted.

Distributions on the Preferred Shares are made quarterly in the amount of $0.15625, yielding 6.25% annually on the original $10.00 issue price. Distributions on the Class A Shares are made monthly in the amount of $0.10 per share. No monthly distributions to the Class A Shares will be made if distributions to the Preferred Shares are in arrears or the NAV of the Company falls below 1.5 times (x) the principal amount of the outstanding Preferred Shares.

As of July 27, 2023, the downside protection stood at 46.8% compared with 50.2% as on July 31, 2022. Dividend coverage based on the current dividend yield on the portfolio was 1.3x. Without giving consideration to the capital appreciation potential or any source of income other than the dividends earned by the portfolio, the targeted monthly distributions to the Class A Shares are likely to create a grind on the portfolio’s NAV equivalent to 5.7% over the remaining term to maturity. The Company can write covered call options for some or all of the portfolio’s common shares to generate additional income to supplement the dividends received on the portfolio. In addition, the Company may enter into Securities Lending Agreements in order to generate an alternative source of income.

The main constraints to the rating are the following:

(1) The downside protection available to holders of the Preferred Shares depends on the value and dividend policies of the securities in the portfolio. In current times, valuation is exposed to market fluctuations resulting from sticky inflation, economic slowdown, and the Russia-Ukraine war.

(2) Volatility of price and changes in the dividend policies of the underlying issuers may result in significant reductions in the Preferred Shares’ dividend coverage or downside protection from time to time.

(3) The Company relies on the portfolio manager to generate additional income, through option writing, to meet distributions and other trust expenses without having to liquidate the portfolio’s securities.

(4) Stated monthly distributions on the Class A Shares will likely create a grind on the portfolio. This risk is mitigated by an asset coverage test of 1.5x that ensures sufficient levels of downside protection to the holders of the Preferred Shares.

Issue Comments

FTS.PR.G To Reset To 6.123%

Fortis Inc. has given notice:

that Fortis Inc. (the “Corporation”) has calculated the annual fixed dividend rate (the “Annual Fixed Dividend Rate”) for the five-year period from, and including, September 1, 2023 to, but excluding, September 1, 2028 (the “Subsequent Fixed Rate Period”) for the Corporation’s Cumulative Redeemable Five-Year Fixed Rate Reset First Preference Shares, Series G (the “Series G First Preference Shares”) in accordance with the terms of the Series G First Preference Shares incorporated in the provisions of its articles. The Annual Fixed Dividend Rate for the Subsequent Fixed Rate Period shall be equal to 6.123% per annum, being equal to the 3.993% yield to maturity of a Canadian dollar denominated non-callable Government of Canada bond with a term to maturity of five years as quoted as of 10:00 a.m. (Toronto time) on August 2, 2023 on the display designated as page “GCAN5YR Index” on the Bloomberg Financial L.P. service, plus 2.13%.During the Subsequent Fixed Rate Period, dividends on the Series G First Preference Shares shall, if, as and when declared by the directors of the Corporation, be payable quarterly at the Annual Fixed Dividend Rate.

This information is not on the Fortis website, nor is it on SEDAR. I obtained the document from Investor Relations. Presumably the company sent the notice to its only registered shareholder, CDS, with the hope that CDS would notify the brokerages and the brokerages would notify their clients. Ha-ha! We all know how careful the brokerages are to pass on every scrap of relevant information, don’t we?

FTS.PR.G was issued as a FixedReset, 5.25%+213 that commenced trading 2008-5-23 after being announced 2008-5-6. It reset to 3.883% in 2013 and to 4.393% in 2018.

Note that this issue does not have an option to convert into FloatingResets – the structure was very new at the time of issue and provisions had not yet standardized although, of course, there is nothing stopping a new issuer from coming out with an equivalent issue.

Issue Comments

ENB.PR.H To Reset To 6.112%

Enbridge Inc. has announced:

that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series H (Series H Shares) (TSX: ENB.PR.H) on September 1, 2023. As a result, subject to certain conditions, the holders of the Series H Shares have the right to convert all or part of their Series H Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series I of Enbridge (Series I Shares) on September 1, 2023. Holders who do not exercise their right to convert their Series H Shares into Series I Shares will retain their Series H Shares.

