Category: Issue Comments

Great-West Lifeco Inc. has announced:

that holders of 59,830 Lifeco Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series N (the “Series N Shares”) have elected to convert their shares into Non-Cumulative Floating Rate First Preferred Shares, Series O (the “Series O Shares”) and that holders of 547,303 Series O Shares have elected to convert their shares into Series N Shares.

Lifeco currently has 8,524,422 Series N Shares and 1,475,578 Series O Shares outstanding. After taking into account all shares tendered for conversion, there would be less than one million Series O Shares outstanding on December 31, 2020. As a result and in accordance with the terms and conditions attached to the shares, no Series N Shares may be converted into Series O Shares and all remaining Series O Shares will automatically be converted into Series N Shares on a one-for-one basis on December 31, 2020. Lifeco will give written notice to that effect to any registered holder on or before Thursday, December 24, 2020.

Following the automatic conversion, Lifeco will have 10,000,000 Series N Shares and no Series O Shares issued and outstanding. The Series N Shares and Series O Shares are currently listed on the Toronto Stock Exchange under the symbols GWO.PR.N and GWO.PR.O, respectively.

GWO.PR.N was issued as a FixedReset, 3.65%+130, that commenced trading 2010-11-23 after being announced 2010-11-15. The issue was met with disfavour and there was an inventory clearance sale closing 2010-12-3. After a notice of extension the issue issue reset to 2.176% in 2015. I recommended against conversion; there was a 15% conversion to the FloatingReset GWO.PR.O anyway. The company provided another notice of extension in November, 2020. The issue will reset to 1.749% effective 2020-12-31. It is tracked by HIMIPref™ and is assigned to the FixedReset (Insurance) subindex.

GWO.PR.O is a FloatingReset, Bills+130, that arose in 2015 via a partial conversion from GWO.PR.N. GWO.PR.O is tracked by HIMIPref™ but has been relegated to the Scraps – FloatingReset subindex on volume concerns.

Capital Power Corporation has announced:

that after having taken into account all Election Notices following the December 16, 2020 conversion deadline, in respect of the Cumulative Rate Reset Preference Shares, Series 1 (Series 1 Shares) tendered for conversion into Cumulative Floating Rate Preference Shares, Series 2 (Series 2 Shares), the holders of Series 1 Shares were not entitled to convert their shares. There were 687,245 Series 1 Shares tendered for conversion, which was less than the required one million shares required for conversion into Series 2 Shares.

There are five million Series 1 Shares listed on the Toronto Stock Exchange (TSX) under the symbol CPX.PR.A. Effective December 31, 2020, the Annual Fixed Dividend Rate for the next five-year period has been reset to 2.62100%.

For more information on the terms of, and risks associated with an investment in the Series 1 Shares, please see Capital Power’s (final) short form prospectus dated December 8, 2010 which is available on sedar.com or on Capital Power’s website at capitalpower.com.

CPX.PR.A was issued as a FixedReset 4.60%+217 that commenced trading 2010-12-16 after being announced 2010-12-1. It reset to 3.06% effective 2015-12-31 and I recommended against conversion; there was no conversion to FloatingResets. It will reset to 2.621% effective 2020-12-31. The issue is tracked by HIMIPref™ but is relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

Enbridge Inc. has announced:

that Westcoast Energy Inc. (“Westcoast”) intends to exercise its right to redeem all of its outstanding Cumulative 5-Year Minimum Rate Reset Redeemable First Preferred Shares, Series 10 (“Series 10 Shares”) on January 15, 2021 at a price of $25.00 per Series 10 Share, together with all accrued and unpaid dividends, if any.

Beneficial holders who are not directly the registered holders of the Series 10 Shares should contact the financial institution, broker or other intermediary through which they hold these shares to confirm how they will receive their redemption proceeds. Inquiries from registered shareholders should be directed to Westcoast’s Registrar and Transfer Agent, Computershare Investor Services Inc., at 1 800-564-6253 (Canada and United States) or 1-514-982-7555 (Outside North America).

W.PR.K was issued as a FixedReset, 5.25%+426M525, that commenced trading 2015-12-15 after being announced 2015-11-24.

DBRS has announced that it:

placed iA Financial Corporation Inc.’s (iA or the Company) Issuer Rating of A (low) and Subordinated Debentures rating of BBB (high) Under Review with Positive Implications. DBRS Morningstar also placed the Issuer Rating of A (high), the Financial Strength Rating of A (high), the Subordinated Debentures rating of “A,” and the Non-Cumulative Preferred Shares rating of Pfd-2 (high) for Industrial Alliance Insurance and Financial Services Inc., iA’s major insurance operating subsidiary, Under Review with Positive Implications.

