Category: Issue Comments

DBRS has announced that it:

changed the trends on Co-operators General Insurance Company (CGIC or the Company) to Positive from Stable. DBRS Morningstar confirmed the Financial Strength Rating and Issuer Rating of the Company at A (low). DBRS Morningstar also confirmed the Non-Cumulative Preference Shares rating of the Company at Pfd-2 (low).

KEY RATING CONSIDERATIONS
The change in the trend to Positive from Stable reflects CGIC’s consistent premiums growth in recent years, and its improved trend in underwriting performance and profitability, due in part to actions taken by management, and fewer claims events compared with prior years. DBRS Morningstar expects the improved financial performance to continue, although not at levels seen in H1 2021. The Positive trend also reflects the Company’s strengthened regulatory capital position.

The affected issue is CCS.PR.C.

Manulife Financial Corporation has announced:

its intention to redeem all of its outstanding 8,000,000 Non-cumulative Rate Reset Class 1 Shares Series 5 (“Series 5 Preferred Shares”) for cash on December 19, 2021. The Series 5 Preferred Shares (TSX: MFC.PR.G) are redeemable at Manulife’s option on December 19, 2021, at a redemption price per Series 5 Preferred Share equal to C$25.00 for an aggregate total of C$200 million. Formal notice will be delivered to holders of Series 5 Preferred Shares in accordance with the terms outlined in the share provisions for the Series 5 Preferred Shares.

Separately from the redemption price, the final quarterly dividend of C$0.243188 per Series 5 Preferred Share will be paid in the usual manner on or after December 19, 2021 to shareholders of record on December 1, 2021. After the Series 5 Preferred Shares are redeemed, holders of Series 5 Preferred Shares will cease to be entitled to distributions of dividends and will not be entitled to exercise any rights as holders other than to receive the redemption price.

MFC.PR.G was issued as a 4.40%+290 FixedReset that commenced trading 2011-12-6 after being announced 2011-11-29. It was reported on PrefBlog in 2016 that MFC.PR.G would be extended; that the reset rate was 3.891% and that I recommended holders not convert; there was no conversion in 2016.

Great-West Lifeco Inc. has announced:

that it intends to redeem all of its outstanding 5.90% Non-Cumulative First Preferred Shares, Series F (the Series F Shares) on December 31, 2021. The redemption price will be $25.00 for each Series F Share plus an amount equal to all declared and unpaid dividends, less any tax required to be deducted and withheld by the Corporation. The paid-up capital of the Series F Shares is $20.59 per share.

Lifeco will send a formal redemption notice and instructions to registered holders of the Series F Shares in accordance with the rights, privileges, restrictions and conditions attached to the shares.

Taxable investors should pay particular attention to the statement:

The paid-up capital of the Series F Shares is $20.59 per share.

In most redemptions, the tax treatment is as if you sold the shares for the redemption price, in this cas $25.00. However, in this instance it will be as if you sold the shares for 20.59 and received a dividend (deemed dividend) of 4.41. While this will be better for some sharhelders, it will be worse for other – probably most others, I would guess, since a lot of people will have no realized gains this year to offset the probable capital loss. Get professional tax advice and consider selling into the market prior to redemption.

GWO.PR.F is a Straight Perpetual, 5,90%, issued 2003-6-19. These shares were issued as part of the consideration in the takeover of Canada Life Financial Corporation (see SEDAR, search for Great-West Lifeco Inc. May 1 2003 13:28:06 ET Press release – English PDF 226 K, not allowed to link to this public press release directly as the Canadian Securities Administrators consider this information top secret):

On February 14, 2003, Lifeco entered into an agreement with Canada Life Financial Corporation (Canada Life), the parent company of The Canada Life Assurance Company, to acquire 100% of Canada Life outstanding common shares. The transaction is valued at $44.50 per Canada Life common share, representing an aggregate transaction value of $7.3 billion.