The foregoing conversion right is subject to the conditions that: (i) if Enbridge determines that there would be less than 1,000,000 Series H Shares outstanding after September 1, 2023, then all remaining Series H Shares will automatically be converted into Series I Shares on a one-for-one basis on September 1, 2023; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series I Shares outstanding after September 1, 2023, no Series H Shares will be converted into Series I Shares. There are currently 14,000,000 Series H Shares outstanding.

With respect to any Series H Shares that remain outstanding after September 1, 2023, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The new annual dividend rate applicable to the Series H Shares for the five-year period commencing on September 1, 2023 to, but excluding, September 1, 2028 will be 6.112 percent, being equal to the five-year Government of Canada bond yield of 3.992 percent determined as of today plus 2.12 percent in accordance with the terms of the Series H Shares.

With respect to any Series I Shares that may be issued on September 1, 2023, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The dividend rate applicable to the Series I Shares for the three-month floating rate period commencing on September 1, 2023 to, but excluding, December 1, 2023 will be 1.79258 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 5.07 percent plus 2.12 percent in accordance with the terms of the Series I Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series H Shares who wish to exercise their right of conversion during the conversion period, which runs from August 2, 2023 until 5:00 p.m. (EST) on August 17, 2023, should communicate as soon as possible with their broker or other intermediary for more information. It is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary time to complete the necessary steps. Any notices received after this deadline will not be valid.

ENB.PR.H was issued as a FixedReset, 4.00%+212, that commenced trading 2012-3-29 after being announced 2012-3-20. It will reset to 4.376% effective 2018-9-1. The issue is tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

Issue Comments

TRP To Spin Out Liquids Business

Hot on the heels of yesterday’s downgrade, TC Energy has announced:

that its Board of Directors has approved plans for TC Energy to separate into two independent, investment-grade, publicly listed companies through the spinoff of TC Energy’s Liquids Pipelines business (the Transaction). The decision comes as a result of a two-year strategic review and is anticipated to be completed on a tax-free basis in the second half of 2024.

The spinoff will unlock shareholder value by providing both companies with the flexibility to pursue their own growth objectives through disciplined capital allocation, enhancing efficiencies and driving operational excellence. Once completed, the spinoff will result in two high-quality, focused energy industry leaders that are committed to providing safe and reliable service to their customers and the communities in which they operate.

TC Energy post-Transaction: A diversified, industry-leading natural gas and energy solutions company, uniquely positioned to meet growing industry and consumer demand for reliable, lower-carbon energy, by leveraging complementary business sets.
Liquids Pipelines Company: A critical infrastructure company with highly strategic assets that connect resilient and secure supply to the highest demand markets, while delivering incremental growth and value creation opportunities.

TC Energy intends that the initial combined dividends of the two companies will be equivalent to TC Energy’s annual dividend immediately prior to the completion of the Transaction, and that over time the combined value of the two companies’ dividends is expected to remain consistent. Dividends will be at the discretion of the respective boards of directors of each company following the Transaction.

Management intends to capitalize the Liquids Pipelines Company with a financial structure that aligns with its asset base, business model and growth plans. Following the Transaction, management anticipates that TC Energy will retain its current credit ratings and that the Liquids Pipelines Company will have investment-grade credit ratings. TC Energy plans to transition an approximately proportionate share of its long-term debt to the Liquids Pipelines Company on a cost-effective basis.

Transaction details, approvals and business continuity
Under the proposed Transaction, TC Energy shareholders will retain their current ownership in TC Energy’s common shares (TRP: TSX, TRP: NYSE) and receive a pro-rata allocation of common shares in the new Liquids Pipelines Company. The Transaction is expected to be tax-free for TC Energy’s Canadian and U.S. shareholders. The determination of the number of common shares in the new Liquids Pipelines Company to be distributed to TC Energy shareholders will be determined prior to the closing of the proposed transaction.

