Category: Issue Comments

DBRS has announced that it:

has downgraded its credit rating on the Preferred Shares issued by Financial 15 Split Corp. (the Company) to Pfd-4 (high) from Pfd-3. The rating downgrade is based on the deterioration in downside protection to 42.1% as of January 15, 2024, from 46.1% as of January 31, 2023, the increase in the Preferred Shares’ distribution rate to 9.25% annually on the Preferred Share’s redemption value of $10.0 for the fiscal year beginning December 1, 2023, from 7.50% annually for the fiscal year beginning December 1, 2022, a decline in the dividend coverage ratio to 0.37 times (x), a projected grind of 8.9% per year over the remaining term and unhedged foreign currency exposure.

The Company invests in a portfolio (the Portfolio) consisting primarily of common shares of 15 financial services companies made up of Canadian and U.S. issuers as follows: Bank of America Corporation; Bank of Montreal; The Bank of Nova Scotia; Canadian Imperial Bank of Commerce; CI Financial Corp.; Citigroup Inc.; The Goldman Sachs Group, Inc.; Great-West Lifeco Inc.; JPMorgan Chase & Co.; Manulife Financial Corporation; National Bank of Canada; Royal Bank of Canada; Sun Life Financial Inc.; The Toronto-Dominion Bank; and Wells Fargo & Company. The Company may invest up to 15% of the Net Asset Value (NAV) in securities of issuers other than the core 15, and no more than 10% of the NAV may be invested in any single issuer. As of August 31, 2023, only 1.2% of the Portfolio was also invested in the other two companies, namely Fifth Third Bancorp and AGF Management, and 23.6% was held in cash.

A portion of the Company’s Portfolio is exposed to currency risk because it includes securities denominated in U.S. dollars (USD), while the NAV of the Company is expressed in Canadian dollars. The Company has not entered into currency-hedging contracts for the USD portion of the Portfolio, although the Company may use derivatives for hedging purposes. As of August 31, 2023, 34.4% of the Portfolio was invested in USD-denominated assets.

The Company established an at-the-market (ATM) equity program in November 2021, which was effective until December 22, 2023. Upon termination, the Company has renewed the ATM Program to issue Preferred Shares and Class A Shares to the public from time to time at the Company’s discretion, effective until January 20, 2026, unless terminated prior to such date by the Company. The maximum gross proceeds from the issuance of the shares will be $400.0 million. During the period ended May 31, 2023, 5,691,210 Preferred Shares were sold through the ATM Program at an average selling price of $9.72 per Preferred Share, raising gross proceeds worth $55.3 million. During the same period, 5,806,000 Class A Shares were sold through the ATM Program at an average selling price of $9.23 per Class A Share, raising gross proceeds worth $53.6 million.

The Company’s termination date is December 1, 2025. At maturity, the holders of the Preferred Shares will be entitled to the value of the Company, up to the face amount of the Preferred Shares, in priority to the holders of the Class A Shares. Holders of the Class A Shares will receive the remaining value of the Company. The termination date can be extended for additional terms of five years at the Company’s discretion, but shareholders are provided with a special retraction right in connection with such extension.

The Preferred Shares distribution rate is set by the board of directors annually and subject to a minimum of 5.5% until 2025. Holders of the Preferred Shares used to receive cumulative monthly cash dividends at a rate of 6.75% annually until November 30, 2022. With effect from December 1, 2022, this rate was increased to 7.50% annually and further to 9.25% annually with effect from December 1, 2023. Holders of the Class A Shares are currently receiving monthly distributions of $0.1257 per share, equivalent to 10.1% per annum on the issue price of $15.0. No distributions will be paid to the Class A Shares if the NAV per unit falls below $15.0. The NAV per unit remained above $15.0 during 2023, and distributions to the Class A Shares were regularly paid out.

As of January 15, 2024, the asset coverage ratio is at 1.7x. The downside protection available to holders of the Preferred Shares was 42.1%. Without giving consideration to capital appreciation potential or any source of income other than the dividends earned by the Portfolio, the current Preferred Share distributions together with the distributions on the Class A Shares will create a projected grind on the NAV of the Portfolio of approximately 8.9% per year for the remaining term of the Preferred Shares. To supplement the Portfolio income, the Company may engage in covered call options and put option writing on all or a portion of the shares held in the Portfolio.

