Category: Issue Comments

Domtar has announced:

that it sent on November 21, 2007 notices of redemption to the registered holders of all of its Series A Preferred Shares and Series B Preferred Shares. In accordance with the share provisions applicable to such Preferred Shares and the notices of redemption, the Series A Preferred Shares will be redeemed on December 21, 2007 at Canadian $25.4932 per Series A Preferred Share, representing the redemption price of Canadian $25.00 plus accrued dividends of Canadian $0.4932, accruing as of and from October 2, 2007 (being the last dividend payment date). The Series B Preferred Shares will be redeemed on December 21, 2007 at Canadian $25.2466 per Series B Preferred Share, representing the redemption price of Canadian $25.00 plus accrued dividends of Canadian $0.2466, accruing as of and from October 2, 2007 (being the last dividend payment date).

Neither issue is tracked by HIMIPref™. They were very tiny issues:

Preferred Shares Series “A”

Cusip: 257561308 The Series A Preferred shares are non-voting and redeemable at the Corporation’s option at $25.00 per share since April 1, 1994. These shares carry a cumulative cash dividend per share of $2.25 per annum.As at December 31, 2006, the Corporation had a total of 67,476 Series A Preferred shares outstanding.

 

Preferred Shares Series “B”

Cusip: 257561407 The Series B Preferred shares are non-voting and redeemable at the Corporation’s option at $25.00 per share. These shares carry a cumulative cash dividend equivalent to 72% of the bank prime rate.

As at December 31, 2006, the Corporation had a total of 1,245,000 Series B Preferred shares outstanding.

The issues’ last rating change was a downgrade to Pfd-5(high) from Pfd-4 by DBRS on April 13, 2006. S&P has had them at P-4(low) since December 1, 2005.

Manulife has announced:

it has exercised its right to redeem, on December 31, 2007, all of the 3,420,905 outstanding 6.10% Non-Cumulative Class A, Series 6 Preferred Shares (CUSIP No. 564835502) at $26.00 per preferred share plus declared and unpaid dividends to the date fixed for redemption. Formal notice of redemption has been delivered to the registered holder of the preferred shares in accordance with the terms and conditions of those shares.

MIC.PR.A is tracked by HIMIPref™ (securityCode A43270), but is not included in any of the indices due to volume concerns – the most recent removal from the indices was August 31, 2007.

Many thanks to the assiduous reader who brought this to my attention!

Brompton Group has announced:

that Dividend Growth Split Corp. has filed a final prospectus in respect of an initial public offering of class A and preferred shares for a maximum offering size of $100 million. The preferred shares have been provisionally rated Pfd-2 by Dominion Bond Rating Service Limited.Dividend Growth Split Corp. has been created to provide investors with an investment in 20 large capitalization Canadian equities that have demonstrated the highest dividend growth rates over a five year period and have a current dividend yield of at least 2% per annum, utilizing a split share structure on a low cost basis.

Class A shareholders will receive the benefits of monthly cash distributions targeted to be 8.0% per annum, low management fees and the opportunity for growth in net asset value. Preferred shareholders will receive attractive quarterly distributions of 5.25% per annum supported by the high credit quality of the underlying assets.

Asset coverage is 2.5:1 at the issue price – probably less after initial fees and expenses, but I haven’t even read as far as that in the prospectus! I do see that the wind-up date is November 30, 2014, with no intervening calls, and:

No distributions will be paid on the Class A Shares if (i) the distributions payable on the Preferred Shares are in arrears, or (ii) in respect of a cash distribution, after payment of the distribution by the Company, the NAV per Unit would be less than $15.00. In addition, it is intended that the Company will not pay distributions in excess of the targeted $0.10 per month, on the Class A Shares if, after payment of the distribution, the NAV per Unit would be less than $25.00 unless the Company has to make such distributions to fully recover refundable taxes.

No decision has been made as to whether to include these in the HIMIPref™ universe; I’m going to wait until I see how much they’re able to sell.