TC Energy expects to seek shareholder approval of the Transaction at a meeting of shareholders in mid-2024. The Transaction will be implemented through a court-approved plan of arrangement under the Canada Business Corporations Act. In addition to TC Energy shareholder and court approvals, the Transaction is subject to receipt of favourable tax rulings from Canadian and U.S. tax authorities, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions. TC Energy expects that the Transaction will be completed in the second half of 2024.

TC Energy will ensure business continuity and reliable services to its valued customers throughout the separation. A separation management office will be established guiding the successful coordination and governance including the development of a separation agreement and a transition service agreement between the two entities once the Transaction is complete.

For additional detail on the Transaction, investor presentation materials and more, please visit our website at www.tcenergy.com/liquids-spinoff.

There can be no assurance that the Transaction will ultimately occur or, if it does occur, what its structure, terms or timing will be.

As noted in the release, the company has created a spinoff information page; this includes a slide deck that projects Debt / EBITDA of 4.75x for TC Energy commencing by the end of 2024 and an initial 5.0x for the liquids business. Assuming there has been no jiggery-pokery with the EBITDA calculations, this implies that debt will be redistributed more or less proportionately to EBITDA.

I have no information regarding what will happen to the preferreds. Most likely is that they will stay with TC Energy (by far the larger of the two companies going forward), but who knows?

Affected issues are: TRP.PR.A, TRP.PR.B, TRP.PR.C, TRP.PR.D, TRP.PR.E, TRP.PR.F, TRP.PR.G, TRP.PR.H and TRP.PR.I.

Update, 2023-7-28: DBRS states:

DBRS Limited (DBRS Morningstar) notes that TC Energy Corporation (TC Energy or the Company) has announced the spinoff of its liquids pipelines business into a separate listed company with an expected closing date in H2 2024. TC Energy expects the liquids pipeline company to be capitalized with approximately $8.0 billion of senior and junior subordinated debt, the proceeds of which will be used to repay debt at the Company. The transaction is subject to favourable tax rulings from Canadian and U.S. tax authorities, the receipt of necessary regulatory approvals, and shareholder approval.

DBRS Morningstar does not expect the spinoff to have an impact on the Company’s ratings. The spinoff has a modestly negative impact on TC Energy’s business risk profile because of the loss of diversification. Nevertheless, DBRS Morningstar foresees the Company’s business risk profile post spinoff remaining strong, underpinned by regulated/contracted cash flows, strong supply and demand fundamentals at its natural gas pipelines and power businesses, and an asset base that is still very diversified despite the spinoff. DBRS Morningstar also believes that the negative impact on the financial risk profile from the loss of cash flow from the spinoff will be more than offset by the reduction in debt. The spinoff also lowers TC Energy’s dividend payouts by approximately 14%. DBRS Morningstar’s upgrade and downgrade thresholds (as noted in its press release dated July 25, 2023) remain unchanged.

S&P states:

S&P Global Ratings said that TC Energy Corp.’s (BBB+/Negative/–) recently announced spinoff of its liquids business via a spinout to its existing shareholders does not affect its rating on the company. We view the proposed spinoff as being leverage neutral for the company’s credit measures.

The transaction is anticipated to close in the second half of 2024. This transaction is part of a broader asset-divestiture program that the company has undertaken and which we have built into our current ratings and outlook on the company.

Although the spinoff of the liquids business does, on balance, slightly weaken the business risk, overall, we believe that TC’s business risk remains excellent, as per our criteria. While the liquids business provided highly stable cash flows with largely take-or-pay contracts, the remaining gas pipeline transmission and power assets are also highly contracted and benefit from rate regulation.

We continue to expect the company will achieve credit metrics of 5.0x on a debt-to-EBITDA basis for 2023 and 4.7x for 2024. See our research update published July 24, 2023.