The terms of the agreement allow Canada Life common shareholders to elect to receive one of the following alternatives for each of their Canada Life common shares:
– $44.50 in cash (to an aggregate maximum of approximately $4.4 billion); or
– 1.78 Lifeco 4.80% Non-Cumulative First Preferred Shares, Series E (to an aggregate maximum of 24 million Lifeco Series E Shares); or
– 1.78 Lifeco 5.90% Non-Cumulative First Preferred Shares, Series F (to an aggregate maximum of 8 million Lifeco Series F Shares); or
– 1.1849 Lifeco common shares (to an aggregate maximum of approximately 56 million Lifeco common shares); or
– any combination of the foregoing;
in each case subject to election and proration as a result of the stated maximums.

The transaction is subject to approval by Canada Life common shareholders on May 5, 2003 and is also subject to approval by regulatory authorities. The transaction is expected to close in the third quarter of 2003.

To support the transaction, Power Financial Corporation has committed to invest $800 to purchase 21.302 million common shares of Lifeco from treasury via private placement. Investors Group Inc. has also agreed to invest $100 by purchasing 2.662 million Lifeco common shares from treasury via private placement. Lifeco also entered into a commitment with a Canadian chartered bank (the “Bank”) pursuant to which the Bank agreed to underwrite a credit facility in favour of Lifeco or one or more of its subsidiaries. The credit facility provides short-term funding alternatives, and also offers up to $600 of five year term financing.

Middlefield Group has announced:

on behalf of E Split Corp. (TSX: ENS and ENS.PR.A) (the “Company”), is pleased to announce that the Company is undertaking an overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively).

The sales period for this overnight offering will end at 9:00 a.m. (ET) on Tuesday, November 2, 2021. The offering is expected to close on or about November 9, 2021 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (“TSX”).

The Class A Shares will be offered at a price of $15.50 per Class A Share to yield 10.1% and the Preferred Shares will be offered at a price of $10.15 per Preferred Share to yield 5.2%. The closing price on the TSX for each of the Class A Shares and Preferred Shares on October 29, 2021 was $15.88 and $10.23, respectively. The Class A Share and Preferred Share offering prices were determined so as to be non-dilutive to the most recently calculated net asset value per unit of the Company (calculated as at October 29, 2021), as adjusted for dividends and certain expenses to be accrued prior to or upon settlement of the offering.

The Company invests in common shares of Enbridge Inc., a North American oil and gas pipeline, gas processing and natural gas distribution company.

The Company’s investment objectives for the:

Class A Shares are to provide holders with:
(i) non-cumulative monthly cash distributions; and
(ii) the opportunity for capital appreciation through exposure to the portfolio

Preferred Shares are to:
(i) provide holders with fixed cumulative preferential quarterly cash distributions; and
(ii) return the original issue price of $10.00 to holders upon maturity.

Middlefield Capital Corporation provides investment management advice to the Company.

The syndicate of agents for the offering is being co-led by CIBC Capital Markets and RBC Capital Markets.

For further information, please visit our website at www.middlefield.com or contact Nancy Tham in our Sales and Marketing Department at 1.888.890.1868.

The NAVPU was 24.28 on October 29 and they’re selling the Whole Units for 25.65, a premium of 5.64%. Not bad!

Quadravest has announced:

Dividend 15 Split Corp. II (the “Company”) is pleased to announce it will undertake an offering of Preferred Shares and Class A Shares of the Company. The offering will be led by National Bank Financial Inc.

The Preferred Shares will be offered at a price of $10.10 per Preferred Share to yield 5.7% on the issue price and the Class A Shares will be offered at a price of $6.45 per Class A Share to yield 18.6% on the issue price.

The closing price on the TSX of each of the Preferred Shares and the Class A Shares on October 22, 2021 was $10.15 and $6.49, respectively.

Since inception of the Company, the aggregate dividends declared on the Preferred Shares have been $7.95 per share and the aggregate dividends declared on the Class A Shares have been $14.00 per share, for a combined total of $21.95 per unit. All distributions to date have been made in tax advantage eligible Canadian dividends or capital gains dividends.

