Category: Issue Comments

Enbridge Inc. has announced (on 2023-2-14):

that none of its outstanding Cumulative Redeemable Preference Shares, Series D (Series D Shares) will be converted into Cumulative Redeemable Preference Shares, Series E (Series E Shares) on March 1, 2023.

After taking into account all conversion notices received from holders of its outstanding Series D Shares by the February 14, 2023 deadline for the conversion of the Series D Shares into Series E Shares, less than the 1,000,000 Series D Shares required to give effect to conversions into Series E Shares were tendered for conversion.

ENB.PR.D is a FixedReset, 4.00%+237, that commenced trading 2011-11-23 after being announced 2011-11-14. It reset to 4.46% in 2018; I recommended against conversion; and there was no conversion. ENB.PR.D will reset to 5.412% effective 2023-3-1. The issue is tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) subindex due to credit concerns.

Update, 2023-2-18: An earlier version of this post quoted from and linked to the incorrect press release! This has been corrected – sorry about that!

Manulife Financial Corporation has announced (on 2023-1-31):

that it does not intend to exercise its right to redeem all or any of its currently outstanding 8,000,000 Non-cumulative Rate Reset Class 1 Shares Series 11 (the “Series 11 Preferred Shares”) (TSX: MFC.PR.J) on March 19, 2023. As a result, subject to certain conditions described in the prospectus supplement dated November 27, 2012 relating to the issuance of the Series 11 Preferred Shares (the “Prospectus”), the holders of the Series 11 Preferred Shares have the right, at their option, to convert all or part of their Series 11 Preferred Shares on a one-for-one basis into Non-cumulative Floating Rate Class 1 Shares Series 12 of Manulife (the “Series 12 Preferred Shares”) on March 19, 2023. A formal notice of the right to convert Series 11 Preferred Shares into Series 12 Preferred Shares will be sent to the registered holders of the Series 11 Preferred Shares in accordance with the share conditions of the Series 11 Preferred Shares. Holders of Series 11 Preferred Shares are not required to elect to convert all or any part of their Series 11 Preferred Shares into Series 12 Preferred Shares. Holders who do not exercise their right to convert their Series 11 Preferred Shares into Series 12 Preferred Shares on such date will retain their Series 11 Preferred Shares, unless automatically converted in accordance with the conditions below.

The foregoing conversion right is subject to the conditions that: (i) if, after March 6, 2023, Manulife determines that there would be less than 1,000,000 Series 11 Preferred Shares outstanding on March 19, 2023, then all remaining Series 11 Preferred Shares will automatically be converted into an equal number of Series 12 Preferred Shares on March 19, 2023, and (ii) alternatively, if, after March 6, 2023, Manulife determines that there would be less than 1,000,000 Series 12 Preferred Shares outstanding on March 19, 2023, then no Series 11 Preferred Shares will be converted into Series 12 Preferred Shares. In either case, Manulife will give written notice to that effect to any registered holders of Series 11 Preferred Shares affected by the preceding minimums on or before March 13, 2023.

The dividend rate applicable to the Series 11 Preferred Shares for the 5-year period commencing on March 20, 2023, and ending on March 19, 2028, and the dividend rate applicable to the Series 12 Preferred Shares for the 3-month period commencing on March 20, 2023, and ending on June 19, 2023, will be determined and announced by way of a news release on February 21, 2023. Manulife will also give written notice of these dividend rates to the registered holders of Series 11 Preferred Shares.

Beneficial owners of Series 11 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 March 6, 2023. Conversion inquiries should be directed to Manulife’s Registrar and Transfer Agent, TSX Trust Company, at 1‑800-783-9495.

Subject to certain conditions described in the Prospectus, Manulife may redeem the Series 11 Preferred Shares, in whole or in part, on March 19, 2028 and on March 19 every five years thereafter and may redeem the Series 12 Preferred Shares, in whole or in part, after March 19, 2023.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 12 Preferred Shares effective upon conversion. Listing of the Series 12 Preferred Shares is subject to Manulife fulfilling all the listing requirements of the TSX and, upon approval, the Series 12 Preferred Shares will be listed on the TSX under the trading symbol “MFC.PR.S”.

MFC.PR.J was issued as a FixedReset, 4.00%+261 that commenced trading 2012-12-4 after being announced 2012-11-27. After the 2018 notice of extension it reset to 4.731%; I recommended against conversion; and there was no conversion. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) sub-index.

Thanks to Assiduous Reader adp4646 for bringing this to my attention.