Issue Comments

DBRS Downgrades TRP To Pfd-3(high)

DBRS has announced that it:

DBRS Limited (DBRS Morningstar) downgraded the ratings of TC Energy Corporation (TCC or the Company) and TransCanada PipeLines Limited (TCPL; TCC’s wholly owned subsidiary) as follows:
— TCC’s Preferred Shares – Cumulative rating to Pfd-3 (high) from Pfd-2 (low)
— TCPL’s Issuer Rating to BBB (high) from A (low)
— TCPL’s Unsecured Debentures & Notes rating to BBB (high) from A (low)
— TCPL’s Junior Subordinated Notes rating to BBB (low) from BBB
— TCPL’s Commercial Paper rating to R-2 (high) from R-1 (low)

Concurrently, DBRS Morningstar downgraded the Medium-Term Notes & Unsecured Debentures rating of Nova Gas Transmission Limited (NGTL) and the Issuer Rating of Trans Québec & Maritimes Pipeline Inc. (TQM) to BBB (high) from A (low). The ratings of NGTL and TQM are aligned with the ratings of TCPL based on the assumption of implicit support. All trends are Stable. DBRS Morningstar also removed the ratings from Under Review with Negative Implications, where they were placed on February 3, 2023, following the updated and materially higher cost estimate from the Company for the Coastal GasLink Project with a potential for additional increases. DBRS Morningstar considered the development to be credit negative as the costs were materially higher than DBRS Morningstar’s previous expectation and will have to be fully borne by TCC through the construction period. At the time, DBRS Morningstar expected to resolve the Under Review with Negative Implications status after having more certainty on the Company’s funding plan and the scope of the asset divestiture program.

DBRS Morningstar believes the agreement to monetize a 40% interest in TCC’s Columbia Gas Transmission, LLC and Columbia Gulf Transmission, LLC (collectively, Columbia Assets) systems for total expected cash proceeds of $5.2 billion (USD 3.9 billion) significantly bridges the funding gap in 2023. Nevertheless, the rating downgrades reflect DBRS Morningstar’s expectation that the Company’s financial risk profile will no longer be supportive of an A (low) rating. In addition, the ratings are also negatively affected by (1) the expected increase in structural subordination after the sale of the Columbia Assets as TCC intends to recapitalize the Columbia Assets with additional debt; (2) cash flow leakage because of the increase in minority interest at the Columbia Assets; and (3) the execution risks associated with the elevated capital program planned for 2023 and 2024.

TCC’s business risk profile continues to be strong and is underpinned by predominantly regulated and contracted cash flow (95% of the 2023 estimated comparable EBITDA), strong supply and demand fundamentals at its natural gas pipelines and power assets and a diversified asset base. The impact of the sale of the Columbia Assets on TCC’s business risk profile is not material, and DBRS Morningstar expects the negative impact, if any, of additional capital rotation transactions on the Company’s business risk profile will be modest. DBRS Morningstar also expects TCC to maintain its net economic exposure in Mexico to approximately 10% of total consolidated comparable EBITDA.

While the sale of the Columbia Assets aids in deleveraging, TCC’s financial risk profile will still be weaker relative to its financial risk profile when its ratings were last confirmed in June 2022. DBRS Morningstar expects the Company’s EBITDA and cash flow to grow annually in the 5% range over the next three years. However, given the large capital program ($30 billion between 2023 and 2026) and significant dividends, DBRS Morningstar expects the Company to generate material free cash flow (cash flow after capital expenditures and dividends) deficits in 2023 and 2024, which will likely have to be funded with debt and proceeds from capital rotation. As a result, factoring in the proceeds of the sale of TCC’s stake in the Columbia Assets in 2023, DBRS Morningstar expects the Company’s lease-adjusted debt-to-cash flow ratio (last 12 months ended Q1 2023: 11.9%) to average around 12% in 2023 and 2024. DBRS Morningstar believes the Company has adequate additional levers available, including an extensive portfolio of contracted assets with stable cash flows, that could be monetized to deleverage further and potentially improve the Company’s financial risk profile.

DBRS Morningstar could consider a positive rating action if the Company (1) maintains a cash flow-to-debt ratio of 15% or more, (2) successfully navigates its elevated capital program through 2024 with no notable additional project delays or cost overruns and pursues a capital expenditure program in the $6 billion to $7 billion range thereafter, and (3) has no material changes in its business risk profile. Conversely, TCC’s ratings could be subject to a negative rating action if (1) the cash flow-to-debt ratio declines below the 11% level for an extended period of time or (2) there are significant delays or cost overruns at its key projects.

