Category: Issue Comments

Issue Comments

CCS: DBRS Upgrades to Pfd-3(high)

Dominion Bond Rating Service has announced it has:

upgraded its rating on the Non-Cumulative Preference Shares of the Co-operators General Insurance Company (Co-op General or the Company) to Pfd-3 (high) from Pfd-3. The trend on the rating remains Stable. The upgrade reflects an updated review of the Company’s strategic market position relative to its peer group in the Canadian property and casualty (P&C) insurance industry.

CCS has two issues of preferreds outstanding: CCS.PR.C (PerpetualDiscount) and CCS.PR.D (FixedReset). Both are tracked by HIMIPref™; both are relegated to the Scraps index on credit concerns. The latter issue has just been dropped from TXPR after being added in July 2009. Love that churning!

S&P maintains its rating at P-2(low).

Issue Comments

SBC.PR.A: Warrants for Capital Unitholders

Brompton Split Banc Corp. has announced:

that it has filed a final prospectus for an offering of warrants to Class A shareholders of the Company. Each Class A shareholder of record on July 19, 2010 will receive one half of one warrant for each Class A share held.

One warrant will entitle the holder to purchase a Unit (consisting of one Class A share and one Preferred share of the Company) upon payment of the subscription price. The subscription price is $20.58, which is the sum of:
a) the most recently calculated NAV per Unit prior to the date of filing the final prospectus; and
b) the estimated per Unit fees and expenses of the offering.

Warrants may be exercised on or before October 22, 2010, the expiry date. The Company has applied to list the warrants (under the ticker symbol SBC.WT) and the Class A shares and Preferred shares issuable on the exercise thereof, on the TSX. Warrants will be distributed to client accounts on a best-efforts basis after the July 19, 2010 record date.

Successful completion of the warrants offering will provide the Company with additional capital that can be used to take advantage of attractive investment opportunities. It is also expected to increase the trading liquidity of the Class A shares and Preferred shares, and reduce the ongoing management expense ratio of the Company.

The intention to undertake this warrant offering was discussed in the post SBC.PR.A to Get Bigger. SBC.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

Issue Comments

LBS.PR.A: Warrants for Capital Unitholders

Life & Banc Split Corp. has announced:

that it has filed a final prospectus for an offering of warrants to Class A shareholders of the Company. Each Class A shareholder of record on July 19, 2010 will receive one half of one warrant for each Class A share held.

One warrant will entitle the holder to purchase a Unit (consisting of one Class A share and one Preferred share of the Company) upon payment of the subscription price. The subscription price is $17.66, which is the sum of:
a) the most recently calculated NAV per Unit prior to the date of filing the final prospectus; and
b) the estimated per Unit fees and expenses of the offering.

Warrants may be exercised on or before August 23, 2010, the expiry date. The Company has applied to list the warrants (under the ticker symbol LBS.WT) and the Class A shares and Preferred shares issuable on the exercise thereof, on the TSX. Warrants will be distributed to client accounts on a best-efforts basis after the July 19, 2010 record date.

Successful completion of the warrants offering will provide the Company with additional capital that can be used to take advantage of attractive investment opportunities. It is also expected to increase the trading liquidity of the Class A shares and Preferred shares, and reduce the ongoing management expense ratio of the Company.

The intention to issue warrants was discussed in the post LBS.PR.A to Get Bigger. LBS.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

Update, 2010-12-16: In their 2010 Semiannual report, Brompton discloses:

Unitholders received warrants on the basis of one-half of one warrant for each Class A share held on July 19, 2010. A whole warrant entitled the holder to subscribe for one unit (consisting of one Class A share and one Preferred share) of the Fund at a subscription price of $17.66. Warrants not exercised prior to August 23, 2010 were void and of no value. Upon the exercise of a warrant, the Fund paid a fee equal to $0.27 per warrant to the dealer whose client exercised the warrant.

… which is nice to know, but some disclosure of the success of the offering would have been appreciated. However, that report indicates there were 10,059,675 units outstanding as of 2010-6-30, and there are 10,307,447 (according to the Toronto Stock Exchange), so they were able to sell about 250,000 units.