Recent Updates/Treasury Offerings

(i) On May 25, 2023
The Company’s announced that the Toronto Stock Exchange (the “TSX”) has accepted its notice of intention to make a Normal Course Issuer Bid (the “NCIB”) to purchase its Preferred Shares and Class A Shares through the facilities of the TSX and/or alternative Canadian trading systems. The NCIB commences on May 29, 2023 and terminates on May 28, 2024. Pursuant to the NCIB, the Company proposes to purchase, from time to time, if it is considered advisable, up to 4,007,080 Preferred Shares and 4,017,102 Class A Shares.

(ii) On September 21, 2023
The Company announced that the Preferred Shares distribution rate for the fiscal year beginning December 1, 2023 will be $9.25% per annum, in comparison to previous rate of 7.50% on the initial issue price of $10.0.

(iii) On December 20, 2023
The Company renewed its ATM Program pursuant to a prospectus supplement dated December 20, 2023 to the Company’s short form base shelf prospectus dated December 19, 2023. The ATM Program allows the Company to issue Class A Shares and Preferred Shares to the public from time to time, at the Company’s discretion. The maximum gross proceeds from the issuance of the shares will be $400.0 million and the ATM Program will be effective until January 20, 2026, unless terminated prior to such date by the Company.

The main constraints to the rating are the following:

(1) Volatility in stock prices along with 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.

(2) A Preferred Shares’ dividend coverage that is less than one time.

(3) Reliance on the manager to generate a high yield, through methods such as option writing, on the investment portfolio to meet distributions and other expenses without having to liquidate portfolio securities.

(4) The monthly cash distributions to holders of the Class A Shares which create grind on the Portfolio.

(5) The concentration of the Portfolio in one industry.

(6) The unhedged portion of the USD-denominated Portfolio that exposes the Portfolio to foreign currency
risk.

The affected issue is FTN.PR.A.

DBRS places emphasis on the grind in the portfolio due to the Capital Unit dividends, but the mitigating factor is that these dividends will be (and have been in the past) halted if the NAVPU falls below $15. It is not clear how much account has been taken of this. However, the 9.5% yield on the preferreds means that, as they say, the preferred share dividend coverage ratio is less than one time.

DBRS Limited (Morningstar DBRS) has announced that it:

changed the trend to Negative from Stable and confirmed the Issuer Rating and Senior Unsecured Debentures rating of Artis Real Estate Investment Trust (Artis or the REIT) at BBB (low) and its Preferred Trust Units rating at Pfd-3 (low).

KEY CREDIT RATING CONSIDERATIONS
The Negative trend reflects the sustained deterioration of EBITDA interest coverage beyond Morningstar DBRS’ prior year expectation of 2.7 times (x) or above because of the REIT’s high proportion of variable rate debt. Morningstar DBRS anticipates a modest improvement in the coverage in the medium term as the REIT continues to execute its Business Transformation Plan through monetizing assets and using the proceeds to repay further variable rate debt. However, Morningstar DBRS notes that, given the increased variable rate debt in an elevated interest rate environment and an already weakened coverage ratio, Artis has less cushion for the current leverage at the given rating level. Morningstar DBRS has also revised its assessment of the REIT’s portfolio size lower as the REIT continues to shrink in size following the asset dispositions carried out in the last 12 months ended (LTM) September 30, 2023. Morningstar DBRS believes that the weakening of the REIT’s financial risk metrics and declining market presence, coupled with its relatively smaller size for the current rating category, increase the possibility of a downgrade action in the near future.

CREDIT RATING DRIVERS
All else equal, Morningstar DBRS would consider downgrading Artis should it fail to achieve a Morningstar DBRS EBITDA interest coverage ratio of 1.83x or better on a sustained basis, or should the Morningstar DBRS total debt-to-EBITDA not improve to 8.6x or better on a sustained basis in the near term. Also, further negative rating actions could occur if the REIT’s debt maturity profile remains short on a sustained basis in the near term. Conversely, Morningstar DBRS would consider restoring a Stable trend should either of these metrics be comfortably achieved on a sustained basis, all else equal.

FINANCIAL OUTLOOK
Morningstar DBRS projects the Morningstar DBRS EBITDA interest coverage metrics to weaken and fluctuate in the 1.6x range by YE2023 and YE2024, primarily because of the REIT’s greater cost of debt as a result of its high variable debt exposure. The Morningstar DBRS debt-to-EBITDA is forecast to increase in the high 9x range at YE2023 because of the loss of EBITDA from recent asset sales carried out in 2023 before showing modest improvement to the high 8x range at YE2024. This improvement will be largely driven by the REIT’s asset monetization plans as demonstrated by the recent sale of its Calgary/Winnipeg Retail portfolio for aggregate proceeds of $222 million, which is expected to close in H1 2024. Morningstar DBRS understands the net disposition proceeds will be used to repay further debt. For comparative purposes, the REIT had Morningstar DBRS total debt-to-EBITDA and EBITDA interest coverage ratios of 9.2x and 1.84x, respectively, as of the LTM ended September 30, 2023.