KEY RATING CONSIDERATIONS
The Under Review with Positive Implications status reflects DBRS Morningstar’s view that iA has made significant efforts over the past few years to improve its risk profile, in particular its sensitivities to market-related risks. The Company has materially reduced its sensitivities to interest rate and equity market movements, an important consideration given the relatively large proportion of individual insurance and segregated fund products in the Company’s product portfolio, and the sustained low interest rate environment that continues to put pressure on life insurers. The Company has also experienced some success in shifting its product portfolio toward less capital-intensive products, reducing the level of guarantees offered and increasing its proportion of fee-based business. During the review period, which is expected to be concluded within 90 days, DBRS Morningstar will focus on the Company’s improving capabilities in limiting the impact of adverse market movements on its net income and regulatory solvency ratios. In addition, DBRS Morningstar will assess the impact of the Coronavirus Disease (COVID-19), which has been more limited than expected so far, on iA’s credit fundamentals.

Affected issues are IAF.PR.B, IAF.PR.G and IAF.PR.I. There was ticker change for these issues in 2019.

The Bank of Nova Scotia has announced (on December 7):

its intention to redeem all outstanding Non-cumulative 5-Year Rate Reset Preferred Shares Series 32 (“Series 32 Shares”) and Non-cumulative Floating Rate Preferred Shares Series 33 (“Series 33 Shares”) of Scotiabank on February 2, 2021 at a price equal to $25.00 per share together with declared and unpaid dividends to the Redemption Date (the “Redemption Price”). Formal notice will be issued to the shareholders in accordance with the share conditions.

The redemption has been approved by the Office of the Superintendent of Financial Institutions and will be financed out of the general funds of Scotiabank. This redemption is part of the Bank’s ongoing management of its Tier 1 capital.

On December 1, 2020, the Board of Directors of Scotiabank declared quarterly dividends of $0.128938 per Series 32 Share and $0.093638 per Series 33 Share. This dividend on the Series 32 Shares and Series 33 Shares will be paid on January 27, 2021, to shareholders of record at the close of business on January 5, 2021, as previously announced. In addition, holders of Series 32 and Series 33 Shares will be entitled to receive, on a pro rata basis, any dividend that may be declared by the Board of Directors of the Bank for Series 32 and Series 33 Shares for the period from, and including, January 26, 2021 to, but excluding, February 2, 2021. On February 2, 2021, the Series 32 and the Series 33 Shares will cease to be entitled to dividends.

This is neither a surprise nor related to LRCN issuance, since these issues are NVCC non-compliant.

BNS.PR.Z was issued as a FixedReset, 3.70%+134, which commenced trading 2011-2-3 after being issued as part of the acquisition of DundeeWealth. The issue reset to 2.063% in 2016 and there was a 32% conversion to the FloatingReset BNS.PR.F.

BNS.PR.F is a FloatingReset, Bills+134, that came into being via a partial conversion from BNS.PR.Z.

Great-West Lifeco Inc. has announced:

the dividend rates for its Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series N (the “Series N Shares”) and for its Non-Cumulative Floating Rate First Preferred Shares, Series O (the “Series O Shares”).

The annual fixed dividend rate for the five-year period commencing on December 31, 2020 and ending on December 30, 2025 applicable to any Series N Shares that remain outstanding on December 31, 2020 will be 1.749% per annum (or $0.109313 per Series N Share per quarter). The 1.749% annual rate is equal to the sum of the Government of Canada Yield (as defined in the Series N Share conditions) on December 1, 2020 plus 1.30%.

The floating dividend rate for the period commencing on December 31, 2020 and ending on March 30, 2021 applicable to any Series O Shares that remain outstanding on December 31, 2020 will be 1.409% per annum (or $0.086855 per Series O Share per quarter). The 1.409% annual rate is equal to the sum of the T-Bill Rate (as defined in the Series O Share conditions) on December 1, 2020 plus 1.30%.

A news release announcing conversion rights for the Series N Shares and the Series O Shares was issued on November 4, 2020 and can be viewed on Great-West Lifeco’s website. Beneficial owners of Series N Shares and Series O Shares who wish to convert their shares should communicate as soon as possible with their broker or other nominee to ensure their instructions are followed so that the registered holder of the Series N Shares or Series O Shares (as applicable) can meet the deadline to exercise such conversion right(s), which is 5:00 p.m. (ET) on Wednesday, December 16, 2020.