Issue Comments

BSC.PR.A Refunding Approved

BNS Split Corp. II has announced:

that holders of its Class A Capital Shares have approved a share capital reorganization (the “Reorganization”) allowing holders of Class A Capital Shares, at their option, to retain their investment in the Company after the scheduled redemption date of September 22, 2010. The Reorganization will permit holders of Class A Capital Shares to extend their investment in the Company beyond the redemption date of September 22, 2010 for an additional 5 years. The Class A Preferred Shares will be redeemed on the same terms originally contemplated in their share provisions and will be called for redemption on or about September 22, 2010. In order to maintain the leveraged “split share” structure of the Company, a new class of shares to be known as the Series 1 Preferred Shares will be created and issued.

Holders of Class A Capital Shares who do not wish to continue their investment in the Company after September 22, 2010 must give notice that they wish to exercise their special retraction right and how they wish to be paid for their shares on or prior to July 30, 2010. Holders of Class A Capital Shares who retract their Class A Capital Shares will be paid on or about September 22, 2010. The Reorganization will become effective provided that holders of at least 1,433,500 Class A Capital Shares retain their Class A Capital Shares and do not exercise the special retraction right.

BSC.PR.A was last mentioned on PrefBlog in the post BSC.PR.A Proposes Term Extension. BSC.PR.A is not tracked by HIMIPref™.

Issue Comments

Best & Worst Performers: June 2010

These are total returns, with dividends presumed to have been reinvested at the bid price on the ex-date. The list has been restricted to issues in the HIMIPref™ indices.

June 2010
Issue Index DBRS Rating Monthly Performance Notes (“Now” means “June 30”)
BAM.PR.K Floater Pfd-2(low) -3.41% Also the worst performer in May.
BAM.PR.B Floater Pfd-2(low) -2.56% Also the second-worst performer in May.
GWO.PR.J FixedReset Pfd-1(low) -2.37% It’s presence here is largely due to a disappearing bid on June 30: the closing quote was 25.92-62, after trading 3,400 shares in a range of 26.62-85. Now with a (bid) yield of 4.90% based on a bid of 25.92 an a call 2014-1-30 at 25.00.
BAM.PR.E Ratchet Pfd-2(low) -1.41% Strong Pair with BAM.PR.G. Also the fourth-worst performer in May.
BNA.PR.D SplitShare Pfd-2(low) -0.19% Now with a pre-tax bid-YTW of 6.35% based on a bid of 25.95 and a hardMaturity 2014-7-9 at 25.00.
… … … … …
W.PR.J Perpetual-Discount Pfd-2(low) +8.01% Now with a pre-tax bid-TTW of 6.10% based on a bid of 23.00 and a limitMaturity.
W.PR.H Perpetual-Discount Pfd-2(low) +8.05% Now with a pre-tax bid-TTW of 6.11% based on a bid of 22.53 and a limitMaturity.
BAM.PR.M Perpetual-Discount Pfd-2(low) +8.26% Now with a pre-tax bid-TTW of 6.59% based on a bid of 18.16 and a limitMaturity.
IAG.PR.A Perpetual-Discount Pfd-2(high) +8.72% The fifth-worst performer in May, so a lot of this return is merely bounce-back. Now with a pre-tax bid-TTW of 6.03% based on a bid of 19.20 and a limitMaturity.
ELF.PR.G Perpetual-Discount Pfd-2(low) +9.10% Now with a pre-tax bid-YTW of 6.62% based on a bid of 18.03 and a limitMaturity.
Issue Comments

PWF.PR.P Closes Firm on Heavy Volume

Power Financial Corp. has announced:

the successful completion and closing of an offering of 11,200,000 4.40% Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series P (the “Series P Shares”) priced at $25.00 per share to raise gross proceeds of $280 million.

The issue was bought by an underwriting group co-led by BMO Capital Markets, RBC Capital Markets and Scotia Capital Inc. Following the successful sale of the initially announced 8,000,000 Series P Shares, the underwriters exercised an option to purchase an additional 3,200,000 Series P Shares.