CREDIT RATING RATIONALE
The rating confirmation is supported by (1) Artis’ well-diversified, albeit reduced, stable and recurrent income-producing portfolio through economic cycles; (2) strong tenant and property diversification; and (3) lack of aggressive expansion and development activities. The rating is constrained by (1) Artis’ weak interest coverage amid a high interest rate environment and elevated leverage for the REIT’s portfolio size and EBITDA; (2) lack of scale in any markets that it operates; and (3) the smaller portfolio size on both EBITDA and square footage bases relative to the BBB (low) rating category.

Affected issues are AX.PR.E AND AX.PR.I.

Pembina Pipeline Corporation has announced:

that it does not intend to exercise its right to redeem the currently outstanding Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 3 (“Series 3 Shares”) (TSX: PPL.PR.C) on March 1, 2024.

As a result of the decision not to redeem the Series 3 Shares, and subject to certain terms of the Series 3 Shares, the holders of the Series 3 Shares will have the right to elect to convert all or part of their Series 3 Shares on a one-for-one basis into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 4 of Pembina (“Series 4 Shares”) on March 1, 2024 (the “Conversion Date”). Holders who do not exercise their right to convert their Series 3 Shares into Series 4 Shares will retain their Series 3 Shares.

As provided in the terms of the Series 3 Shares: (i) if Pembina determines that there would remain outstanding immediately following the conversion less than 1,000,000 Series 3 Shares, then all remaining Series 3 Shares will be automatically converted into Series 4 Shares on a one-for-one basis effective as of the Conversion Date; or (ii) if Pembina determines that there would be less than 1,000,000 Series 4 Shares outstanding immediately following the conversion, no Series 3 Shares will be converted into Series 4 Shares on the Conversion Date. There are currently 6,000,000 Series 3 Shares outstanding.

With respect to any Series 3 Shares that remain outstanding after the Conversion Date, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Pembina. The annual dividend rate for the Series 3 Shares for the five-year period from and including March 1, 2024, to, but excluding, March 1, 2029, will be 6.019 percent, being equal to the five-year Government of Canada bond yield of 3.419 percent determined as of today plus 2.60 percent, in accordance with the terms of the Series 3 Shares.

With respect to any Series 4 Shares that may be issued on the Conversion Date, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Pembina. The annual dividend rate applicable to the Series 4 Shares for the three-month floating rate period from and including March 1, 2024, to, but excluding, June 1, 2024, will be 7.631 percent, being equal to the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 5.031 percent plus 2.60 percent, in accordance with the terms of the Series 4 Shares (the “Floating Quarterly Dividend Rate”). The Floating Quarterly Dividend Rate will be reset on the first day of March, June, September and December in each year.

Beneficial holders of Series 3 Shares who wish to exercise their right of conversion during the conversion period, which runs from January 31, 2024, until 3:00 pm (MT) / 5:00 pm (ET) on February 15, 2024, 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 with the time to complete the necessary steps. Any notices received after this deadline will not be valid.

As previously announced, the dividend payable on March 1, 2024, to holders of the Series 3 Shares of record on February 1, 2024, will be $0.279875 per Series 3 Share. For more information on the terms of the Series 3 Shares and the Series 4 Shares, please see the prospectus supplement dated September 25, 2013, which can be found on SEDAR+ at www.sedarplus.ca.

PPL.PR.C was issued as a FixedReset, 4.70%+260, that commenced trading 2013-10-2 after being announced 2013-9-23. Notice of the reset to 4.478% was given 2019-1-30. I recommended against conversion and there was no conversion. The issue is tracked by HIMIPref™ but is relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

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

Update, 2024-2-21: No conversion:

Pembina Pipeline Corporation (“Pembina”) (TSX: PPL; NYSE: PBA) announced today that none of Pembina’s Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 3 (“Series 3 Shares”) (TSX: PPL.PR.C) will be converted into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 4 of Pembina (“Series 4 Shares”) on March 1, 2024.

After taking into account all the conversion notices received from holders of its outstanding Series 3 Shares by the February 15, 2024 deadline for the conversion of the Series 3 Shares into Series 4 Shares, less than the 1,000,000 Series 3 Shares required to give effect to conversions into Series 4 Shares were tendered for conversion.