Way back in October, 2021, DBRS announced:

placed all the ratings of Algonquin Power & Utilities Corp. (APUC or the Company) Under Review with Developing Implications. On October 26, 2021, APUC announced an agreement with American Electric Power (AEP) to acquire Kentucky Power Company (Kentucky Power) and AEP Kentucky Transmission Company, Inc. (Kentucky TransCo) for a total purchase price of USD 2.846 billion, including the assumption of approximately USD 1.221 billion in debt (the Acquisition). Kentucky Power is a state rate-regulated electricity generation, distribution, and transmission utility operating within the Commonwealth of Kentucky, serving approximately 228,000 active customer connections and operating under a cost-of-service framework. Kentucky TransCo is an electricity transmission business operating in the Kentucky portion of the transmission infrastructure that is part of the Pennsylvania–New Jersey–Maryland regional transmission organization. The Acquisition is expected to close mid-2022, subject to regulatory approvals.

DBRS Morningstar views this acquisition as a positive development from a business risk perspective because of the following factors: (1) a significant increase in APUC’s low-risk regulated assets with a total consolidated rate base expected to increase to approximately USD 9 billion from USD 6.8 billion, which would reflect a 32% increase upon closing. After the completion of the Acquisition, DBRS Morningstar expects APUC to generate over 75% (currently 66%) of its consolidated cash flow from stable regulated operations and the remainder from long-term contracted nonregulated generation; (2) an expected improvement in jurisdictional diversification with the addition of Kentucky and the U.S. Federal Energy Regulatory Commission. Kentucky has a reasonable cost-of-service regulatory framework with acceleration of capital recovery and a reasonably regulated return on equity; (3) an expected improvement of capital expenditure planning, which should add more flexibility with the Acquisition.

Notwithstanding these potentially positive impacts, the Under Review with Developing Implications rating action reflects some uncertainties associated with APUC’s financing plan. To finance the Acquisition, APUC intends to issue up to USD 750 million common equity through a bought deal with the banks. APUC expects to finance the remainder in the amount of approximately USD 875 million with a combination of hybrid debt financing, equity units, and proceeds from the sale of the non-regulated assets/investments. DBRS Morningstar has reviewed APUC’s financing plan and is of the view that its current plan (if the hybrid debt is issued out of APUC) could increase APUC’s nonconsolidated leverage. The magnitude of the increase will depend on the amount of the hybrid debt to be issued. DBRS Morningstar notes that if APUC’s nonconsolidated debt-to-capital (as calculated by DBRS Morningstar) rises significantly above 20% following the issuance of the hybrid debt, then a negative rating action could be taken.

They have now announced:

DBRS Limited (DBRS Morningstar) removed the Issuer Rating and Preferred Shares rating of Algonquin Power & Utilities Corp. (APUC or the Company) from Under Review with Developing Implications and confirmed the ratings at BBB and Pfd-3, respectively. Both trends are Stable. The rating confirmations reflect DBRS Morningstar’s expectations that the proposed acquisition of Kentucky Power Company and AEP Kentucky Transmission Company, Inc. from American Electric Power (AEP) (collectively, KPC Acquisition) will close in the first half of 2023, and the financing of the KPC Acquisition will be implemented as currently planned. Following APUC’s January 2023 investor call and the latest information provided by the Company, DBRS Morningstar believes that even if the KPC Acquisition does not close, DBRS Morningstar does not expect a materially negative impact on APUC’s current credit profile.
…
DBRS Morningstar estimates EBITDA contribution from the low-risk regulated utility group accounted for approximately 70% of APUC’s consolidated 2022 EBITDA and the remainder from the power renewable generation group. Following the KPC Acquisition, DBRS Morningstar expects EBITDA contribution from the regulated utility group to increase to between 75% and 80%, significantly strengthening the business risk profile for APUC. Based on APUC’s current financing plan over the next few years, including the financing of the KPC Acquisition, DBRS Morningstar expects APUC to maintain solid consolidated metrics, as well as its nonconsolidated debt-to-capital ratio at a reasonable level (at around 20%) on a sustainable basis. DBRS Morningstar, however, could take a negative rating action if (1) APUC’s consolidated metrics weaken materially from the current level, or (2) its nonconsolidated debt-to-capital ratio increases significantly from the expected levels on a sustained basis, or (3) there is a significant increase in consolidated business risk profile.

Affected issues are AQN.PR.A and AQN.PR.D.