Yesterday, S&P announced that it had affirmed TRP at P-2(low) with a Negative Outlook:

  • TC Energy Corp. (TC) recently announced the sale of a 40% interest in the Columbia Gas Transmission LLC and Columbia Gulf Transmission LLC systems for proceeds of approximately C$5.2 billion.
  • TC previously indicated that it is committed to asset sales to help fund its capital program and the increased cost of Coastal GasLink Project, and to reduce leverage. The announced sale helps to partially achieve this goal.
  • As a result, S&P Global Ratings affirmed all ratings, including its ‘BBB+’ issuer credit rating on TC, based on projected credit metrics that are forecast to be 5.0x in 2023 and 4.7x in 2024.
  • The negative outlook indicates the uncertainty regarding the timing and amount of further asset sales, which the company has committed to in order to ensure that it can achieve a debt-to-EBITDA ratio of not greater than 4.75x on a consistent basis.

S&P Global Ratings today took the rating actions listed above.

Sale of partial interest helps to reduce leverage. TC has stated its commitment to funding its capital plan and deleveraging in part through asset sales. Given the ambitious capital plan that TC is pursuing, asset sales are the foundation of it achieving its stated objective of reducing debt to EBITDA to 4.75x or lower. The sale of the Columbia gas assets is a first step toward achieving this goal. Given the anticipated proceeds of approximately C$5.2 billion, we anticipate that debt to EBITDA will be about 5.0x in 2023. In addition, we forecast further asset sales in 2024 and beyond, which will bring credit metrics to approximately 4.7x.

Although historically we have considered financial metrics on a funds from operations (FFO)-to-debt basis, we believe that moving to debt to EBITDA as the basis for measuring leverage better aligns the company with its peer group, which is primarily located in the U.S., and which is evaluated on a debt-to-EBITDA basis. This is particularly the case, given that the company receives almost half of its revenue from its U.S. assets. We believe that TC’s businesses, which have a significant proportion of regulated or contractual arrangements, provide some mitigation with respect to the company’s leverage and are consistent with a ‘BBB+’ rating when leverage is about 4.7x.

The negative outlook reflects our view that there is execution risk in the company’s divesture program, the success of which is required in order for TC to deleverage its balance sheet to about 4.7x in 2024 and 2025.

We could take a negative rating action if adjusted debt to EBITDA remains above 4.75x on a consistent basis. This could result from increased debt to finance large capital projects or debt-funded acquisitions or from cost overruns or delays in projects entering service. This could also result from the company receiving lower proceeds for asset sales than forecast without any mitigations such as lower capital expenditures.

We could revise the outlook to stable if TC adopts a more conservative financial policy that improves credit measures, such that adjusted debt to EBITDA is consistently in the 4.7x-4.75x area or lower.

Affected issues are: TRP.PR.A, TRP.PR.B, TRP.PR.C, TRP.PR.D, TRP.PR.E, TRP.PR.F, TRP.PR.G, TRP.PR.H and TRP.PR.I.

Issue Comments

EMA.PR.H To Reset To 6.324%

Emera Incorporated has announced:

the applicable dividend rates for its Cumulative Minimum Rate Reset First Preferred Shares, Series H (the “Series H Shares”) and Cumulative Floating Rate First Preferred Shares, Series I (the “Series I Shares”), in each case, payable if, as and when declared by the Board of Directors of the Company:

  • 6.3240% per annum on the Series H Shares ($0.39525 per Series H Share per quarter), being equal to the sum of the Government of Canada bond yield as at July 17, 2023, plus 2.54%, payable quarterly on the 15th of February, May, August and November of each year during the five-year period commencing on August 15, 2023 and ending on (and inclusive of) August 14, 2028; and
  • 7.4940% on the Series D Shares of the Company (the “Series D Shares”) for the three-month period commencing on August 15, 2023 and ending on (and inclusive of) November 14, 2023 ($0.47222 per Series D Share for the quarter), being equal to the sum of the three-month Government of Canada treasury bill yield rate as at July 17, 2023, plus 2.54% (calculated on the basis of the actual number of days elapsed during the quarter divided by 365), payable on the 15th of November 2023. The quarterly floating dividend rate will be reset every quarter.