Enbridge Inc. has announced:

that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series P (Series P Shares) (TSX: ENB.PR.P) on March 1, 2024. As a result, subject to certain conditions, the holders of the Series P Shares have the right to convert all or part of their Series P Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series Q of Enbridge (Series Q Shares) on March 1, 2024. Holders who do not exercise their right to convert their Series P Shares into Series Q Shares will retain their Series P 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 P Shares outstanding after March 1, 2024, then all remaining Series P Shares will automatically be converted into Series Q Shares on a one-for-one basis on March 1, 2024; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series Q Shares outstanding after March 1, 2024, no Series P Shares will be converted into Series Q Shares. There are currently 16,000,000 Series P Shares outstanding.

With respect to any Series P Shares that remain outstanding after March 1, 2024, 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 P Shares for the five-year period commencing on March 1, 2024 to, but excluding, March 1, 2029 will be 5.918 percent, being equal to the five-year Government of Canada bond yield of 3.418 percent determined as of today plus 2.50 percent in accordance with the terms of the Series P Shares.

With respect to any Series Q Shares that may be issued on March 1, 2024, 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 Q Shares for the three-month floating rate period commencing on March 1, 2024 to, but excluding, June 1, 2024 will be 1.89279 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 5.03 percent plus 2.50 percent in accordance with the terms of the Series Q Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series P Shares who wish to exercise their right of conversion during the conversion period, which runs from January 31, 2024 until 5:00 p.m. (EST) on February 15, 2024, 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.P was issued as a FixedReset, 4.00%+250, that commenced trading 2012-9-14 after being announced 2012-9-4. Notice of the reset to 4.379% was published 2019-1-30. I recommended against conversion and there was no conversion. It is tracked by HIMIPref™ but is relegated to the Scraps FixedReset Discount index on credit concerns.

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

Update, 2024-2-28: No conversion:

Enbridge Inc. (TSX: ENB) (NYSE: ENB) (Enbridge) announced today that none of its outstanding Cumulative Redeemable Preference Shares, Series P (Series P Shares) will be converted into Cumulative Redeemable Preference Shares, Series Q (Series Q Shares) on March 1, 2024.

After taking into account all conversion notices received from holders of its outstanding Series P Shares by the February 15, 2024 deadline for the conversion of the Series P Shares into Series Q Shares, less than the 1,000,000 Series P Shares required to give effect to conversions into Series Q Shares were tendered for conversion.

Enbridge Inc. has announced:

that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series 7 (Series 7 Shares) (TSX: ENB.PR.J) on March 1, 2024. As a result, subject to certain conditions, the holders of the Series 7 Shares have the right to convert all or part of their Series 7 Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series 8 of Enbridge (Series 8 Shares) on March 1, 2024. Holders who do not exercise their right to convert their Series 7 Shares into Series 8 Shares will retain their Series 7 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 7 Shares outstanding after March 1, 2024, then all remaining Series 7 Shares will automatically be converted into Series 8 Shares on a one-for-one basis on March 1, 2024; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series 8 Shares outstanding after March 1, 2024, no Series 7 Shares will be converted into Series 8 Shares. There are currently 10,000,000 Series 7 Shares outstanding.

With respect to any Series 7 Shares that remain outstanding after March 1, 2024, 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 7 Shares for the five-year period commencing on March 1, 2024 to, but excluding, March 1, 2029 will be 5.988 percent, being equal to the five-year Government of Canada bond yield of 3.418 percent determined as of today plus 2.57 percent in accordance with the terms of the Series 7 Shares.

With respect to any Series 8 Shares that may be issued on March 1, 2024, 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 8 Shares for the three-month floating rate period commencing on March 1, 2024 to, but excluding, June 1, 2024 will be 1.91038 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 5.03 percent plus 2.57 percent in accordance with the terms of the Series 8 Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series 7 Shares who wish to exercise their right of conversion during the conversion period, which runs from January 31, 2024 until 5:00 p.m. (EST) on February 15, 2024, 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.J was issued as a FixedReset, 4.40%+257, that commenced trading 2013-12-12 after being announced 2013-12-3. Notice of the reset to 4.449% was published 2019-1-30. I recommended against conversion and there was no conversion. The issue is tracked by HIMIPref™ but relegated to the Scraps – FixedResets (Discount) subindex on credit concerns.

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

Update, 2024-2-18: No conversion.