GWO.PR.N was issued as a FixedReset, 3.65%+130, that commenced trading 2010-11-23 after being announced 2010-11-15. The issue was met with disfavour and there was an inventory clearance sale closing 2010-12-3. After a notice of extension the issue issue reset to 2.176% in 2015. I recommended against conversion; there was a 15% conversion to the FloatingReset GWO.PR.O anyway. The company provided another notice of extension in November, 2020.

GWO.PR.O is a FloatingReset, Bills+130, that arose in 2015 via a partial conversion from GWO.PR.N.

Power Financial Corporation has announced:

that it does not intend to exercise its right to redeem all or part of the currently outstanding 8,965,485 Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series P (the “Series P shares”) nor all or part of the currently outstanding 2,234,515 Non-Cumulative Floating Rate First Preferred Shares, Series Q (the “Series Q shares”) on January 31, 2021. As a result, subject to certain conditions, the holders of the Series P shares have the right to convert all or part of their Series P shares, on a one-for-one basis, into Series Q shares, and subject to certain conditions, the holders of the Series Q shares have the right to convert all or part of their Series Q shares, on a one-for-one basis, into Series P shares, in each case on February 1, 2021 (the “Conversion Date”), pursuant to the terms and conditions of the Series P shares and the Series Q shares.

Holders of Series P shares who do not exercise their right to convert their Series P shares into Series Q shares on the Conversion Date will retain their Series P shares, and holders of the Series Q shares who do not exercise their right to convert their Series Q shares into Series P shares on the Conversion Date will retain their Series Q shares, in each case, subject to certain conditions.

The foregoing conversion rights of the Series P shares and the Series Q shares are subject to the conditions that: (i) if Power Financial determines that there would remain outstanding on the Conversion Date less than 1,000,000 Series Q shares, after having taken into account all Series P shares and Series Q shares tendered for conversion, then holders of Series P shares will not be entitled to convert their shares into Series Q shares and all remaining Series Q shares will automatically be converted into Series P shares without the consent of the holders, on a one-for-one basis, on the Conversion Date, and (ii) alternatively, if Power Financial determines that there would remain outstanding on the Conversion Date less than 1,000,000 Series P shares, after having taken into account all Series P shares and Series Q shares tendered for conversion, then holders of Series Q shares will not be entitled to convert their shares into Series P shares and all remaining Series P shares will automatically be converted into Series Q shares without the consent of the holders, on a one-for-one basis, on the Conversion Date. In either case, Power Financial will give written notice to that effect to the registered holders of Series P shares and/or Series Q shares, as the case may be, no later than January 25, 2021.

The dividend rate applicable to the Series P shares for the 5-year period from January 31, 2021 to but excluding January 31, 2026, and the dividend rate applicable to the Series Q shares for the 3-month period from January 31, 2021 to but excluding April 30, 2021, will be determined and announced by way of a news release on January 4, 2021.

Beneficial owners of Series P shares or Series Q shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from January 4, 2021 until January 18, 2021 at 5:00 p.m. (Eastern Time).

PWF.PR.P was issued as a FixedReset, 4.40%+160, that commenced trading 2010-6-29 after being announced 2010-6-17. It reset to 2.306% in 2016; I recommended against conversion but there was a 20% conversion to PWF.PR.Q anyway.

PWF.PR.Q is a FloatingReset, Bills+160, that arose via a partial conversion from PWF.PR.P in 2016.

Fairfax Financial Holdings Limited has announced:

that it has determined the fixed dividend rate on its Cumulative 5-Year Rate Reset Preferred Shares, Series I (the “Series I Shares”) (TSX: FFH.PR.I) for the five years commencing January 1, 2021 and ending December 31, 2025. The fixed quarterly dividends on the Series I Shares during that period, if and when declared, will be paid at an annual rate of 3.327% (C$0.207938 per share per quarter).

Holders of Series I Shares have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on December 16, 2020, to convert all or part of their Series I Shares, on a one-for-one basis, into Cumulative Floating Rate Preferred Shares, Series J (the “Series J Shares”) (TSX: FFH.PR.J), effective December 31, 2020. The quarterly floating rate dividends on the Series J Shares will be paid at an annual rate, calculated for each quarter, of 2.85% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly dividend rate in respect of the December 31, 2020 to March 30, 2021 dividend period for the Series J Shares will be 0.72962% (2.95901% on an annualized basis) and the dividend for such dividend period, if and when declared, will be C$0.18240 per share, payable on March 30, 2021.

Holders of Series J Shares also have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on December 16, 2020, to convert all or part of their Series J Shares, on a one-for-one basis, into Series I Shares, effective December 31, 2020. Holders of the Series J Shares who elect to convert their shares by the conversion deadline will receive Series I Shares effective December 31, 2020 and will be entitled to receive, if and when declared, the fixed-rate dividend as described above.

