Category: Issue Comments

This issue is a 3.85%+100 FixedReset announced March 25.

BNS has announced:

that as a result of investor demand for its domestic public offering of non-cumulative 5-year rate reset preferred shares Series 30 (the “Preferred Shares Series 30”), the size of the offering has been increased to 10.6 million Preferred Shares Series 30. The gross proceeds of the offering will now be $265 million.

The offering was made through a syndicate of investment dealers led by Scotia Capital Inc. The Preferred Shares Series 30 commence trading on the Toronto Stock Exchange today under the symbol BNS.PR.Y.

Holders of Preferred Shares Series 30 will be entitled to receive a non-cumulative quarterly fixed dividend for the initial period ending April 25, 2015 yielding 3.85% per annum, as and when declared by the Board of Directors of Scotiabank. Thereafter, the dividend rate will reset every five years at a rate equal to 1.00% over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series 30 will, subject to certain conditions, have the right to convert all or any part of their shares to non-cumulative floating rate preferred shares Series 31 (the “Preferred Shares Series 31”) of Scotiabank on April 26, 2015 and on April 26 every five years thereafter. Holders of the Preferred Shares Series 31 will be entitled to receive a non-cumulative quarterly floating dividend at a rate equal to the 3-month Government of Canada Treasury Bill yield plus 1.00%, as and when declared by the Board of Directors of Scotiabank.

BNS.PR.Y traded 461,960 shares in a range of 24.30-64 (!) today, before settling at 24.42-49.

Vital statistics are:

BNS.PR.Y is tracked by HIMIPref™. It is assigned to the “FixedReset” index; when there is enough differentiation of prices to justify a new index, the FixedReset index will be split into discount and premium indices; just by price, I think: doing it by reset level and call expectation might be too complex for what is meant to be a simple index.

Mulvihill has announced 898,716 warrants for full units of World Financial Split Corp. were exercised. Issuance was 8,557,010, hence: 10%.

The 900,000-odd new shares added to the 8.6-million old ones should increase the liquidity of WFS.PR.A; it’s a shame about the credit quality.

WFS.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-4(high) by DBRS. WFS.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

Mulvihill has announced that the SBN.PR.A warrant offering has succeeded in selling slightly under 1.3-million units, for gross proceeds of $24.24-million.

The prospectus stated 3.8-million units were up for sale; hence, 34%.

The 1.3-million new shares, added to the 3.8-million old ones, means this fund is starting to get to a respectable size. Now, if only the credit quality was better…

SBN.PR.A was last mentioned on PrefBlog when the warrant prospectus was filed. SBN.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

I can’t find any definitive information on this issue but DBRS reports:

DBRS has today assigned a rating of A (high) with a Stable trend to Enbridge Pipelines Inc.’s $350 million 4.45% unsecured medium-term notes (Notes) issue maturing on April 6, 2020, and $300 million 5.33% Notes maturing on April 6, 2040.
The Notes will rank equally with all of Enbridge Pipelines Inc.’s existing senior unsecured indebtedness. Net proceeds from the issue will be used to repay short-term indebtedness and for other general corporate purposes.

Thirty year Enbridge Pipelines paper at 5.33%, eh? Given continuing carnage in the preferred share market, it’s nice to see how the other half lives!

Enbridge Pipelines is 100% owned by Enbridge. It issued $200-million in 30-year notes at 5.35 in a prospectus supplement dated 2009-11-23. That issue had a Canada Call at +33bp, but no unusual features.

ENB.PR.A closed today at 24.05-10 to yield 5.78% dividend at the bid, equivalent to 8.09% interest at the standard equivalency factor of 1.4x; a spread (assuming credit equivalency) of +276bp. ENB.PR.A was last mentioned on PrefBlog in the post TXPR Rebalancing Effect on Market (it was removed from TXPR in January). ENB.PR.A is tracked by HIMIPref™ and is a member of the PerpetualDiscounts subindex.