Enbridge Inc. (TSX: ENB) (NYSE: ENB) (Enbridge) announced today that none of its outstanding Cumulative Redeemable Preference Shares, Series 7 (Series 7 Shares) will be converted into Cumulative Redeemable Preference Shares, Series 8 (Series 8 Shares) on March 1, 2024.

After taking into account all conversion notices received from holders of its outstanding Series 7 Shares by the February 15, 2024 deadline for the conversion of the Series 7 Shares into Series 8 Shares, less than the 1,000,000 Series 7 Shares required to give effect to conversions into Series 8 Shares were tendered for conversion.

Royal Bank of Canada has announced:

the applicable dividend rates for its Non-Viability Contingent Capital (NVCC) Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series BO (the “Series BO shares”) and NVCC Non-Cumulative Floating Rate First Preferred Shares, Series BP (the “Series BP shares”).

With respect to any Series BO shares that remain outstanding after February 24, 2024, holders will be entitled to receive quarterly fixed rate non-cumulative preferential cash dividends, as and when declared by the Board of Directors of Royal Bank of Canada, subject to the provisions of the Bank Act (Canada).

The dividend rate for the 5-year period from and including February 24, 2024 to, but excluding, February 24, 2029 will be 5.885% for the Series BO shares, being equal to the 5-Year Government of Canada bond yield determined as of January 25, 2024 plus 2.38%, as determined in accordance with the terms of the Series BO shares.

With respect to any Series BP shares that may be issued on February 24, 2024, holders will be entitled to receive quarterly floating rate non-cumulative preferential cash dividends, calculated on the basis of the actual number of days elapsed in such quarterly period divided by 365, as and when declared by the Board of Directors of Royal Bank of Canada, subject to the provisions of the Bank Act (Canada).

The dividend rate for the floating rate period from and including February 24, 2024 to, but excluding, May 24, 2024 will be 7.421% for the Series BP shares, being equal to the 3-month Government of Canada Treasury Bill yield determined as of January 25, 2024 plus 2.38%, as determined in accordance with the terms of the Series BP shares.

Beneficial owners of Series BO shares who wish to exercise their conversion rights should instruct their broker or other nominee to exercise such rights on or prior to the deadline for notice of intention to convert, which is 5:00 p.m. (EST) on February 9, 2024.

RY.PR.S was issued as a FixedReset, 4.80+238, that commenced trading 2018-11-2 after being announced 2018-10-25. Notice of extension was reported previously. The issue is tracked by HIMIPref™ and is assigned to the Fixed-Resets (Discount) subindex.

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

Royal Bank of Canada has announced:

that it does not intend to exercise its right to redeem all or any part of the currently outstanding Non-Viability Contingent Capital (NVCC) Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series BO (the “Series BO shares”) on February 24, 2024. There are currently 14,000,000 Series BO shares outstanding.

Subject to certain conditions set out in the prospectus supplement dated October 29, 2018 (the “Prospectus”) relating to the issuance of the Series BO shares, the holders of the Series BO shares have the right to convert all or part of their Series BO shares, on a one-for-one basis, into NVCC Non-Cumulative Floating Rate First Preferred Shares Series BP (the “Series BP shares”) on February 24, 2024. On such date, holders who do not exercise their right to convert their Series BO shares into Series BP shares will continue to hold their Series BO shares. The conversion will occur on February 26 being the first business day following the conversion date of February 24 as identified in the Prospectus, which falls on a Saturday. The foregoing conversion rights are subject to the following:

if Royal Bank of Canada determines that there would be less than 1,000,000 Series BP shares outstanding after taking into account all shares tendered for conversion on February 24, 2024, then holders of Series BO shares will not be entitled to convert their shares into Series BP shares, and
alternatively, if Royal Bank of Canada determines that there would remain outstanding less than 1,000,000 Series BO shares after February 24, 2024, then all remaining Series BO shares will automatically be converted into Series BP shares on a one-for-one basis on February 24, 2024.
In either case, Royal Bank of Canada will give written notice to that effect to holders of Series BO shares no later than February 17, 2024.

The dividend rate applicable for the Series BO shares for the 5-year period from and including February 24, 2024 to, but excluding, February 24, 2029, and the dividend rate applicable to the Series BP shares for the 3-month period from and including February 24, 2024 to, but excluding, May 24, 2024, will be determined and announced by way of a press release on January 25, 2024.

Beneficial owners of Series BO shares who wish to exercise their conversion rights should instruct their broker or other nominee to exercise such rights during the conversion period, which runs from January 25, 2024 until 5:00 p.m. (EST) on February 9, 2024.

