Category: Issue Comments

Mulvihill Asset Management has announced:

In connection with the special retraction right granted to shareholders pursuant to the extension of the term of the Company approved by shareholders on May 31, 2011, the Company is announcing a consolidation of the Class A shares effective the opening of trading on July 4, 2011. The consolidation will ensure that an equal number of Class A shares and Preferred shares are outstanding subsequent to the special retraction. Each Class A shareholder will receive 0.562426082 Class A shares for each Class A share held. The total value of a shareholder’s investment will not change, however, the number of Class A shares reflected in the shareholder’s account will decline and the net asset value per share will increase proportionately. Investors are advised that the CUSIP number will change to 98146P301. No fractional shares will be issued and shareholders are not required to take any action for the consolidation to be effective.

Given that the Whole Unit NAV on June 23 was only 10.58, even the retraction of nearly half of the preferred shares and consolidation of the capital units doesn’t help much: asset coverage will still be only about 1.1:1 following the reorganization.

WFS.PR.A was last discussed on PrefBlog in the post WFS.PR.A Term Extension Approved. WFS.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

Capstone Infrastructure Corporation has announced:

that it has closed its previously announced offering of 3,000,000 Cumulative 5-Year Rate Reset Preferred Shares, Series A (the “Series A Shares”) at a price of $25.00 per Series A Share for aggregate gross proceeds of $75,000,000.

The Series A Shares were sold to a syndicate of underwriters co-led by TD Securities Inc., Macquarie Capital Markets Canada Ltd. and RBC Capital Markets on a bought deal basis. The underwriters are entitled, pursuant to an over-allotment option exercisable in whole or in part at any time up until 30 days after the closing date, to purchase an additional 450,000 Series A Shares at $25.00 per Series A Share.

The Series A Shares will be listed and posted for trading on the Toronto Stock Exchange under the symbol “CSE.PR.A”. The net proceeds of the offering will be used to fund the Corporation’s final equity payment for the construction of the Amherstburg solar power facility, to fund future potential acquisitions and for general corporate purposes.

The Corporation also announced today that the Amherstburg solar power facility has achieved commercial operation under its Renewable Energy Standard Offer Program contract with the Ontario Power Authority and is in the process of finalizing acceptance testing, which is expected to be completed in the first week of July.

CSE.PR.A is a 5.00%+271 FixedReset announced June 13. The issue traded 13,150 shares in a range of 24.00-75 before closing at 24.00-20, 5×10.

Vital statistics are:

CSE.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

This is late, but Mulvihill Capital Management has announced:

that holders of Class A Shares and holders of Preferred Shares of the Fund have approved a proposal to extend the term of the Fund for seven years beyond its scheduled termination date of June 30, 2011, and for automatic successive seven-year terms after June 30, 2018.

As a result, holders of Class A Shares will benefit from ongoing leveraged exposure to a high-quality portfolio consisting principally of common equity securities selected from the ten largest (by market capitalization) financial services companies in each of Canada, the United States and the rest of the world. Holders of Preferred Shares will continue to benefit from fixed cumulative preferential quarterly cash dividends in the amount of $0.13125 per Preferred Share representing a yield of 5.25% per annum on the original issue price of $10.00 per Preferred Share and an attractive seven-year term.

As part of the extension of the term of the Fund, the Fund will also make other changes, including: (i) provide a special redemption right to enable holders of Class A Shares and Preferred Shares to retract their shares on June 30, 2011 on the same terms that would have applied had the Fund redeemed all Class A Shares and Preferred Shares in accordance with the existing terms of such shares; (ii) change the monthly retraction prices for the Class A Shares and the Preferred Shares such that monthly retraction prices are calculated by reference to market price in addition to net asset value and to change the notice period and payment period for the exercise of such rights and the payment of the retraction amount relating thereto; and (iii) consolidate the Class A Shares or redeem the Preferred Shares on a pro rata basis, as the case may be, in order to maintain the same number of Class A Shares and Preferred Shares outstanding.