Subject to certain conditions set out in the prospectus supplement of the Company dated May 22, 2018, to the short form base shelf prospectus dated May 16, 2018, relating to the issuance of the Series H Shares (collectively, the “Prospectus”), holders of the Series H Shares have the right, at their option, to convert all or any of their Series H Shares, on a one-for-one basis, into Series I Shares on August 15, 2023 (the “Conversion Date”). On such date, holders who do not exercise their right to convert their Series H Shares into Series I Shares will continue to hold their Series H Shares. The foregoing conversion right is subject to the following:

  • if the Company determines that there would be less than 1,000,000 Series I Shares outstanding on the Conversion Date, then holders of Series H Shares will not be entitled to convert their shares into Series I Shares, and
  • alternatively, if the Company determines that there would remain outstanding less than 1,000,000 Series H Shares on the Conversion Date, then all remaining Series H Shares will automatically be converted into Series I Shares on a one-for-one basis on the Conversion Date.

Holders of Series H Shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from July 17, 2023 until 5:00 p.m. (EDT) on July 31, 2023. Any notices received after this deadline will not be valid. Holders of Series H Shares who wish to exercise their conversion right must carefully follow the procedures and instructions received from their broker or other nominee and contact their broker or other nominee if they need assistance. Such broker or nominee may set deadlines for the return of instructions that are well in advance of the 5:00 p.m. (EDT) deadline on July 31, 2023. As such, it is recommended that holders of Series H Shares communicate instructions to their broker or nominee well in advance of the deadline in order to provide their broker or other nominee with adequate time to complete the necessary steps prior to the deadline.

Holders of Series H Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their Series H Shares and receive the new annual fixed dividend rate applicable to the Series H Shares, subject to the conditions stated above. Holders of Series H Shares will have the opportunity to convert their shares again on August 15, 2028 and every five years thereafter as long as the shares remain outstanding. For more information on the terms of, and risks associated with, an investment in Series H Shares and Series I Shares, please see the Company’s Prospectus, which is available on SEDAR at www.sedar.com.

EMA.PR.H is a FixedReset, 4.90%+254M490, that commenced trading 2018-5-31 after being announced 2018-5-17. Notice of extension was provided in 2023. It is tracked by HIMIPref™ but has been relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Issue Comments

EMA.PR.C To Reset To 6.434%

Emera Incorporated has announced:

the applicable dividend rates for its Cumulative Rate Reset First Preferred Shares, Series C (the “Series C Shares”) and Cumulative Floating Rate First Preferred Shares, Series D (the “Series D Shares”), in each case, payable if, as and when declared by the Board of Directors of the Company:

  • 6.4340% per annum on the Series C Shares ($0.40213 per Series C Share per quarter), being equal to the sum of the Government of Canada bond yield as at July 17, 2023, plus 2.65%, payable quarterly on the 15th of February, May, August and November of each year during the five-year period commencing on August 15, 2023 and ending on (and inclusive of) August 14, 2028; and
  • 7.6040% on the Series D Shares of the Company (the “Series D Shares”) for the three-month period commencing on August 15, 2023 and ending on (and inclusive of) November 14, 2023 ($0.47916 per Series D Share for the quarter), being equal to the sum of the three-month Government of Canada treasury bill yield rate as at July 17, 2023, plus 2.65% (calculated on the basis of the actual number of days elapsed during the quarter divided by 365), payable on the 15th of November 2023. The quarterly floating dividend rate will be reset every quarter.