The net proceeds of the offering will be used by the Company to invest in an actively managed portfolio of dividend yielding common shares which includes each of the 15 Canadian companies listed below:

Bank of Montreal	Enbridge Inc.	TC Energy
The Bank of Nova Scotia	Manulife Financial Corp.	TELUS Corporation
BCE Inc.	National Bank of Canada	Thomson Reuters Corp.
Canadian Imperial Bank of Commerce	Royal Bank of Canada	The Toronto-Dominion Bank
CI Financial Corp.	Sun Life Financial Inc.	TransAlta Corporation

The Company’s investment objectives are:

Preferred Shares:
i. to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends in the amount of 5.75% annually; and
ii. on or about the termination date, currently December 1, 2024 (subject to further 5 year extensions thereafter and it has been extended in the past), to pay the holders of the Preferred Shares $10.00 per Preferred Share.

Class A Shares:
i. to provide holders of the Class A Shares with regular monthly cash dividends currently targeted to be $0.10 per Class A; and
ii. on or about December 1, 2024, to pay the holders of Class A Shares at least the original issue price of those shares.

The sales period of this overnight offering will end at 9:00 a.m. (EST) on October 26, 2021.

So Whole Units are offered at 16.55 and the NAVPU on 2021-10-22 was 15.79. A 4.8% premium isn’t bad business!

Update, 2021-10-26: They have further announced:

it has completed the overnight marketing of Preferred Shares and Class A Shares of the Company. Total gross proceeds of the offering are expected to be approximately $51.8 million.

Power Corporation of Canada and Power Financial Corporation have announced:

the closing of Power Financial’s previously announced offering of 8,000,000 4.50% Non-Cumulative First Preferred Shares, Series 23 in the capital of Power Financial (the “Series 23 Shares”) priced at $25.00 per share for gross proceeds of $200 million. The issue was bought by a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets and Scotiabank.

The Series 23 Shares will be listed and posted for trading on the Toronto Stock Exchange under the symbol “PWF.PF.A”. The net proceeds of this offering will be used by Power Financial for general corporate purposes. Power Financial intends to redeem all of its outstanding $200 million 6.00% Non-Cumulative First Preferred Shares, Series I.

PWF.PF.A is a Straight Perpetual, 4.50%, announced 2021-10-6. It will be tracked by HIMIPref™ and has been assigned to the PerpetualDiscount subindex.

The issue traded 736,260 shares today in a range of 24.65-83 before closing at 24.65-80. Vital statistics are:

Moody’s Investors Service has announced that it:

has today placed on review for upgrade all long-term ratings and assessments of Royal Bank of Canada (RBC), including the a3 standalone baseline credit assessment (BCA), the Aa2 deposit rating and Counterparty Risk Rating, and the Aa2(cr) Counterparty Risk Assessments. The bank’s Prime-1 short term ratings and Prime-1(cr) short-term Counterparty Risk Assessment were affirmed.
…
RBC’s strong credit profile reflects its position as a diversified universal bank with leading market shares across many retail products and services in its home market and a growing presence in the US through its California-based private and commercial bank, City National Bank (LT deposits Aa3 stable, BCA a2), which RBC acquired in 2015. RBC’s diversified business mix, which also includes a major commitment to capital markets, and wealth and asset management businesses, has extended the bank’s competitive advantage over many of its peers. This business mix has also produced a sturdy buffer against the greater volatility of RBC’s capital markets activity through various economic cycles. The steady profitability generated by RBC’s businesses enables the bank to consistently reinvest to drive organic business growth as well as develop leading digital customer solutions and capabilities, further supporting its strong competitive position.
…
RBC’s a3 BCA could be upgraded if Moody’s assesses that the bank will likely continue to demonstrate a resilient operating performance that reflects a superior diversity of business mix relative to many similarly rated global peers, and stability in its risk profile , while maintaining its capital level above 12% tangible common equity as a percentage of risk-weighted assets. A higher BCA would likely lead to a ratings upgrade. The ratings could be confirmed at their existing level should the bank’s earnings and capital base not demonstrate the level of resilience expected by Moody’s when stressed under various scenarios.