Shareholders who exercise the special redemption right will receive the amount which they would have received had the June 30, 2011 termination date not been extended. Payments for shares tendered pursuant to the Special Retraction Right will be made no later than 10 business days after June 30, 2011, provided that such shares have been surrendered for redemption on or prior to 5:00 p.m. (Toronto time) on June 17, 2011. The retraction price per Class A Share to be received by a holder of Class A Shares under the Special Retraction Right will be equal to the greater of (a) the NAV per Unit on the Special Retraction Date minus $10.00 and (b) nil. The retraction price per Preferred Share to be received by a holder of Preferred Shares under the Special Retraction Right will be equal to the lesser of: (a) $10.00; and (b) the NAV of the Fund divided by the number of Preferred Shares outstanding on the Special Retraction Date. Any declared and unpaid distributions payable on or before the Special Retraction Date in respect of Class A Shares or Preferred Shares tendered for retraction on the Special Retraction Date will also be paid on the retraction payment date.

This follows publication of the notice of meeting and information circular

The proposal to extend term was discussed on PrefBlog. WFS.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

Canaccord Financial Inc has announced:

the completion of its previously announced offering of 4,000,000 Cumulative 5-Year Rate Reset First Preferred Shares, Series A ( the “Series A Preferred Shares”) at a purchase price of $25.00 per Series A Preferred Share, for aggregate gross proceeds of $100 million. The Series A Preferred Shares are expected to commence trading on the Toronto Stock Exchange on June 23, 2011 under the trading symbol “CF.PR.A”.

The offering was underwritten on a bought deal basis by a syndicate of underwriters co-led by CIBC World Markets Inc. and Canaccord Genuity Corp. that included BMO Nesbitt Burns Inc., National Bank Financial Inc., RBC Dominion Securities Inc., Scotia Capital Inc., GMP Securities L.P., Macquarie Capital Markets Canada Ltd., HSBC Securities (Canada) Inc., Raymond James Ltd., Wellington West Capital Markets Inc., Cormark Securities Inc., Desjardins Securities Inc., Dundee Securities Ltd., Haywood Securities Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

Canaccord has granted the underwriters an over-allotment option, exercisable, in whole or in part, for a period of 30 days following today’s closing, to purchase up to an additional 600,000 Series A Preferred Shares which, if exercised in full, would increase the gross proceeds of the offering to $115 million.

Canaccord intends to use the net proceeds from the offering for general corporate purposes and may use all or a portion of such net proceeds with a view to growing or expanding its businesses.

CF.PR.A is a 5.50%+321 FixedReset announced June 6. CF.PR.A traded 187,001 shares today in a range of 24.75-98 before closing at 24.88-90, 2×12.

Vital statistics are:

CF.PR.A is tracked by HIMIPref™. It is assigned to the Scraps index on credit concerns.

Update, 2011-7-7:Greenshoe exercised:

Canaccord Financial Inc. (“Canaccord”, TSX: CF, AIM: CF.) announced today that it has closed the over-allotment option granted to the underwriters in connection with Canaccord’s bought deal public offering of Cumulative 5-Year Rate Reset First Preferred Shares, Series A (the “Series A Preferred Shares”), which closed on June 23, 2011. As a result of the exercise of the over-allotment option, Canaccord sold an additional 540,000 Series A Preferred Shares at a purchase price of $25.00 per Series A Preferred Share for additional gross proceeds of $13,500,000. In total, Canaccord has issued 4,540,000 Series A Preferred Shares for aggregate gross proceeds of $113,500,000. The Series A Preferred Shares trade on the Toronto Stock Exchange under the trading symbol “CF.PR.A”.

Canaccord intends to use the net proceeds from the offering for general corporate purposes and may use all or a portion of such net proceeds with a view to growing or expanding its businesses.

