Category: Issue Comments

Middlefield has not bothered to announce the recent name change of Real Estate Split Corp. (formerly Real Estate & E-Commerce Split Corp.). To get the details, one must visit SEDAR and search for “Real Estate Split Corp. (formerly Real Estate & E-Commerce Split Corp.) Jan 6 2022 09:36:30 ET Other securityholders documents – English PDF 169 K” to get a link to a document that the Canadian Securities Administrators won’t allow me to link to because we’re all stupid investor scum and should not bother ourselves with complicated documents.

Oh, Canada!

Enbridge Inc. has announced:

that, subject to market and other conditions, it is considering an offering of hybrid subordinated debt securities in Canada on a private placement basis in reliance upon exemptions from the prospectus requirements under applicable securities legislation.

If a successful offering is completed, the Company intends to use the net proceeds of the offering to redeem its issued and outstanding Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 17 (TSX: ENB.PF.I), in accordance with their terms, and pending such redemption, to repay short-term indebtedness as well as for general corporate purposes.

This news release does not constitute a notice of redemption with respect to the Cumulative Redeemable Minimum Rate Reset Preference Shares, Series 17, nor does it constitute an offer to sell or the solicitation of an offer to buy the hybrid subordinated debt securities in any jurisdiction.

ENB.PF.I is a FixedReset 5.15%+414M515, that commenced trading 2016-11-23 after being announced 2016-11-15. It is tracked by HIMIPref™ and has been added to the Scraps index due to credit concerns.

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

Brompton Group has announced:

Brompton Lifeco 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 Friday, January 7, 2022. The offering is expected to close on or about January 13, 2022 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 $6.95 per Class A Share for a distribution rate of 12.9% 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 6.6%.(1) The closing market price on the TSX for each of the Class A Shares and Preferred Shares on January 5, 2022 was $7.06 and $10.30, 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 December 30, 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 portfolio (the “Portfolio”) of common shares of the four Canadian life insurance companies on an approximately equal weight basis: Great-West Lifeco Inc., iA Financial Corporation Inc., Manulife Financial Corporation and Sun Life Financial Inc.

Over the last 3 years, the Class A Shares have delivered a 42.0% per annum total return based on net asset value (“NAV”) and the Preferred Shares have returned 6.4% per annum, as of December 31, 2021.(1)

The investment objectives for the Class A Shares are to provide holders with regular monthly cash distributions targeted to be at least $0.075 per Class A Share and to provide the opportunity for growth in the net asset value per Class A Share.

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions, currently in the amount of $0.15625 per Preferred Share, and to return the original issue price to holders of Preferred Shares on April 29, 2024.

The NAVPU of the fund was 16.40 per whole unit on 2021-12-30 so the new issue comes at a premium of 3.7% over the December 30 price.

Update, 2022-1-7:They raised $40.5-million:

Brompton Lifeco Split Corp. (the “Company”) is pleased to announce a successful overnight treasury offering of class A shares and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively). Gross proceeds of the offering are expected to be approximately $40.5 million. The offering is expected to close on or about January 13, 2022 and is subject to certain closing conditions. The Company has granted the Agents (as defined below) an over-allotment option, exercisable for 30 days following the closing date of the offering, to purchase up to an additional 15% of the number of Class A Shares and Preferred Shares issued at the closing of the offering.

AltaGas Ltd. has announced:

that it has priced an offering of $300 million of 5.25% Fixed-to-Fixed Rate Subordinated Notes, Series 1 due January 11, 2082 (the “Offering”).

The Offering is expected to close on or about January 11, 2022. The Company intends to use the net proceeds of the offering to redeem or repurchase its outstanding cumulative redeemable five-year rate reset preferred shares, series K (TSX: ALA.PR.K).

The subordinated notes are being offered through a syndicate of underwriters, co-led by CIBC Capital Markets, BMO Capital Markets and RBC Capital Markets, under AltaGas’ short form base shelf prospectus dated February 22, 2021, as supplemented by a prospectus supplement dated January 5, 2022.

ALA.PR.K is a FixedReset, 5.00%+380M500, that commenced trading 2017-2-22 after being announced 2017-2-13. It is tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

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

Update, 2022-1-16: The sub-debt offering closed:

AltaGas Ltd. (“AltaGas” or the “Company”) (TSX: ALA) today announced that it has closed its previously announced offering of $300 million of 5.25% Fixed-to-Fixed Rate Subordinated Notes, Series 1 due January 11, 2082 (the “Offering”).

The Company intends to use the net proceeds of the offering to redeem or repurchase its outstanding cumulative redeemable five-year rate reset preferred shares, series K (TSX: ALA.PR.K). As a result of the Offering, based on current rates, AltaGas expects to save approximately $66 million in the initial ten-year term of the Offering due to lower taxes and financing charges. The Offering also continues to stagger, extend and de-risk AltaGas’ capital structure.