This one is complex. Assiduous Readers will recall that the former XCM has been reorganized into two parts: Original Commerce Split Corp. and New Commerce Split Fund, which are what one might call “virtual” funds sharing the same set of books (rather like different classes of mutual fund units).

As the website states:

Original Commerce Split Corp. offers two types of shares, a Class A (YCM.X) and a Priority Equity (YCM.PR.X).

New Commerce Split Corp. offers three types of shares, a Capital share (YCM), a Class I Preferred (YCM.PR.A) and a Class II Preferred (YCM.PR.B).

The Reorg Summary is (emphasis added):

At the opening of trading on March 26, 2010:

Holders of Priority Equity Shares (Symbol: XCM.PR.A) that did not elect to remain in the Original Commerce Split Fund will have each of the Priority Equity Shares that they hold converted into the following new securities in the New Commerce Split Fund:

• 1. One $5.00 Class I Preferred Share (Symbol: YCM.PR.A) (the “Class I Preferred Share”);
• 2. One $5.00 Class II Preferred Share (Symbol: YCM.PR.B) (the “Class II Preferred Share”);
• 3. One half 2011 Warrant (Symbol: YCM.WT); and
• 4. One 2012 Warrant (Symbol: YCM.WT.A).

Holders of Priority Equity Shares (Symbol: XCM.PR.A) that did elect to remain in the Original Commerce Split Fund will have each of the Priority Equity Shares that they hold converted into the following new security in the Original Commerce Split Fund:

• 1. One Priority Equity Share 2010 (Symbol: YCM.PR.X).

Holders of Class A Shares (Symbol: XCM) that did not elect to remain in the Original Commerce Split Fund will have each of the Class A Shares that they hold converted into the following securities (in order to achieve the required balancing objectives as previously discussed in the March 10, 2010 press release):

• 1. 0.7167721 of a Capital Share in the New Commerce Split Fund (Symbol: YCM); and
• 2. 0.283228 of a Class A Share 2010 in the Original Commerce Split Fund (Symbol: YCM.X)

Holders of existing Class A Shares (Symbol: XCM) who elected to remain in the Original Commerce Split Fund will have each of the Class A Shares that they hold converted into the following security in the Original Commerce Split Fund:

• 1. One Class A Share 2010 (Symbol: YCM.X)

Original Commerce Split Corp states:

that the opening net asset value per unit for the newly reorganized Original Commerce Split Fund was $9.36 as of the close of business on March 25, 2010. There were 1,707,491 units outstanding for total net assets of $16.0 million as at March 25, 2010. The net assets of the Original Commerce Split Fund are currently allocated approximately 82.7% to the Priority Equity Portfolio Protection Plan and approximately 17.3% to CIBC common shares. The Original Commerce Split Fund will continually rebalance the portfolio between the requirements of the Priority Equity Protection Plan and maintaining direct exposure to CIBC common stock.

The following is a summary of some of the principal provisions of the Priority Equity Shares 2010 and Class A Shares 2010 of the Original Commerce Split Fund. In general, these two classes of shares will retain the same characteristics as the existing Priority Equity and Class A Shares.

Priority Equity Shares 2010
Priority Equity Shares 2010 (Symbol YCM.PR.X) will continue to have the repayment target of $10 per share on December 1, 2014 as the primary investment objective. The Fund will continue to implement the Priority Equity Portfolio Protection Plan described in the original prospectus. Dividends are anticipated to remain suspended for the foreseeable future in order to preserve cash and to assist in rebuilding the net asset value of the Original Commerce Split Fund. Since the dividends on the Priority Equity Shares are cumulative, the suspended dividends (and all subsequent dividends not paid) will be accrued and are recorded as a liability in determining the net asset value of the Original Commerce Split Fund. The current amount of accrued dividends is $0.5688 per share representing 13 months of suspended dividends.

Class A Shares 2010
Class A Shares 2010 (Symbol: YCM.X) will continue to participate in any net asset value growth over $10.00 per Unit and dividends would be reinstated only if and when the net asset value per Unit exceeds $12.50. Each “Unit” consists of one Priority Equity Share 2010 and one Class A Share 2010.