It will be most interesting to see how they choose between growing or expanding their business!

Standard & Poor’s has announced:

• •Brookfield Office Properties has a high-quality office portfolio located in generally comparatively healthier global office markets that benefits from long-term leases to good-quality tenants.
• •We have tolerance for the recent dip in Brookfield’s fixed-charge coverage because we believe a recent acquisition bolsters the company’s strong business profile and will generate very stable cash flow.
• •We revised our outlook on Brookfield and Brookfield Office Properties Canada to stable from negative because we expect Brookfield’s recent high leasing volume and further modest deleveraging will lead to a gradual improvement in currently weak debt coverage measures over the next few years.
• •We affirmed our ‘BBB’ corporate credit ratings and our ‘BB+/P-3 (High)’ preferred stock ratings on the two companies.

There are quite a few listed issues: BPO.PR.F, BPO.PR.H, BPO.PR.I, BPO.PR.J, BPO.PR.K, BPO.PR.L, BPO.PR.N and BPO.PR.P. All are tracked by HIMIPref™; all are relegated to the Scraps index on credit concerns.

There was no mention of BPO Properties (BPP) its wholly owned subsidiary.

Standard & Poor’s has announced:

• •We are placing our ‘BBB’ long-term corporate credit ratings on Capital Power Income L.P. (CPI) and CPI Preferred Equity Ltd. (CPIPE) on
  CreditWatch with negative implications.

• •At the same time, we are placing our ‘BBB’ issue-level ratings on CPI’s and Curtis Palmer LLC’s senior unsecured debt, and our ‘BB’ global scale and ‘P-3(High)’ Canada scale ratings on CPIPE’s preferred shares on CreditWatch with negative implications.
• •These rating actions follow the June 20, 2011, joint announcement by CPI and Atlantic Power Corp. (ATP, not rated) of an agreement for ATP to acquire CPI, subject to a favorable vote by CPI’s unitholders and ATP’s shareholders and the necessary regulatory approval. We expect the transaction to be completed in fourth-quarter 2011.
• •The rating actions reflect our view that, if the transaction occurs, the combined entity operating both ATP’s and CPI’s assets could potentially have a business risk or financial risk profile weaker than that of CPI.
• •We will resolve the CreditWatch when we are certain of the outcome in the voting and approval processes and upon greater clarity on the combined entity’s capital structure, business strategy, and financial policies.

DBRS maintained CZP.PR.A and CZP.PR.B at Pfd-3, Review-Negative:

DBRS has maintained the Under Review with Negative Implications status on the BBB (high) Senior Unsecured Debt & Medium-Term Notes rating of Capital Power Income L.P. (the Partnership or CPILP) and the Pfd-3 Cumulative Preferred Shares rating of CPI Preferred Equity Ltd., where they were placed on October 5, 2010.

The rating action follows the joint announcement by Atlantic Power Corporation (Atlantic Power; not rated by DBRS) and CPILP that that they have entered into an arrangement agreement (the Agreement) pursuant to which Atlantic Power intends to acquire, directly and indirectly, all of the outstanding limited partnership units of CPILP for $19.40 per limited partnership unit (the Transaction). APC will pay the purchase price of approximately $1.1 billion using a combination of cash and APC shares, with the cash component capped at $507 million. APC has stated that while it has obtained committed debt financing sufficient to pay the cash portion of the acquisition, it intends on raising approximately $423 million of debt and $200 million in equity to fund the cash component, as well as to refinance certain of CPILP’s bank facilities. The Transaction is a result of the strategic review process undertaken by the Partnership, which was publicly announced on October 5, 2010. The agreed-upon price represents a 4% premium to the CPILP closing price on June 17, 2011.

BNS Split Corp. II has announced:

that it will be hosting an investor update conference call on Thursday, June 23, 2011, with Brian McChesney, President and CEO of Scotia Managed Companies Administration Inc. (the “Administrator”).