The subordinated notes are being offered through a syndicate of underwriters, co-led by CIBC Capital Markets, BMO Capital Markets and RBC Capital Markets, under AltaGas’ short form base shelf prospectus dated February 22, 2021, as supplemented by a prospectus supplement dated January 5, 2022.

Brookfield Renewable Partners L.P. has announced:

that it intends to redeem all of its outstanding Class A Preferred Limited Partnership Units, Series 5 (the “Series 5 Preferred Units”) (TSX: BEP.PR.E) for cash on January 31, 2022. The redemption price for each Series 5 Preferred Unit will be C$25.25. Holders of Series 5 Preferred Units of record as of January 14, 2022 will receive the previously declared final quarterly distribution of C$0.3494 per Series 5 Preferred Unit.

BEP.PR.E is a Straight Perpetual, 5.59%, that commenced trading 2016-2-11 (with complex distributions) following a 41% conversion from BRF.PR.E.

Power Corporation of Canada has announced:

that it intends to redeem all 86,100 of its outstanding Cumulative Redeemable First Preferred Shares, 1986 Series (the “1986 Series Shares”) on January 15, 2022.

In accordance with the terms of the 1986 Series Shares, the redemption price will be $50.00 per 1986 Series Share together with all accrued and unpaid dividends, net of any tax required to be withheld by the Corporation. On November 10, 2021, the board of directors of the Corporation declared a quarterly dividend on the 1986 Series Shares, payable January 15, 2022 to shareholders of record December 24, 2021, of $0.2144 [1]. A notice of the redemption of the 1986 Series Shares will be provided in accordance with the rights, privileges and conditions attached to the 1986 Series Shares.

POW.PR.F is a Floater, paying 70% of Canada Prime. It has been notable mainly for its unusual $50 par value, for its sinking fund and for the lackadaisical efforts to give effect to the sinking fund. It has been tracked by HIMIPref™ since the beginning of the database 1993-11-30 and has been assigned to the Scraps index for a long time due to volume concerns – at $340 daily, it has the lowest Average Daily Trading Value of any current issue. But it was in the BMO-CM “50” index as late as 1996!

BCE Inc. has announced:

1. Holders of fixed-rate BCE Inc. Series AK Preferred Shares have the right to convert all or part of their shares, effective on December 31, 2021, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AL of BCE Inc. (the “Series AL Preferred Shares”). In order to convert their shares, holders must exercise their right of conversion during the conversion period, which runs from December 1, 2021 until 5:00 p.m. (Montréal/Toronto time) on December 16, 2021.
…
4. As of December 31, 2021, the Series AK Preferred Shares will, should they remain outstanding, 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 a fixed rate equal to the sum of: (a) the yield to maturity compounded semi-annually (the “Government of Canada Yield”), computed on December 1, 2021 in accordance with the articles of BCE Inc., of a Canadian dollar denominated non-callable Government of Canada bond with a term to maturity of five years, and (b) 1.88%. The “Government of Canada Yield” computed on December 1, 2021 is 1.426%. Accordingly, the annual fixed dividend rate applicable to the Series AK Preferred Shares for the period of five years beginning on December 31, 2021 will be 3.306%.

BCE.PR.K was issued as a FixedReset, 4.15%+188, that commenced trading 2011-7-5 after being announced 2011-6-20. Astonishingly, it was re-opened in December, 2011; rare enough in itself, but what’s more it was sold at par even though the GOC-5 yield had tumbled to 1.33% from the time-of-issue level of about 2.20%. The issue reset at 2.954% in 2016 and I recommended against conversion; there was a 9% conversion to the FloatingReset, BCE.PR.L, anyway. BCE.PR.K is tracked by HIMIPref™, but is been relegated to the Scraps index on credit concerns.

BCE.PR.L is a FloatingReset, Bills+188, that arose via partial conversion from BCE.PR.K.

Brompton Group has announced (on December 8):

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 Thursday, December 9, 2021. The offering is expected to close on or about December 15, 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 $6.80 per Class A Share for a distribution rate of 17.6% on the issue price, and the Preferred Shares will be offered at a price of $10.00 per Preferred Share for a yield to maturity of 5.6%. (1) The closing market price on the TSX for each of the Class A Shares and Preferred Shares on December 7, 2021 was $7.00 and $10.11, 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 December 2, 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 portfolio (the “Portfolio”) consisting primarily of equity securities of Canadian dividend growth companies. In addition, the Company may hold up to 20% of the total assets of the Portfolio in global dividend growth companies for diversification and improved return potential, at the discretion of 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, each dividend growth company included in the Portfolio must have (i) a market capitalization of at least CDN$2.0 billion; and (ii) 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 targeted to be at least $0.10 per Class A Share and to provide the opportunity for growth in the net asset value per Class A Share.