New Commerce Split Fund has announced:

that the opening net asset value per unit for the newly reorganized New Commerce Split Fund was approximately $9.94 as of the close of business on March 25, 2010. There were 3,824,009 units outstanding for total net assets of approximately $38.0 million as at March 25, 2010. The New Commerce Split Fund will now begin to initiate its full investment plan and increase its investment in CIBC common shares and its supplemental covered call writing program.

The following is a summary of some of the principal provisions of the Class I Preferred Shares, Class II Preferred Shares, 2011 Warrants, 2012 Warrants and Capital Shares of the New Commerce Split Fund:

Class I Preferred Shares
Each Class I Preferred Share (Symbol: YCM.PR.A) pays fixed cumulative preferential monthly dividends to yield 7.50% per annum on the $5.00 notional issue price and has a repayment objective on December 1, 2014 or such other date as the Company may be terminated (the “Termination Date”) of $5.00. The dividend payable in respect of the month of March 2010 will be accrued and is expected to be paid with the April 2010 dividend, payable May 10, 2010 to shareholders of record on April 30, 2010.

Class II Preferred Shares
Each Class II Preferred Share (Symbol: YCM.PR.B) pays distributions to yield 7.50% per annum on the $5.00 notional issue price if and when the net asset value per Unit exceeds $12.50 and has a repayment objective on the Termination Date of $5.00. Each “Unit” consists of one Class I Preferred Share, one Class II Preferred Share and one Capital Share. As the net asset value per Unit is currently less than $12.50, no dividends will initially be paid on the Class II Preferred Shares.

2011 Warrant
Each whole 2011 Warrant (Symbol: YCM.WT) can be exercised to purchase one Unit for an exercise price of $10.00 per Unit at specified times until February 28, 2011.

2012 Warrant
Each 2012 Warrant (Symbol: YCM.WT.A) can be exercised to purchase one Unit for an exercise price of $12.50 per Unit at specified times until February 28, 2012.

Capital Shares
Capital Shares (Symbol: YCM) will continue to participate in any net asset value growth over $10.00 per Unit and dividends would be reinstated only if and when the net asset value per Unit exceeds $15.00. The dividend rate on the Capital Shares will be set by the Board of Directors of the Company at its discretion, based on market conditions. No dividend payments will be made on the Capital Shares unless all dividends on the Class I Preferred Shares and, if applicable, Class II Preferred Shares have been declared and paid.

XCM.PR.A was last mentioned on PrefBlog when reorg details were announced. XCM.PR.A was not tracked by HIMIPref™; there are no plans to commence tracking YCM.PR.X, YCM.PR.A or YCM.PR.B.

M Split Corp has announced (on March 23, so I’m a little late with this):

the opening net asset value per unit for the newly reorganized Company was $9.01 per unit as of the close of business on March 22, 2010. There were 2,846,795 units outstanding for total net assets of $25.6 million as at March 22, 2010. The Company will begin to initiate its full investment plan and increase its investment in Manulife common shares and its supplemental covered call writing program. Trading will begin today on the TSX under the following new stock symbols listed below:

XMF.PR.B – the Class I Preferred Share
XMF.PR.C – the Class II Preferred Share
XMF.WT – the 2011 Warrant
XMF.WT.A – the 2012 Warrant
XMF.A – the Capital Share

The following is a summary of some of the principal provisions of the Class I Preferred Shares, Class II Preferred Shares, 2011 Warrants, 2012 Warrants and Capital Shares:

Class I Preferred Shares
Each Class I Preferred Share (Symbol: XMF.PR.B) pays fixed cumulative preferential monthly dividends to yield 7.50% per annum on the $5.00 notional issue price and having a repayment objective on December 1, 2014 or such other date as the Company may be terminated (the “Termination Date”) of $5.00.