The conference call will provide an update on the Company’s performance. Investors and investment advisors are reminded that the Company currently has warrants outstanding which expire on July 7, 2011 at 5:00 p.m. (Toronto time). Note that investment dealers may have deadlines earlier than July 7, 2011.

Conference Call Details
Thursday, June 23 2011 at 11:00 a.m. (EST)
Featuring Brian McChesney, President and CEO of the Administrator
Dial-in Numbers: 416-340-2217 or 1-866-696-5910
Passcode: 3583283#

A replay of the conference call will be available at 905-694-9451 or 1-800-408-3053, passcode 3644732#.

Each warrant entitles the holder to purchase one Unit, each Unit consisting of two Capital Shares and one Preferred Share, for a subscription price of $50.84 per Unit. The warrants are listed on the Toronto Stock Exchange under the ticker symbol BSC.WT.

Holders of Preferred Shares are entitled to receive quarterly fixed cumulative distributions equal to $0.2003 per Preferred Share. The Company’s Capital Share dividend policy is to pay a quarterly dividend on the Capital Shares equal to the dividends received by the Company on the BNS Shares minus the dividends payable on the Preferred Shares and all administrative and operating expenses provided the net asset value per Unit at the time of declaration, after giving effect to the dividend, would be greater than the original issue price of the Preferred Shares.

BNS Split Corp. II is a mutual fund corporation created to hold a portfolio of common shares of The Bank of Nova Scotia.

BSC.PR.B was last discussed on PrefBlog when the warrants were issued. BSC.PR.B is not tracked by HIMIPref™.

Newgrowth Corp. has announced:

that it has called 803,467 Preferred Shares for cash redemption on June 24, 2011 (in accordance with the Company’s Articles) representing approximately 22.620% of the outstanding Preferred Shares as a result of the special annual retraction of 803,467 Capital Shares by the holders thereof. The Preferred Shares shall be redeemed on a pro rata basis, so that each holder of Preferred Shares of record on June 23, 2011 will have approximately 22.620% of their Preferred Shares redeemed. The redemption price for the Preferred Shares will be $13.70 per share.

In addition, holders of a further 849,325 Capital Shares and 849,325 Preferred Shares have deposited such shares concurrently for retraction on June 24, 2011. As a result, a total of 1,652,792 Capital Shares and 1,652,792 Preferred Shares, or approximately 37.5521% of both classes of shares currently outstanding, will be redeemed.

Holders of Preferred Shares that are on record for dividends but have been called for redemption will be entitled to receive dividends thereon which have been declared but remain unpaid up to but not including June 24, 2011.

Payment of the amount due to holders of Preferred Shares will be made by the Company on June 24, 2011. From and after June 24, 2011 the holders of Preferred Shares that have been called for redemption will not be entitled to dividends or to exercise any right in respect of such shares except to receive the amount due on redemption.

Huh. It was only two months ago that their warrant offering was completely subscribed and only three months ago that I was so pleased with the growth in shares outstanding that I added it to the HIMIPref™ database. Market timing … market schmiming, that’s what I say!

NEW.PR.C is tracked by HIMIPref™ and is assigned to the SplitShare index.

It has been announced that GLOBAL X FUNDS LAUNCHES FIRST CANADA PREFERRED ETF (CNPF):

Global X Funds, the New York based provider of exchange traded funds, today launched the Global X Canada Preferred ETF (Ticker: CNPF). This is the first ETF to target Canadian companies that issue preferred stock.

For investors seeking income, preferred shares are an asset class worth considering due to their unique combination of bond and equity characteristics. Like bonds, preferred shares generally pay stable dividends with more frequent distributions than common shares. Like equity, preferred shares trade on an exchange and have the potential to appreciate in value, offering additional income growth potential for investors. Moreover, preferred shareholders have priority over common shareholders with regard to claims on company earnings and assets, which provide some downside protection.