RY.PR.S was issued as a FixedReset, 4.80+238, that commenced trading 2018-11-2 after being announced 2018-10-25. It is tracked by HIMIPref™ and is assigned to the Fixed-Resets (Discount) subindex.

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

Dundee Corporation has announced (on 2023-12-28):

the results of its substantial issuer bid (the “Offer”) to purchase for cancellation from the holders thereof who chose to participate up to 975,610 of its issued and outstanding Cumulative Floating Rate First Preference Shares, Series 3 in the capital of the Corporation (the “Series 3 Shares”) at a purchase price of C$20.50 per Series 3 Share, for a maximum aggregate purchase price of C$20,000,005. The Offer expired at 11:59 p.m. (Toronto time) on December 27, 2023.

Based on the report of Computershare Investor Services Inc., as depositary for the Offer (the “Depositary”), 914,040 Series 3 Shares were tendered to the Offer. In accordance with the terms and conditions of the Offer and based on the Depositary’s report, the Corporation has taken up and will pay for 914,040 Series 3 Shares at a purchase price of C$20.50 per Series 3 Share for an aggregate purchase price of C$18,737,820. All Series 3 Shares purchased by the Corporation under the Offer will be cancelled in due course. The Series 3 Shares purchased under the Offer represent approximately 55.8% of the Series 3 Shares issued and outstanding before giving effect to the Offer. After giving effect to the cancellation of the Series 3 Shares purchased by the Corporation under the Offer, 724,982 Series 3 Shares will be issued and outstanding.

The Corporation has made payment for the Series 3 Shares tendered and accepted for purchase by tendering to the Depositary the aggregate purchase price payable on the Series 3 Shares validly tendered, taken up and paid for under the Offer, all in accordance with the Offer and applicable laws. Payment to shareholders for the Series 3 Shares will be made in cash, without interest, and will be completed by the Depositary as soon as practicable. Any Series 3 Shares invalidly tendered will be returned to the tendering shareholder promptly by the Depositary.

“This Offer represents a critical step towards optimizing our capital structure to support the successful execution of our strategic business plan with a focus on capital allocation in the junior mining space. By reducing the demands on our capital from the payment of preferred share dividends, we can deploy more resources to fund our core strategy,” said Jonathan Goodman, President and Chief Executive Officer.

“We believe this is an effective way of simplifying our balance sheet, reducing our cost of capital, and lowering our recurring cash needs to unlock value for all of our shareholders. By partially funding the purchase of the Series 3 Shares tendered with cash from treasury, we minimize debt obligations and run-rate cash outflows,” said Lila Murphy, Executive Vice President and Chief Financial Officer.

The full details of the Offer are described in the Corporation’s offer to purchase and issuer bid circular dated November 22, 2023, as well as the related letter of transmittal and notice of guaranteed delivery, copies of which were filed and are available under Dundee’s profile on SEDAR+ at www.sedarplus.ca and are posted on Dundee’s website at www.dundeecorporation.com.

Dundee retained Cassels Brock & Blackwell LLP to act as its external legal advisor and appointed Computershare Investor Services Inc. to act as depositary for the Offer.

The Board of Directors of the Corporation will continue to review various options for the allocation of capital. Beginning in early 2018, the Corporation has focused on the implementation of its strategy of rationalizing its portfolio of investments and monetizing non-core assets as it exits business lines which are no longer deemed to be aligned with its longer-term mining-focused strategy. As part of this process, the Corporation has taken significant steps to streamline its capital structure and strengthen its balance sheet.

This news release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell any Series 3 Shares.

Update Regarding the Loan

As previously announced by the Corporation on November 20, 2023, in connection with the Offer, the Corporation entered into a loan agreement dated November 17, 2023 (the “Loan Agreement”) among the Corporation, as borrower, Dundee Resources Limited, as guarantor, and Earlston Investments Corp. (the “Lender”), as lender, pursuant to which the Lender agreed to make a loan in a principal amount of up to C$20,000,000 upon satisfaction of certain customary conditions precedent. Pursuant to the Loan Agreement and in connection with the completion of the Offer, the Lender has advanced to the Corporation a loan in the principal amount of C$14,000,000 for purposes of funding the purchase of the Series 3 Shares tendered, taken up and paid for under the Offer. For further details relating to the Loan and the Loan Agreement, including certain material terms and conditions thereof, please see the Corporation’s news release dated November 20, 2023.

The SIB was previously discussed on PrefBlog.

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