Holders of Series I Shares are not required to elect to convert all or any part of their Series I Shares into Series J Shares and holders of Series J Shares are not required to elect to convert all or any part of their Series J Shares into Series I Shares. Holders of the Series I Shares who do not elect to convert their shares by the conversion deadline will retain their Series I Shares and will receive the fixed-rate dividend as described above (subject to the automatic conversion features described below). Holders of the Series J Shares who do not elect to convert their shares by the conversion deadline will retain their Series J Shares and will receive the floating-rate dividend as described above (subject to the automatic conversion features described below).

As provided in the share conditions of the Series I Shares and the Series J Shares: (i) if Fairfax determines that there would be fewer than 1,000,000 Series I Shares outstanding after December 31, 2020, all remaining Series I Shares will be automatically converted into Series J Shares on a one-for-one basis effective December 31, 2020 and Fairfax will cause the return of all Series J Shares tendered for conversion into Series I Shares; and (ii) if Fairfax determines that there would be fewer than 1,000,000 Series J Shares outstanding after December 31, 2020, all remaining Series J Shares will be automatically converted into Series I Shares on a one-for-one basis effective December 31, 2020 and Fairfax will cause the return of all Series I Shares tendered for conversion into Series J Shares.

There are currently 10,465,553 Series I Shares and 1,534,447 Series J Shares outstanding. The Series I Shares and the Series J Shares are listed on the Toronto Stock Exchange under the trading symbols “FFH.PR.I” and “FFH.PR.J”, respectively.

FFH.PR.I was issued as a FixedReset, 5.00%+285, that commenced trading 2010-10-5 after being announced 2010-9-27. I recommended against conversion.

FFH.PR.J is a FloatingReset, Bills+285, that came into existence in 2015 via partial conversion from FFH.PR.I.

Brookfield Asset Management Inc. has announced:

that it has determined the fixed dividend rate on its Cumulative Class A Preference Shares, Series 44 (“Series 44 Shares”) (TSX: BAM.PF.H) for the five years commencing January 1, 2021 and ending December 31, 2025, and also determined the quarterly dividend on its floating rate Cumulative Class A Preference Shares, Series 25 (“Series 25 Shares”) (TSX: BAM.PR.S).

Series 44 Shares and Series 45 Shares

If declared, the fixed quarterly dividends on the Series 44 Shares during the five years commencing January 1, 2021 will be paid at an annual rate of 5.00% ($0.3125 per share per quarter).

Holders of Series 44 Shares have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on December 16, 2020, to convert all or part of their Series 44 Shares, on a one-for-one basis, into Cumulative Class A Preference Shares, Series 45 (the “Series 45 Shares”), effective December 31, 2020.

The quarterly floating rate dividends on the Series 45 Shares will be paid at an annual rate, calculated for each quarter, of 4.17% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly dividend rate in respect of the January 1, 2021 to March 31, 2021 dividend period for the Series 45 Shares will be 1.0551% (4.279% on an annualized basis) and the dividend, if declared, for such dividend period will be $0.263775 per share, payable on March 31, 2021.

Holders of Series 44 Shares are not required to elect to convert all or any part of their Series 44 Shares into Series 45 Shares.

As provided in the share conditions of the Series 44 Shares, (i) if Brookfield determines that there would be fewer than 1,000,000 Series 44 Shares outstanding after December 31, 2020, all remaining Series 44 Shares will be automatically converted into Series 45 Shares on a one-for-one basis effective December 31, 2020; and (ii) if Brookfield determines that there would be fewer than 1,000,000 Series 45 Shares outstanding after December 31, 2020, no Series 44 Shares will be permitted to be converted into Series 45 Shares. There are currently 9,831,929 Series 44 Shares outstanding.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 45 Shares effective upon conversion. Listing of the Series 45 Shares is subject to Brookfield fulfilling all the listing requirements of the TSX and, upon approval, the Series 45 Shares will be listed on the TSX under the trading symbol “BAM.PF.K”.

Series 25 Shares

The dividend on the Series 25 Shares is paid at an annual rate, calculated for each quarter, of 2.30% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly dividend rate in respect of the January 1, 2021 to March 31, 2021 dividend period will be 0.594% (2.409% on an annualized basis) and the dividend, if declared, for such dividend period will be $0.1485 per share, payable on March 31, 2021.

BAM.PF.H was issued as a FixedReset, 5.00%+417M500, that commenced trading 2015-10-2 after being announced 2015-9-24. It is tracked by HIMIPref™ and has been assigned to the FixedResets subindex.