The Series P Shares will be listed and posted for trading on the Toronto Stock Exchange under the symbol “PWF.PR.P”. Proceeds from the issue will be used to supplement Power Financial’s financial resources and for general corporate purposes.

PWF.PR.P is a FixedReset, 4.40%+160, announced June 17. It traded 563,942 shares today in a range of 24.85-02 before closing at 25.00-14.

The greenshoe was for 4-million shares, so 80% was exercised.

Given the Power Group’s reputation for extremely tight pricing of their new preferred issues, I can bet the CFO has already received a sternly worded memo about leaving too much money on the table!

Vital statistics are:

PWF.PR.P FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2040-06-29
Maturity Price : 23.12
Evaluated at bid price : 25.00
Bid-YTW : 4.06 %

PWF.PR.P is tracked by HIMIPref™ and has been assigned to the FixedReset index.

Issue Comments

TRP.PR.C Closes Below Par on Heavy Volume

TransCanada Corp. has announced:

that it has completed its public offering of cumulative redeemable first preferred shares, series 5 (the “Series 5 Preferred Shares”). As the underwriters fully exercised their option to acquire an additional two million Series 5 Preferred Shares, the size of the offering increased to a total of 14 million shares resulting in gross proceeds of $350 million.

The offering was first announced on June 17, 2010 when TransCanada entered into an agreement with a syndicate of underwriters in Canada led by Scotia Capital Inc., RBC Capital Markets, and BMO Capital Markets.

The net proceeds of the offering will be used to partially fund capital projects, for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.

TRP.PR.C traded 567,818 shares today in a range of 24.75-90 before closing at 24.83-88. This issue is a FixedReset, 4.40%+154, announced June 17.

Vital statistics are:

TRP.PR.C FixedReset YTW SCENARIO
Maturity Type : Limit Maturity
Maturity Date : 2040-06-29
Maturity Price : 23.07
Evaluated at bid price : 24.83
Bid-YTW : 4.05 %

TRP.PR.C is tracked by HIMIPref™ and has been added to the FixedReset index.

Issue Comments

FIG.PR.A: Warrant Exercise Minimal

Faircourt Asset Management has announced:

that approximately 1 million Warrants outstanding have been exercised at an exercise price of $4.00 per Trust Unit for aggregate gross proceeds raised approximating $4 million. Warrants not exercised expired on June 25th, 2010.

There were 4.9-million outstanding, so take-up was just a little over 20%.

FIG.PR.A was last mentioned on PrefBlog when the mass retraction of 6.4-million units was announced.

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

Issue Comments

PWF.PR.J to be Redeemed

Power Financial Corporation has announced:

that it intends to redeem all $150 million of its outstanding 4.70% Non-Cumulative First Preferred Shares, Series J on July 30, 2010.

In accordance with the terms of the Series J Shares, the redemption price will be $25.50 for each Series J share plus an amount equal to all declared and unpaid dividends, net of any tax required to be withheld by the Corporation.

A notice of the redemption of the Series J Shares will be provided in accordance with the rights, privileges and conditions attached to the Series J Shares.

PWF.PR.J commenced trading in March, 2003, and was scheduled to become callable at par commencing 2012-4-30. It was last mentioned on PrefBlog in early 2007, after GWO bought Putnam.

PWF.PR.J is a member of the rapidly shrinking Operating Retractible index and closed last night at 25.80-85, with a negative Yield-to-Worst.

Issue Comments

FFN.PR.A: Capital Units Dividend Suspended

Financial 15 Split Corp. II has announced:

There will not be a distribution paid to Financial 15 II Class A Shares for June 30, 2010 as per the Prospectus which states no regular monthly dividends or other distributions will be paid on the Class A Shares in any month as long as the net asset value per unit is equal to or less than $15.00. The net asset value as of June 15, 2010 was $14.47.

FFN.PR.A was last mentioned on PrefBlog when the capital unit dividend was suspended in February (it was reinstated in March). FFN.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.