BCE has announced:

that 6,991,775 of its 8,852,620 Cumulative Redeemable First Preferred Shares, Series Z (“Series Z Preferred Shares”) have been tendered for conversion, on a one-for-one basis, into Cumulative Redeemable First Preferred Shares, Series Y (“Series Y Preferred Shares”). In addition, 12,825 of its 1,147,380 Series Y Preferred Shares have been tendered for conversion, on a one-for-one basis, into Series Z Preferred Shares. Consequently, on December 1, 2007, BCE will have 8,126,330 Series Y Preferred shares and 1,873,670 Series Z Preferred shares issued and outstanding.
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The Series Y Preferred Shares will pay a monthly floating adjustable cash dividend for the five-year period beginning on December 1, 2007, as and when declared by the Board of Directors of BCE. The Series Z Preferred Shares will
pay on a quarterly basis, for the five-year period beginning on December 1, 2007, as and when declared by the Board of Directors of BCE, a fixed dividend based on an annual dividend rate of 4.331%.
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Under and subject to the terms and conditions of the Definitive Agreement entered into by BCE Inc. in connection with its acquisition by an investor group led by Teachers’ Private Capital, the private investment arm of the Ontario Teachers’ Pension Plan, Providence Equity Partners Inc. and Madison Dearborn Partners, LLC, the purchaser has agreed to purchase all outstanding Series Y Preferred Shares for a price of $25.50 per share, together with accrued but unpaid dividends to the Effective Date (as such term is defined in the Definitive Agreement). The purchaser has also agreed, on and subject to the terms and conditions of the Definitive Agreement, to purchase all outstanding Series Z Preferred Shares for a price of $25.25 per share, together with accrued but unpaid dividends to the Effective Date.

A press release states:

JovFunds Management Inc., the manager of Charterhouse Preferred Share Index Corporation (the “Company”) (PFD.PR.A: TSX), announced today that the Company has received requests for redemption in respect of a total of 844,498 PSI Preferred Shares (“Shares”), representing approximately 38% of the outstanding Shares. Redeeming shareholders will be entitled to receive an amount equal to the net realized proceeds from that portion of the Index Portfolio that is sold to fund the redemption, together with any other net assets of the Company as at November 30, 2007. The redemption payment will be made on or before the tenth business day of the December, 2007.

I reviewed Charterhouse as part of my review of closed end funds.

Now … let’s work it out. 844,000 preferred shares outstanding … 38% are being redeemed … let’s say the NAV approximates the market price, say $20 …. that’s selling pressure of about maybe six to six-and-a-half million. Good thing it’s not a big fund!

Update: Oops! 844,000 preferred shares REPRESENTS 38% of the outstanding. So at $20, total selling pressure comes to about $16.9-million. This is much more serious!

The board of Thirty-Five Split Inc. has announced:

The Capital Shares and Preferred Shares will be redeemed by the Company on March 31, 2008 (the “Redemption Date”) in accordance with the redemption provisions of the shares. Pursuant to these provisions, the Preferred Shares will be redeemed at a price per share equal to the lesser of $25.00 and the Net Asset Value per Unit.

TFS.PR.A is tracked by HIMIPref™, but is not included in the SplitShare index due to volume concerns.

Quebecor has announced:

that it was withdrawing its refinancing plan involving an offer of approximately Cdn$250 million of its equity shares, an offer on a private placement basis of an aggregate of $500 million of new debt securities and amendments to the Company’s secured credit facilities.  The Company has decided to withdraw the refinancing plan due to adverse current financial market conditions.

The previously noted potential redemption of IQW.PR.C, which was conditional on successful financing, will presumably not take place.

DBRS has announced it has:

placed the Long-Term and Preferred Share ratings of Quebecor World Inc. (Quebecor World or the Company) Under Review with Negative Implications.

This action follows an announcement by the Company that it has withdrawn the aggregate $750 million refinancing plan that was announced on November 13, 2007. The Company’s inability to implement its refinancing plan raises additional concerns with Quebecor World’s liquidity position and near-term financial flexibility. DBRS believes Quebecor World’s liquidity issues remain significant and could increase in severity should the Company fail to refinance all or portions of its existing credit facilities in the first half of 2008.

At Pfd-5, there’s not much further IQW.PR.C / IQW.PR.D can go! They were last downgraded October 5.

Update, 2007-11-23: Moody’s has put Quebecor World:

on review for possible downgrade and downgraded the company’s speculative grade liquidity rating to SGL-4 (indicating poor liquidity).
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With the refinancing transaction having been cancelled, the company’s financing arrangements require prompt attention in order to assure ongoing orderly operations, and Moody’s considers near term default risk and, therefore, QWI’s long term debt ratings, to be inextricably linked to the company’s ability to normalize its financing arrangements (refer to Moody’s credit opinion for further commentary). Moody’s intends to review the company’s financing/liquidity plans in short order, with any resulting rating action being based on likely effectiveness and prospects for timely execution. With QWI appearing to be on the verge of generating modest positive cash flow as the cash drain related to its extensive retooling exercise nears completion, presuming that the company’s financing/liquidity plans are viable, Moody’s would affirm the existing B3 corporate family rating (CFR) and Caa1 instrument ratings. Should this not be the case, downwards ratings actions are likely.