In addition, preferred shares of Canadian companies offer investors an opportunity to diversify outside the U.S. and increase their international issuer and currency exposure, which may help reduce overall portfolio risk. A shrinking budget deficit paired with strong economic growth and higher commodity prices make Canada a strong contender for investment dollars when compared to the current budget and debt issues of its southern neighbor (Wall Street Journal, 2011).

“CNPF provides a relatively efficient way for investors to reap the benefits of this hybrid asset class as well as receive international exposure via the Canadian issuers traded on the Toronto Stock Exchange,” said Bruno del Ama, chief executive officer of Global X Funds. “We are pleased to expand our global offering to income generating asset classes.”

The Global X Canada Preferred ETF tracks the Solactive Canada Preferred Stock Index, which is designed to measure the performance of preferred stocks from Canadian issuers traded on the Toronto Stock Exchange. The Underlying Index does not seek to directly reflect the performance of the companies issuing the preferred stock. The Underlying Index is comprised of preferred shares that meet certain criteria relating to size, liquidity, issuer rating, maturity and other requirements as determined by Structured Solutions AG. As of May 16, 2011, the three largest components of the index were Transcanada Corp., Manulife Financial Corp., and Canadian Imperial Bank.

I can think of some people who just may take issue with the statement that “This is the first ETF to target Canadian companies that issue preferred stock.”! Michael Johnson of ETFdb notes:

There are multiple ETFs listed in Canada offering exposure to the country’s preferred stock market; the Claymore S&P/TSX CDN Preferred Share Trust has more than $600 million in AUM, and the actively-managed Horizons AlphaPro Preferred Share ETF (HPR) is another options for accessing this asset class. iShares filed earlier this year for an international preferred stock ETF that would include a heavy tilt towards Canadian securities, along with issuers from Japan, New Zealand, and the U.K.

The Solactive Canada Preferred Stock Index is admirably transparent. The indexing agent is Structured Solutions AG, which is based in Frankfurt. My, aren’t we getting international! They appear to do a lot of business with Global X, a New York based firm that has a hatful of thinly sliced ETFs.

At 58bp, this ETF doesn’t have anything special going for it on the fee side. I have not yet checked – and may never check! – the composition of the index, so I won’t comment on that. I am also being lazy and not checking whether Canadian dividends will retain their character for Canadian investors when routed through a US ETF, but it’s something I would find out before plunking any money down! In the meantime, I’m wondering (a) why Americans would buy Canadian preferreds on a passive basis, when they have no tax advantage, and (b) when the first Canadian listed US Municipal bond ETF will start up.

Barron’s gave the fund a civil mention. ETFdb reports the fund has $3.75-million in market cap.

CNPF is NYSE listed and, according to Yahoo!, closed today at 14.20-12, 10×2. If that spread is any indication of normality, it might be fun to make a market in it!

Many thanks to Assiduous Reader NS for bringing this to my attention. He’s wondering whether this listing is a sign of doom … maybe it is, but more likely for the increasingly ridiculous ETF market than for Canadian preferreds.

Allbanc Split Corp. has announced:

the completion of its warrant offering. The gross proceeds from the exercise of the warrants previously issued totaled $26.9 million, representing 40% of the maximum available subscription amount.

The net proceeds from the exercise of the warrants will be invested in accordance with the investment objectives of the Company.

AllBanc Split Corp. is a mutual fund corporation created to hold a portfolio of publicly listed common shares of selected Canadian chartered banks. Class A Capital Shares and Class B Preferred Shares of AllBanc Split Corp. are listed for trading on The Toronto Stock Exchange under the symbols ABK.A and ABK.PR.B respectively.

As previously noted, the warrants were significantly in-the-money, but sometimes that doesn’t mean the money comes in!

Sadly, this leaves the preferred shares with only about $34-million worth outstanding … getting up there, but still a little on the small side to be included in the HIMIPref™ universe. Maybe next time!