BCE Inc. has announced (on 2023-1-13):

Holders of fixed-rate BCE Inc. Series AC Preferred Shares have the right to convert all or part of their shares, effective on March 1, 2023, on a one-for-one basis into floating-rate Cumulative Redeemable First Preferred Shares, Series AD of BCE Inc. (the “Series AD Preferred Shares”). In order to convert their shares, holders must exercise their right of conversion during the conversion period which runs from January 15, 2023 until 5:00 p.m. (Eastern time) on February 20, 2023.
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As of March 1, 2023, the Series AC Preferred Shares, should they remain outstanding, will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be determined by BCE Inc. on February 6, 2023 but which shall not be less than 80% of the five-year Government of Canada Yield (as defined in BCE Inc.’s articles) compounded semi-annually and computed on February 6, 2023 by two investment dealers appointed by BCE Inc. The annual dividend rate applicable to the Series AC Preferred Shares will be published on February 8, 2023 in the national edition of The Globe and Mail, the Montreal Gazette and Le Devoir and will be posted on BCE Inc.’s website at www.bce.ca.

With respect to BCE.PR.D, they announced:

Holders of floating-rate BCE Inc. Series AD Preferred Shares have the right to convert all or part of their shares, effective on March 1, 2023, on a one-for-one basis into fixed-rate Cumulative Redeemable First Preferred Shares, Series AC of BCE Inc. (the “Series AC Preferred Shares”). In order to convert their shares, holders must exercise their right of conversion during the conversion period which runs from January 15, 2023 until 5:00 p.m. (Eastern time) on February 20, 2023.
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In order to exercise their conversion right in respect of all or part of their Series AD Preferred Shares, registered holders must provide a written notice thereof, accompanied by their Series AD Preferred Share certificates with the transfer form on the back thereof or other appropriate stock transfer power of attorney duly endorsed, and deliver them, at the latest by 5:00 p.m. (Eastern time) on February 20, 2023, to one of the following addresses of TSX Trust Company:…
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As of March 1, 2023, the Series AD Preferred Shares, should they remain outstanding, will continue to pay a monthly floating dividend based on a dividend rate that will fluctuate over time between 50% and 100% of the Prime rate (“Prime”) for each month computed in accordance with the articles of BCE Inc. Accordingly, from March 1, 2023, the holders of Series AD Preferred Shares will continue to be entitled to receive floating adjustable cash dividends, as and when declared by the Board of Directors of BCE Inc., to be paid on the twelfth day of the subsequent month. The dividend rate will be adjusted upwards or downwards on a monthly basis by an Adjustment Factor (as described below) whenever the Calculated Trading Price, being the market price of the Series AD Preferred Shares computed in accordance with the articles of BCE Inc., is $24.875 or less or $25.125 or more, respectively. …

They have now announced:

BCE Inc. will, on March 1, 2023, continue to have Cumulative Redeemable First Preferred Shares, Series AC (“Series AC Preferred Shares”) outstanding if, following the end of the conversion period on February 20, 2023, BCE Inc. determines that at least 2,500,000 Series AC Preferred Shares would remain outstanding. In such a case, as of March 1, 2023, the Series AC Preferred Shares will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be based on an annual fixed dividend rate equal to 5.08%

BCE.PR.C is a FixedFloater that has been around for years. A conversion notice was sent in 2008 and it reset to 4.60%. About 55% was converted to BCE.PR.D. A conversion notice was sent in 2013 and it reset to 3.55%. A conversion notice was sent in 2018 and it reset to 4.38%. I recommended conversion.

BCE.PR.D is a RatchetRate preferred that was first issued by partial conversion from BCE.PR.C.

Thanks to Assiduous Reader newbiepref for bringing this to my attention

DBRS has announced that it:

has placed the ratings of TC Energy Corporation (TCC or the Company), TransCanada PipeLines Limited (TCPL; TCC’s wholly owned subsidiary), Nova Gas Transmission Limited (NGTL), and Trans Québec & Maritimes Pipeline Inc. (TQM) Under Review with Negative Implications. The ratings of NGTL and TQM are based on the ratings of TCPL. The rating actions follow the updated cost estimate of $14.5 billion (previously $ 11.2 billion) provided by the Company for the Coastal GasLink Project (the Project) with a potential for additional increases of $1.2 billion if construction extends well into 2024. While the Company is pursuing cost mitigants and recoveries, the process is unlikely to be completed before the Project is placed in service. DBRS Morningstar considers the increase in Project cost to be credit negative as the costs are materially higher than DBRS Morningstar’s previous expectation and will have to be fully borne by TCC through the construction period.