The review for upgrade indicates that rating downgrades are unlikely over the next 12-18 months. However, RBC’s a3 BCA could be downgraded if the bank increases risk appetite leading to credit quality deterioration or the bank increased the size of its capital markets operations relative to its retail and commercial banking businesses. A significant further deterioration in the domestic operating environment or any material regulatory, compliance or risk management failures could also lead to a downgrade of the bank’s BCA. A lower BCA would likely lead to a ratings downgrade.

Affected issues are: RY.PR.H, RY.PR.J, RY.PR.M, RY.PR.N, RY.PR.O, RY.PR.P, RY.PR.S and RY.PR.Z .

Great-West Lifeco Inc. has announced:

the closing of its previously announced offering of 8,000,000 4.50% Non-Cumulative First Preferred Shares, Series Y (the “Series Y Preferred Shares”) for gross proceeds of $200 million. The offering was completed through a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets, Scotiabank, CIBC Capital Markets and TD Securities. The Series Y Preferred Shares will be listed for trading on the Toronto Stock Exchange under the symbol “GWO.PR.Y”.

Vital statistics are:

The issue traded 884,860 shares today in a range of 24.95-45 before closing at 24.98-99.

GWO.PR.Y is a Straight Perpetual, 4.50%, announced 2021-10-1. It is tracked by HIMIPref™ and has been assigned to the Insurance-Straight subindex.

Power Corporation of Canada and Power Financial Corporation have announced:

Upon completion of the offering, Power Financial intends to redeem all of its outstanding $200 million First Preferred Shares, Series I.

The offering in the quoted paragraph refers to a today’s announcement of a new issue of 4.50% Straight Perpetuals.

PWF.PR.I is a Straight Perpetual, 6.00%, that commenced trading 2003-3-11. It has been tracked by HIMIPref™ and is assigned to the PerpetualPremium subindex.

Update, 2021-11-13: On October 18, the company announced:

that it intends to redeem all 8,000,000 of its outstanding 6.00% Non-Cumulative First Preferred Shares, Series I (the “Series I Shares”) on November 22, 2021.

In accordance with the terms of the Series I Shares, the redemption price will be $25.00 per Series I Share (for a total of $200 million) together with any declared and unpaid dividends, net of any tax required to be withheld by the Corporation. A notice of the redemption of the Series I Shares will be provided in accordance with the rights, privileges and conditions attached to the Series I Shares.

Brompton Group has announced:

Global Dividend Growth Split Corp. (the “Company”) is pleased to announce it is undertaking an overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively).

The sales period for this overnight offering will end at 9:00 a.m. (ET) on Wednesday, October 6, 2021. The offering is expected to close on or about October 13, 2021 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (“TSX”).

The Class A Shares will be offered at a price of $12.25 per Class A Share for a distribution rate of 9.8% on the issue price, and the Preferred Shares will be offered at a price of $10.05 per Preferred Share for a yield to maturity of 4.9%. The closing price on the TSX for each of the Class A Shares and Preferred Shares on October 4, 2021 was $12.51 and $10.50, respectively. The Class A Share and Preferred Share offering prices were determined so as to be non-dilutive to the most recently calculated net asset value per unit of the Company (“Unit”) (calculated as at October 4, 2021), as adjusted for dividends and certain expenses to be accrued prior to or upon settlement of the offering. The offering is being led by RBC Capital Markets.

The Company invests in a diversified portfolio (the “Portfolio”) of equity securities of large capitalization global dividend growth companies selected by the Brompton Funds Limited (the “Manager”). In order to qualify for inclusion in the Portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing of the Portfolio, each global dividend growth company included in the Portfolio must (i) have a market capitalization of at least $10 billion; and (ii) have a history of dividend growth or, in the Manager’s view, have high potential for future dividend growth.

The investment objectives for the Class A Shares are to provide holders with regular monthly cash distributions and to provide the opportunity for capital appreciation through exposure to the Portfolio.

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions, currently in the amount of $0.125 per Preferred Share, and to return the original issue price to holders of Preferred Shares on June 30, 2026.

So whole units are offered for a total of 22.30 per Unit, while the October 4 NAVPU is 20.86; a premium of 6.90%. What a glorious business this is!