Subject to certain conditions set out in the prospectus supplement of the Company dated May 31, 2012, to the amended and restated short form base shelf prospectus dated February 18, 2011, relating to the issuance of the Series C Shares (collectively, the “Prospectus”), holders of the Series C Shares have the right, at their option, to convert all or any of their Series C Shares, on a one-for-one basis, into Series D Shares on August 15, 2023 (the “Conversion Date”). On such date, holders who do not exercise their right to convert their Series C Shares into Series D Shares will continue to hold their Series C Shares. The foregoing conversion right is subject to the following:

  • if the Company determines that there would be less than 1,000,000 Series D Shares outstanding on the Conversion Date, then holders of Series C Shares will not be entitled to convert their shares into Series D Shares, and
  • alternatively, if the Company determines that there would remain outstanding less than 1,000,000 Series C Shares on the Conversion Date, then all remaining Series C Shares will automatically be converted into Series D Shares on a one-for-one basis on the Conversion Date.

Holders of Series C Shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from July 17, 2023 until 5:00 p.m. (EDT) on July 31, 2023. Any notices received after this deadline will not be valid. Holders of Series C Shares who wish to exercise their conversion right must carefully follow the procedures and instructions received from their broker or other nominee and contact their broker or other nominee if they need assistance. Such broker or nominee may set deadlines for the return of instructions that are well in advance of the 5:00 p.m. (EDT) deadline on July 31, 2023. As such, it is recommended that holders of Series C Shares communicate instructions to their broker or nominee well in advance of the deadline in order to provide their broker or other nominee with adequate time to complete the necessary steps prior to the deadline.

Holders of Series C Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their Series C Shares and receive the new annual fixed dividend rate applicable to the Series C Shares, subject to the conditions stated above. Holders of Series C Shares will have the opportunity to convert their shares again on August 15, 2028 and every five years thereafter as long as the shares remain outstanding. For more information on the terms of, and risks associated with, an investment in Series C Shares and Series D Shares, please see the Company’s Prospectus, which is available on SEDAR at www.sedar.com.

EMA.PR.C was issued as a FixedReset, 4.10%+265, that commenced trading 2012-6-7 after being announced 2012-5-29. After notice of extension in 2018 the rate was reset to 4.721%; I recommended against conversion; there was no conversion. DBRS discontinued coverage of Emera in June, 2016. Notice of extension was given in 2023. The preferreds are rated P-3(high) by S&P. It is tracked by HIMIPref™ and is assigned to the Scraps – FixedReset (Discount) subindex.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Issue Comments

EMA.PR.C To Be Extended

Emera Incorporated has announced:

that it does not intend to exercise its right to redeem all or any part of the currently outstanding Cumulative Rate Reset First Preferred Shares, Series C of the Company (the “Series C Shares”) on August 15, 2023. There are currently 10,000,000 Series C Shares outstanding.

Subject to certain conditions set out in the prospectus supplement of the Company dated May 31, 2012, to the amended and restated short form base shelf prospectus dated February 18, 2011, relating to the issuance of the Series C Shares (collectively, the “Prospectus”), the holders of the Series C Shares have the right, at their option, to convert all or any of their Series C Shares, on a one-for-one basis, into Cumulative Floating Rate First Preferred Shares, Series D of the Company (the “Series D Shares”) on August 15, 2023 (the “Conversion Date”). On such date, holders who do not exercise their right to convert their Series C Shares into Series D Shares will continue to hold their Series C Shares.

The foregoing conversion right is subject to the following:

if the Company determines that there would be less than 1,000,000 Series D Shares outstanding on the Conversion Date, then holders of Series C Shares will not be entitled to convert their shares into Series D Shares, and

alternatively, if the Company determines that there would remain outstanding less than 1,000,000 Series C Shares on the Conversion Date, then all remaining Series C Shares will automatically be converted into Series D Shares on a one-for-one basis on the Conversion Date.
In either case, Emera will give written notice to that effect to holders of Series C Shares no later than August 8, 2023.

The dividend rate applicable for the Series C Shares for the five-year period commencing on August 15, 2023 and ending on (and inclusive of) August 14, 2028, and the dividend rate applicable to the Series D Shares for the 3-month period commencing on August 15, 2023 and ending on (and inclusive of) November 14, 2023, will be determined on July 17, 2023 and notice of such dividend rates shall be provided to the holders of the Series C Shares on that day.