DBRS Morningstar’s ratings on TCC and TCPL are based on the expectation that TCC will maintain its overall financial risk profile in the “A” rating category. However, the increase in Project cost has reduced the Company’s financial flexibility, and TCC will have to depend on the successful execution of its proposed asset divestiture program to bridge the funding gap and maintain its financial risk profile. While the Company has an extensive portfolio of contracted assets with stable cash flows that could be monetized, the size of the divestiture program does entail execution and timing risks. In addition, the impact of the asset sales on cash flow and possibly the Company’s business risk profile is uncertain at this time.

DBRS Morningstar expects to resolve the Under Review Status after reviewing the Company’s updated financing plan and having more certainty with regard to the scope of the asset divestiture program. Despite the increase in Project cost, TCC’s rating is underpinned by its strong business risk profile, and DBRS Morningstar expects any negative rating action to likely be limited at most to one notch lower from the current ratings.

This follows the S&P announcement of 2023-2-1:

• TC Energy Corp. (TC) recently announced an updated cost estimate for its Coastal GasLink project. The increase of approximately C$3.3 billion will bring the estimated total cost of the project to C$14.5 billion. The increased project cost, to be realized over the remainder of construction, is in addition to the C$9.5 billion in 2023 capital expenditure (capex) that the company announced in November 2022.
• TC has indicated that it is committed to asset sales to fully fund its capital program and the increased costs of Coastal GasLink Project; however, the timing of these sales and the net impact on leverage and EBITDA are uncertain at this time.
• As a result, S&P Global Ratings revised the outlook to negative from stable and affirmed its ‘BBB+’ issuer credit rating on TC.
• The negative outlook indicates the uncertainty regarding the timing and amount of the anticipated asset sales necessary to ensure the company can achieve a debt-to-EBITDA ratio of less than 5.0x, consistent with the rating.

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The negative outlook reflects the uncertainty regarding any asset sales in support of the company’s announced capital program as well as the increased costs at the Coastal GasLink project. Although we believe TC has assets that would be attractive to potential purchasers, it is not clear as to the impact on business risk of such sales or whether the ultimate amount and EBITDA impact of such sales will allow the company to reduce its leverage consistent with the rating. Based on our base-case assumption, we forecast debt to EBITDA of about 5.4x in 2023 and 5x in 2024.

We could lower the rating if we believe that the asset sales net of any EBITDA impact will not be sufficient to offset the company’s increased capex, including the higher costs at the Coastal GasLink project or any of the other projects, such that debt to EBITDA will remain above 5.0x or FFO-to-Debt will fall below 13% on a consistent basis.

We could revise the outlook to stable if we believe the company has undertaken sufficient asset sales or other credit positive measures such that debt to EBITDA will remain below 5.0x and FFO-to-debt will remain above 13% on a consistent basis.

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.

Pembina Pipeline Corporation has announced (on 2023-1-31):

that none of Pembina’s Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 25 (“Series 25 Shares”) (TSX: PPL.PF.E) will be converted into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 26 of Pembina (“Series 26 Shares”) on February 15, 2023.

After taking into account all the conversion notices received from holders of its outstanding Series 25 Shares by the January 31, 2023 deadline for the conversion of the Series 25 Shares into Series 26 Shares, less than the 1,000,000 Series 25 Shares required to give effect to conversions into Series 26 Shares were tendered for conversion.

PPL.PF.E was issued as KML.PR.C, a FixedReset, 5.20%+351M520, that commenced trading 2017-12-15 after being announced 2017-12-6. A Plan of Arrangement was announced in August 2019 and a vote by preferred shareholders was made explicit in September 2019. The ticker changed in late 2019. The shares reset to 6.481% in 2023.

Pembina Pipeline Corporation has announced:

that it does not intend to exercise its right to redeem the currently outstanding Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 21 (“Series 21 Shares”) (TSX: PPL.PF.A) on March 1, 2023.

As a result of the decision not to redeem the Series 21 Shares, and subject to certain terms of the Series 21 Shares, the holders of the Series 21 Shares will have the right to elect to convert all or part of their Series 21 Shares on a one-for-one basis into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 22 of Pembina (“Series 22 Shares”) on March 1, 2023 (the “Conversion Date”). Holders who do not exercise their right to convert their Series 21 Shares into Series 22 Shares will retain their Series 21 Shares.