Class II Preferred Shares
Each Class II Preferred Share (Symbol: XMF.PR.C) pays distributions to yield 7.50% per annum on the $5.00 notional issue price if and when the net asset value per Unit exceeds $12.50 and having a repayment objective on the Termination Date of $5.00. Each “Unit” consists of one Class I Preferred Share, one Class II Preferred Share and one Capital Share.

2011 Warrant
Each 2011 Warrant (Symbol: XMF.WT) can be exercised to purchase one Unit for an exercise price of $10.00 per Unit at specified times until February 28, 2011.

2012 Warrant
Each 2012 Warrant (Symbol: XMF.WT.A) can be exercised to purchase one Unit for an exercise price of $12.50 per Unit at specified times until February 28, 2012.

Capital Shares
Capital Shares (Symbol: XMF.A) will continue to participate in any net asset value growth over $10.00 per Unit and dividends would be reinstated only if and when the net asset value per Unit exceeds $15.00. The dividend rate on the Capital Shares will be set by the Board of Directors of the Company at its discretion, based on market conditions. No dividend payments will be made on the Capital Shares unless all dividends on the Class I Preferred Shares and, if applicable, Class II Preferred Shares have been declared and paid.

For additional information regarding the provisions attached to the Class I Preferred Shares, Class II Preferred Shares, 2011 Warrants, 2012 Warrants and Capital Shares, reference should be made to the Company’s Management Information Circular dated December 23,2009.

The effective date and a reminder of the terms of the reorg were announced March 19:

At the opening of trading on March 23, 2010, holders of Priority Equity Shares (Symbol: XMF.PR.A) will have received the following securities in exchange for each Priority Equity Share held:

1. One $5.00 Class I Preferred Share (Symbol: XMF.PR.B) (the “Class I Preferred Share”);
2. One $5.00 Class II Preferred Share (Symbol: XMF.PR.C) (the “Class II Preferred Share”);
3. One 2011 Warrant (Symbol: XMF.WT); and
4. One 2012 Warrant (Symbol: XMF.WT.A).

As previously announced, since more Priority Equity Shares were tendered for retraction under the special retraction right than Class A Shares, the outstanding Class A Shares will effectively be consolidated (the “Consolidation”) through an adjustment to the number of Capital Shares to be issued to holders of Class A Shares in the Reorganization. The Consolidation will be implemented so that following the Reorganization, there will be an equal number of Capital Shares, Class I Preferred Shares and Class II Preferred Shares outstanding.

As a result of the Reorganization and the Consolidation, holders of Class A Shares (Symbol: XMF) will receive 0.944808 of a Capital Share (Symbol: XMF.A) in exchange for each Class A Share held.

XMF.PR.A was last mentioned on PrefBlog in the post XMF.PR.A Announces Reorg Details. XMF.PR.A was not tracked by HIMIPref™; there are no current plans to track XMF.PR.B or XMF.PR.C.

Dividend Growth Split Corp. has announced (via SEDAR; press release dated 2010-4-1; management’s too lazy to put it on their web site [Update: But see the comments!]):

it has filed a preliminary short form prospectus with respect to a treasury offering of preferred shares and class A shares.

Dividend Growth Split Corp. invests in a portfolio of common shares of high quality, large capitalization companies, which have among the highest dividend growth rates of those companies included in the S&P/TSX Composite Index. Subsequent to the closing of this offering, the portfolio will consist of common shares of the following 20 companies:
…
The preferred shares will be offered at a price of $10.00 per share. The closing price of the preferred shares on the TSX on March 31, 2010 was $10.32. The investment objectives for the preferred shares are to provide their holders with fixed cumulative preferential quarterly cash distributions in the amount of $0.13125 per preferred share to yield 5.25% per annum on the original issue price, and to return the original issue price to holders of preferred shares at the time of redemption on November 30, 2014.

The class A shares will be offered at a price of $9.75 per share. The closing price of the class A shares on the TSX on March 31, 2010 was $9.95. The investment objectives for the class A shares are to provide their holders with regular monthly cash distributions targeted to be $0.10 per class A share, and to provide the opportunity for growth in net asset value per class A share.