In accordance with the company’s plans, Energy Split Corp. II Inc. has announced:

that the final condition required to extend the term of the Company for an additional three years to December 16, 2010, has been met. Holders of Capital Yield Shares and holders of ROC Preferred Shares previously approved the extension of the term of the Company subject to the condition that a minimum of 1,280,000 Capital Yield Shares remain outstanding following the November 16, 2007 additional special retraction right (the “Special Retraction Right”). Following the Special Retraction, 2,366,686 Capital Yield Shares (representing 98% of the currently outstanding Capital Yield Shares) will remain outstanding.
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In order to increase the asset coverage for the continuing ROC Preferred Shares and in order to meet the requirements needed to maintain the current rating of Pfd-2 (low), the Company expects to call approximately 16% of the continuing ROC Preferred Shares for redemption on December 14, 2007 on the same basis as those tendered to the Special Retraction Right. The exact number of shares called for redemption will be announced on November 30, 2007. While the Company expects to receive a confirmation of the Pfd-2 (low) rating on the ROC Preferred Shares, the redemption and reorganization is not conditional on the rating being maintained. Upon the completion of the reorganization, the Company expects to adjust the number of remaining outstanding ROC Preferred Shares by way of sub-division in order to maintain the ratio of Capital Yield Shares to ROC Preferred Shares of two-to-one.

EN.PR.A is tracked by HIMIPref™, but is not included in any of the indices due to low average volume. There are a mere 1,209,398 shares outstanding, according to the Toronto Stock Exchange.

From Marketwire …

Quebecor World Inc. (TSX:IQW)(NYSE:IQW) today announced that none of its 12,000,000 issued and outstanding Series 3 Cumulative Redeemable First Preferred Shares (TSX:IQW.PR.D) (the “Series 3 Preferred Shares”) will be converted into Series 2 Cumulative Redeemable First Preferred Shares (the “Series 2 Preferred Shares”).Shareholders who had elected to convert will have returned to them, as soon as practicable after December 1, 2007, share certificates representing the number of Series 3 Preferred Shares surrendered for conversion. Starting December 1, 2007 and until November 31, 2012, holders of Series 3 Preferred Shares will be entitled to receive quarterly fixed dividends at an annual rate of 6.13% subject to being declared by the Board of Directors of Quebecor World and as permitted by applicable law. The Series 3 Preferred Shares will remain listed on The Toronto Stock Exchange under the symbol IQW.PR.D.

It would seem that the market emphatically agrees with my assessment that the fixed-rate was the way to go for the next five years!

DBRS has announced that Weston is under review with negative implications due to the review of Loblaw:

DBRS has today placed the ratings of Loblaw Companies Limited (Loblaw, or the Company) Under Review with Negative Implications based on the Company’s deepening decline in earnings that shows no sign of abating. DBRS is increasingly concerned about Loblaw’s ability to execute on its turnaround plan and achieve the improvements required to maintain its current ratings.
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(1) Operational problems such as supply chain management and integration of the management team.
(2) An intensifying competitive environment and Loblaw’s ability to generate meaningful same-store sales growth and improve operating income using a price-reduction strategy in this environment.
(3) Implementation of meaningful cost saving initiatives.

This follows the downgrade to Pfd-3(high) on May 22. Weston has the following preferred issues trading on the TSX: WN.PR.A WN.PR.B WN.PR.C WN.PR.D & WN.PR.E. All except WN.PR.B are fixed-rate perpetual; WN.PR.B is retractible.

This follows a similar announcement by S&P:

Standard & Poor’s Ratings Services today said it placed its ratings, including the ‘BBB+’ long-term corporate credit rating, on Toronto-based retailer Loblaw Companies Ltd. on CreditWatch with negative implications. At the same time, we placed the ratings on parent company George Weston Ltd., including the ‘BBB’ long-term corporate credit rating, on CreditWatch with negative implications.

“The CreditWatch placement follows Loblaw’s announcement of its very weak third-quarter performance,” said Standard & Poor’s credit analyst Maude Tremblay.

Update, 2008-2-7: DBRS has today:

downgraded the long-term ratings of Loblaw Companies Limited (Loblaw or the Company) to BBB (high) from A (low) and has also downgraded the short-term rating to R-2 (high) from R-1 (low). The trend is Negative for the long-term ratings and Stable for the short-term rating.
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DBRS’s ratings for George Weston Limited remain Under Review with Negative Implications (where they were placed on November 16, 2007), until the review is completed this month.

S&P also downgraded Loblaws to BBB (no modifier!) and still with a negative trend, while maintaining Weston on Watch Negative.