As provided in the terms of the Series 21 Shares: (i) if Pembina determines that there would remain outstanding immediately following the conversion less than 1,000,000 Series 21 Shares, then all remaining Series 21 Shares will be automatically converted into Series 22 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 22 Shares outstanding immediately following the conversion, no Series 21 Shares will be converted into Series 22 Shares on the Conversion Date. There are currently 16,000,000 Series 21 Shares outstanding.

With respect to any Series 21 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 21 Shares for the five-year period from and including March 1, 2023, to, but excluding, March 1, 2028, will be 6.302 percent, being equal to the five-year Government of Canada bond yield of 3.042 percent determined as of today plus 3.26 percent, in accordance with the terms of the Series 21 Shares.

With respect to any Series 22 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 22 Shares for the three-month floating rate period from and including March 1, 2023, to, but excluding, June 1, 2023, will be 7.706 percent, being equal to the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 4.446 percent plus 3.26 percent, in accordance with the terms of the Series 22 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 21 Shares who wish to exercise their right of conversion during the conversion period, which runs from January 30, 2023, until 3:00 pm (MT) / 5:00 pm (ET) on February 14, 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 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, 2023, to holders of the Series 21 Shares of record on February 1, 2023, will be $0.30625 per Series 21 Share, consistent with the dividend rate in effect since the issuance of the Series 21 Shares. For more information on the terms of the Series 21 Shares and the Series 22 Shares, please see the prospectus supplement dated November 30, 2017, which can be found on SEDAR at www.sedar.com.

PPL.PF.A was issued as a FixedReset 4.90%+326M490 that commenced trading 2017-12-7 after being announced 2017-11-28. It is tracked by HIMIPref™, but has been relegated to the Scraps – FixedResets (Discount) subindex on credit concerns.

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

Update, 2024-12-9: There was a partial conversion to the FloatingReset, PPL.PF.B, announced 2023-2-14:

Pembina Pipeline Corporation (“Pembina”) (TSX: PPL; NYSE: PBA) announced today that holders of an aggregate of 1,028,130 of its 16,000,000 Cumulative Redeemable Minimum Rate Reset Class A Preferred Shares, Series 21 (“Series 21 Shares”) have elected to convert, on a one-for-one basis, their Series 21 Shares into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 22 of Pembina (“Series 22 Shares”). As a result of the exercise of such conversion rights, on March 1, 2023, Pembina will have 14,971,870 Series 21 Shares and 1,028,130 Series 22 Shares issued and outstanding. The Series 21 Shares and the Series 22 Shares will be listed on the Toronto Stock Exchange under the symbols PPL.PF.A and PPL.PF.B, respectively.

The asynchronous redemption of PPL.PF.B was announced 2024-12-9.

Enbridge Inc. has announced:

that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series D (Series D Shares) (TSX: ENB.PR.D) on March 1, 2023. As a result, subject to certain conditions, the holders of the Series D Shares have the right to convert all or part of their Series D Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series E of Enbridge (Series E Shares) on March 1, 2023. Holders who do not exercise their right to convert their Series D Shares into Series E Shares will retain their Series D 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 D Shares outstanding after March 1, 2023, then all remaining Series D Shares will automatically be converted into Series E Shares on a one-for-one basis on March 1, 2023; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series E Shares outstanding after March 1, 2023, no Series D Shares will be converted into Series E Shares. There are currently 18,000,000 Series D Shares outstanding.

With respect to any Series D Shares that remain outstanding after March 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 D Shares for the five-year period commencing on March 1, 2023 to, but excluding, March 1, 2028 will be 5.412 percent, being equal to the five-year Government of Canada bond yield of 3.042 percent determined as of today plus 2.37 percent in accordance with the terms of the Series D Shares.

With respect to any Series E Shares that may be issued on March 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 E Shares for the three-month floating rate period commencing on March 1, 2023 to, but excluding, June 1, 2023 will be 1.71901 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 4.45 percent plus 2.37 percent in accordance with the terms of the Series E Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series D Shares who wish to exercise their right of conversion during the conversion period, which runs from January 30, 2023 until 5:00 p.m. (EST) on February 14, 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.D is a FixedReset, 4.00%+237, that commenced trading 2011-11-23 after being announced 2011-11-14. It reset to 4.46% in 2018; I recommended against conversion; and there was no conversion. The issue is tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) subindex due to credit concerns.

Thanks to Assiduous Readers niagara and Fuzzybear for bringing this to my attention!