The red-herring prospectus filed on SEDAR does not specify a closing date.

DGS.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-3 by DBRS. It is not tracked by HIMIPref™ as it is too small an issue to trade efficiently (slightly over 2-million shares outstanding on 2009-12-31, according to the 2009 Annual Report … but that could change!

This is very old news indeed, but should be recorded for easy access to the information.

There’s no prospectus for the issue, since it came into being via the

OFFER TO PURCHASE
all of the outstanding Non-Cumulative Preferred Shares, Series L
of
THE GREAT-WEST LIFE ASSURANCE COMPANY
not already held directly or indirectly by Great-West Lifeco Inc.
in exchange, at the option of the holder, for
$23.00 cash
or
One Non-Cumulative Preferred Share, Series O (a “Series O Share”) of
The Great-West Life Assurance Company (“GWL”)
for each Non-Cumulative Preferred Share, Series L (a “Series L Share”) of GWL

This document is available on SEDAR, as “The Great-West Life Assurance Company Dec 14 2000 Issuer bid circular – English
PDF 314K”

Series O Dividends

Until October 31, 2010 (the “Fixed Dividend Rate Period”), the holders of the Series O Shares will be entitled to receive quarterly non-cumulative cash dividends, as and when declared by the board of directors of GWL, payable on the last day of January, April, July and October in each year at a rate equal to $0.346875 per share to initially yield 5.55%. The first such dividend, if declared, will be payable on January 31, 2001 in an amount equal to $0.346875 per share.

From October 31, 2010 (the “Floating Dividend Rate Period”), the holders of the Series O Shares will be entitled to receive non-cumulative cash dividends, as and when declared by the board of directors of GWL, payable on the last day of January, April, July and October in each year at a floating rate in respect of each quarterly dividend period equal to one quarter of the greater of (a) 4.75% and (b) 80% of Prime.

Series O Redemption

The Series O Shares will not be redeemable prior to October 31, 2010. Subject to the provisions described under “Restrictions on Dividends and Retirement of Series O Shares” and “Regulatory Approvals”, GWL may redeem on October 31, 2010 and on the last day of every successive period of five years plus one day thereafter, all or any part of the then outstanding Series O Shares. Such redemption may be made upon payment in cash of the amount of $25.00 per share together with an amount equal to all declared and unpaid dividends thereon to but excluding the date on which such shares are redeemed. GWL will provide not less than 30 nor more than 60 calendar days’ notice of such redemption to each holder of Series O Shares to be redeemed.

On October 31, 2010 and every five years thereafter, Series O is exchangeable at the holder’s option (subject to the usual restrictions on shares left outstanding) to and from Series P.

Series P Dividends

The holders of the Series P Shares will be entitled to receive fixed non-cumulative preferential cash dividends, as and when declared by the Board of Directors of GWL, in an amount per share per annum determined by the Board of Directors of GWL payable quarterly on the last day of January, April, July and October in each year. The first such dividend, if declared, will be payable on January 31, 2011.

The annual dividend rate determined by the Board of Directors of GWL in respect of a Dividend Period will not be less than 85% of the Government of Canada Yield prevailing at the time the dividend rate is set.

Series P Redemption

The Series P Shares will not be redeemable prior to November 1, 2015. Subject to the provisions described under “Restrictions on Dividends and Retirement of Series P Shares” and “Regulatory Approvals”, GWL may redeem on November 1, 2015 and on the last day of every successive period of five years plus one day thereafter, all or any part of, the outstanding Series P Shares. Such redemption may be made upon payment in cash in the amount of $25.00 for each Series P Share together with an amount equal to all declared and unpaid dividends thereon to but excluding the date on which such shares are redeemed.

GWL.PR.O is not currently listed on PrefInfo. When I get around to updating the information, it will be summarized as:

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.

Momentum is still amazing, with the Floating Rate sector continuing to shine.