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions, currently in the amount of $0.1375 per Preferred Share, and to return the original issue price to holders of Preferred Shares on September 27, 2024.

So the Whole Units were offered for 16.80, while the NAVPU on December 2 was 16.01, a 4.9% premium. I love this business!

Today, Brompton announced:

a successful overnight treasury offering of class A shares and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively). Gross proceeds of the offering are expected to be approximately $76.4 million. The offering is expected to close on or about December 15, 2021 and is subject to certain closing conditions. The Company has granted the Agents (as defined below) an over-allotment option, exercisable for 30 days following the closing date of the offering, to purchase up to an additional 15% of the number of Class A Shares and Preferred Shares issued at the closing of the offering.

Thanks to Assiduous Reader JD for ensuring I was aware of this!

DBRS has announced that it:

changed the trends on Canadian Western Bank’s (CWB or the Bank) long-term ratings to Stable from Negative and maintained the trends on all short-term ratings at Stable. DBRS Morningstar also confirmed its ratings on CWB, including the Bank’s Long-Term Issuer Rating at A (low) and Short-Term Issuer Rating at R-1 (low). The Bank’s Intrinsic Assessment of A (low) and Support Assessment of SA3 are unchanged. The SA3 designation, which reflects no expectation of timely external support, results in the final rating being equivalent to the Intrinsic Assessment.

KEY RATING CONSIDERATIONS
The trend changes to Stable from Negative reflect DBRS Morningstar’s view that, despite the potential for some near-term volatility, the economic uncertainties facing the Bank because of the Coronavirus Disease (COVID-19) pandemic have largely abated. Indeed, the Bank has maintained good asset quality metrics. Although impairments initially increased as expected, they reverted to the historical average in F2021, remaining at manageable levels. Additionally, CWB’s earnings have proved resilient and the Bank has continued growing and diversifying its franchise through further expansion into Ontario as well as improving its level of directly sourced deposits.

In confirming the ratings, DBRS Morningstar recognizes CWB’s well-established and growing franchise, operating in the middle-market commercial space across Canada. Furthermore, the Bank has been successful in executing strategically targeted wealth and loan portfolio acquisitions that augment its business while providing some geographic and revenue diversification. The ratings also consider the Bank’s high level of exposure to the real estate sector, specifically to development projects in Western Canada; its modest level of fee-based revenues; and its lower capitalization relative to peers.

RATING DRIVERS
DBRS Morningstar would upgrade its ratings if CWB further diversifies its revenue mix with a material and sustainable increase in the level of noninterest income. Increased diversification of the loan book, including a reduction in the relative exposure to real estate project finance, would also result in a ratings upgrade.

Conversely, a ratings downgrade would occur should there be significant losses in the loan portfolio or a perceived weakness in loan underwriting and/or risk management. Furthermore, operational issues that negatively affect the Bank’s implementation of its various organizational systems and data projects or a reduction in capitalization to levels closer to regulatory minimums would also result in a ratings downgrade.

Affected issues are CWB.PR.B and CWB.PR.D .

Canadian Utilities Limited has announced:

it has closed its previously announced public offering of Cumulative Redeemable Second Preferred Shares Series HH, by a syndicate of underwriters co-led by BMO Capital Markets and RBC Capital Markets, and including TD Securities Inc., Scotia Capital Inc., CIBC World Markets Inc., National Bank Financial Inc., and iA Private Wealth Inc. Canadian Utilities Limited issued 7,000,000 Series HH Preferred Shares for gross proceeds of $175,000,000. The Series HH Preferred Shares will begin trading on the TSX today under the symbol CU.PR.J. The proceeds will be used to increase the Corporation’s cash position to allow for operational flexibility and may be used in the future to repay indebtedness and to bolster liquidity.

Canadian Utilities Limited has granted the Underwriters an option, exercisable, in whole or in part, at any time until and including 30 days following the closing of the Offering, to purchase, at the offering price, an additional 1,050,000 Series HH Preferred Shares, to cover over-allotments, if any. Should the option be fully exercised, the total gross proceeds of the Series HH Preferred Share offering will be $201,250,000.

DBRS rates it Pfd-2(high):

DBRS Limited (DBRS Morningstar) assigned a rating of Pfd-2 (high) with a Stable trend to Canadian Utilities Limited’s CAD 175 million Cumulative Redeemable Second Preferred Shares Series HH.

The rating assigned to this newly issued preferred shares instrument is based on the rating of an already-outstanding preferred shares series of the above-mentioned instrument.

CU.PR.J is a Straight Perpetual, 4.75%, announced 2021-11-23.

The issue traded 383,500 shares today in a range of 24.70-00 before closing at 24.80-97. Vital statistics are:

The issue will be tracked by HIMIPref™ and has been assigned to the PerpetualDiscount subindex.