Enbridge Inc. has announced:

that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 19 (Series 19 Shares) (TSX: ENB.PF.K) on March 1, 2023. As a result, subject to certain conditions, the holders of the Series 19 Shares have the right to convert all or part of their Series 19 Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series 20 of Enbridge (Series 20 Shares) on March 1, 2023. Holders who do not exercise their right to convert their Series 19 Shares into Series 20 Shares will retain their Series 19 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 19 Shares outstanding after March 1, 2023, then all remaining Series 19 Shares will automatically be converted into Series 20 Shares on a one-for-one basis on March 1, 2023; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series 20 Shares outstanding after March 1, 2023, no Series 19 Shares will be converted into Series 20 Shares. There are currently 20,000,000 Series 19 Shares outstanding.

With respect to any Series 19 Shares that remain outstanding after March 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 19 Shares for the five-year period commencing on March 1, 2023 to, but excluding, March 1, 2028 will be 6.212 percent, being equal to the five-year Government of Canada bond yield of 3.042 percent determined as of today plus 3.17 percent in accordance with the terms of the Series 19 Shares.

With respect to any Series 20 Shares that may be issued on March 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 20 Shares for the three-month floating rate period commencing on March 1, 2023 to, but excluding, June 1, 2023 will be 1.92066 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 4.45 percent plus 3.17 percent in accordance with the terms of the Series 20 Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series 19 Shares who wish to exercise their right of conversion during the conversion period, which runs from January 30, 2023 until 5:00 p.m. (EST) on February 14, 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.PF.K was issued as a FixedReset 4.90%+317M490 that commenced trading 2017-2-11 after being announced 2017-12-4. It has been added to the HIMIPref™ database but has been relegated to the Scraps subindex on credit concerns.

Thanks to Assiduous Readers niagara and CanSiamCyp for bringing this to my attention!

Brompton Funds has announced:

As previously announced, the board of directors of Brompton Oil Split Corp. (the “Fund”) determined that it would extend the maturity date of the class A and preferred shares of the Company. Today, the board of directors announces that the new term of the Fund will be 1 year to March 28, 2024. In addition, the distribution rate for the preferred shares (the “Preferred Shares”) for the new term from March 31, 2023 to March 28, 2024 has been increased to $0.80 per Preferred Share per annum (8.0% on the original issue price of $10) payable quarterly. The new Preferred Share distribution rate is based on current market rates for preferred shares with similar terms. In addition, the Fund intends to maintain the targeted monthly Class A Share distribution rate at $0.10 per Class A Share.

The Fund invests in a portfolio of equity securities of large capitalization North American oil and gas issuers, primarily focused on those with significant exposure to oil. The Manager believes that the Fund’s strategy is well positioned to participate in opportunities that are expected to continue in the energy sector.

In connection with the extension, shareholders who do not wish to continue their investment in the Fund, will be able to retract Preferred Shares or Class A Shares on March 30, 2023 pursuant to a special retraction right and receive a retraction price that is calculated in the same way that such price would be calculated if the Fund were to terminate on March 30, 2023. Pursuant to this option, the retraction price may be less than the market price if the security is trading at a premium to net asset value. To exercise this retraction right, shareholders must provide notice to their investment dealer by February 28, 2023 at 5:00 p.m. (Toronto time). Alternatively, shareholders may sell their Preferred Shares and/or Class A Shares through their securities dealer for the market price at any time, potentially at a higher price than would be achieved through retraction, or shareholders may take no action and continue to hold their shares.

Thanks to Assiduous Reader RAV4guy for bringing this to my attention. As he suggests, the crucial question is “Will it stop the current owners retracting?”, following the 41% retraction of SBC.PR.A at the end of 2022 and the 75% retraction of OSP.PR.A itself in early 2020. Well, you got me! The issue has been trading slightly under par during January and the Whole Unit NAPVU is 14.62 as of 2023-1-26, much healthier than the 8.28 at the end of February 2020. On the other hand, DGS.PR.A is yielding 9.63% at its current bid price of 9.45, despite a Whole Unit NAVPU of 15.29 as of 2023-1-26. Added to which, OSP.PR.A is inherently less credit-worthy due to its concentration in the oil industry. So retraction, or a prior sale on the market at 10.00+, certainly looks attractive! The decision would be far more complex if Brompton had offered a longer term for that big fat 8.00%.

The capital units, by the way, are trading above intrinisic value at 4.85 VWAP, but volume is low and the price shot up on Friday and there hasn’t been a Capital Unit Distribution for quite a while. It won’t take much of a capital share consolidation following preferred retraction to get the distribution flowing again … could it be that Friday’s buyers are anticipating exactly that, to be followed by a pop in the capital units from those who look for dividend yield without qualifications or reservations?