Holders of Series C Shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from July 17, 2023 until 5:00 p.m. (EDT) on July 31, 2023. Any notices received after this deadline will not be valid. As such, it is recommended that this be done well in advance of the deadline in order to provide their broker or other nominee with adequate time to complete the necessary steps.

Holders of Series C Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their Series C Shares and receive the new annual fixed dividend rate applicable to the Series C Shares, subject to the conditions stated above. Holders of Series C Shares will have the opportunity to convert their shares again on August 15, 2028 and every five years thereafter as long as the shares remain outstanding. For more information on the terms of, and risks associated with, an investment in Series C Shares and Series D Shares, please see the Company’s Prospectus, which is available on SEDAR at www.sedar.com.

EMA.PR.C was issued as a FixedReset, 4.10%+265, that commenced trading 2012-6-7 after being announced 2012-5-29. After notice of extension in 2018 the rate was reset to 4.721%; I recommended against conversion; there was no conversion. DBRS discontinued coverage of Emera in June, 2016. The preferreds are rated P-3(high) by S&P. It is tracked by HIMIPref™ and is assigned to the Scraps – FixedReset (Discount) subindex.

Thanks to Assiduous Reader niagara for bringing this to my attention!

Issue Comments

EMA.PR.H To Be Extended

Emera Incorporated has announced:

that it does not intend to exercise its right to redeem all or any part of the currently outstanding Cumulative Minimum Rate Reset First Preferred Shares, Series H of the Company (the “Series H Shares”) on August 15, 2023. There are currently 12,000,000 Series H Shares outstanding.

Subject to certain conditions set out in the prospectus supplement of the Company dated May 22, 2018, to the short form base shelf prospectus dated May 16, 2018, relating to the issuance of the Series H Shares (collectively, the “Prospectus”), the holders of the Series H Shares have the right, at their option, to convert all or any of their Series H Shares, on a one-for-one basis, into Cumulative Floating Rate First Preferred Shares, Series I of the Company (the “Series I Shares”) on August 15, 2023 (the “Conversion Date”). On such date, holders who do not exercise their right to convert their Series H Shares into Series I Shares will continue to hold their Series H Shares.

The foregoing conversion right is subject to the following:

if the Company determines that there would be less than 1,000,000 Series I Shares outstanding on the Conversion Date, then holders of Series H Shares will not be entitled to convert their shares into Series I Shares, and
alternatively, if the Company determines that there would remain outstanding less than 1,000,000 Series H Shares on the Conversion Date, then all remaining Series H Shares will automatically be converted into Series I Shares on a one-for-one basis on the Conversion Date.
In either case, Emera will give written notice to that effect to holders of Series H Shares no later than August 8, 2023.

The dividend rate applicable for the Series H Shares for the five-year period commencing on August 15, 2023 and ending on (and inclusive of) August 14, 2028, and the dividend rate applicable to the Series I Shares for the 3-month period commencing on August 15, 2023 and ending on (and inclusive of) November 14, 2023, will be determined on July 17, 2023 and notice of such dividend rates shall be provided to the holders of the Series H Shares on that day.

Holders of Series H Shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from July 17, 2023 until 5:00 p.m. (EDT) on July 31, 2023. Any notices received after this deadline will not be valid. As such, it is recommended that this be done well in advance of the deadline in order to provide their broker or other nominee with adequate time to complete the necessary steps.

Holders of Series H Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their Series H Shares and receive the new annual fixed dividend rate applicable to the Series H Shares, subject to the conditions stated above. Holders of Series H Shares will have the opportunity to convert their shares again on August 15, 2028 and every five years thereafter as long as the shares remain outstanding. For more information on the terms of, and risks associated with, an investment in Series H Shares and Series I Shares, please see the Company’s Prospectus, which is available on SEDAR at www.sedar.com.

EMA.PR.H is a FixedReset, 4.90%+254M490, that commenced trading 2018-5-31 after being announced 2018-5-17. It is tracked by HIMIPref™ but has been relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

Thanks to Assiduous Reader skeptical for bringing this to my attention!