Category: Issue Comments

Scotia Managed Companies has announced (on October 23):

today that all of its issued and outstanding Class A Capital Shares (“Capital Shares”) and Class B Preferred Shares, Series 2 (“Preferred Shares”) will be redeemed by the Company in accordance with their terms on February 26, 2021 and that the Company will wind up and terminate as soon as practicable after such date.

The redemption price for each Preferred Share will be an amount equal to the Series 2 Preferred Share Redemption Price (as defined in the provisions attaching to the Preferred Shares). The Series 2 Preferred Share Redemption Price will equal the lesser of (i) $25.67; and (ii) Unit Value (as defined in the provisions attaching to the Preferred Shares). The redemption price (the “Capital Share Redemption Price”) for every two Capital Shares redeemed will be an amount equal to the amount, if any, by which the Unit Value exceeds $25.67.

Holders of Capital Shares who wish to receive a redemption payment equal to the Capital Share Redemption Price in portfolio shares (rounded down to the nearest whole share) rather than cash must give notice to this effect to the Company and tender $25.67 for every two Capital Shares redeemed to the Company no later than January 29, 2021. Dealers and CDS may have deadlines earlier than January 29, 2021 for receiving such notice. Accordingly, a holder who wishes to receive portfolio shares on the final redemption should contact their dealer sufficiently in advance of January 29, 2021 to ensure that their dealer is provided sufficient time to deliver such notice to CDS before the deadline set by CDS for receiving those notices. Holders of Capital Shares who do not give the required 20 business days’ notice will be deemed to have chosen to be paid in cash.

The payment of the amount due to holders of the redeemed Capital Shares and Preferred Shares will be made by the Company on February 26, 2021.

The Capital Shares and Preferred Shares will be delisted from the Toronto Stock Exchange on or about February 26, 2021.

Allbanc Split Corp. II is a mutual fund corporation created to hold a portfolio of publicly listed common shares of selected Canadian chartered banks. Capital Shares and Preferred Shares of Allbanc Split Corp. II are listed for trading on The Toronto Stock Exchange under the symbols ALB and ALB.PR.C respectively.

ALB.PR.C is a SplitShare, ~4.75%, maturing 2021-2-28, that commenced trading 2016-2-29. It is tracked by HIMIPref™ but relegated to the Scraps – SplitShare subindex on volume concerns.

Royal Bank of Canada has announced:

that during the conversion notice period, which ran from October 26, 2020 to November 9, 2020, 52,464 Non-Viability Contingent Capital (NVCC) Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series BF (the “Series BF shares”) were tendered for conversion, on a one-for-one basis, into NVCC Non-Cumulative Floating Rate First Preferred Shares, Series BG (the “Series BG shares”). As per the conditions set out in the prospectus supplement dated March 9, 2015, since less than 1,000,000 Series BG shares would be outstanding after November 24, 2020, holders of Series BF shares will not be entitled to convert their shares into Series BG shares. As a result, Series BG shares will not be issued at this time and holders of Series BF shares will retain their shares.

On November 24, 2020, Royal Bank of Canada will have 12,000,000 Series BF shares issued and outstanding. The Series BF shares are currently listed on the Toronto Stock Exchange under the symbol RY.PR.M.

RY.PR.M is a FixedReset, 3.60%+262, NVCC-compliant, that commenced trading 2015-3-15 after being announced 2015-3-5. The company announced extension earlier in October. The issue will reset to 3.00% effective 2020-11-24. The issue is tracked by HIMIPref™ and is assigned to the FixedReset-Discount subindex.

Pembina Pipeline Corporation has announced:

that it does not intend to exercise its right to redeem the currently outstanding Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 9 (“Series 9 Shares”) (TSX: PPL.PR.I) on December 1, 2020 (the “Conversion Date”).

As a result, subject to certain terms of the Series 9 Shares, the holders of the Series 9 Shares will have the right to convert all or part of their Series 9 Shares on a one-for-one basis into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 10 of Pembina (“Series 10 Shares”) on the Conversion Date. Holders who do not exercise their right to convert their Series 9 Shares into Series 10 Shares will retain their Series 9 Shares.

As provided in the terms of the Series 9 Shares: (i) if Pembina determines that there would remain outstanding immediately following the conversion less than 1,000,000 Series 9 Shares, then all remaining Series 9 Shares will be automatically converted into Series 10 Shares on a one-for-one basis effective December 1, 2020; or (ii) if Pembina determines that there would be less than 1,000,000 Series 10 Shares after December 1, 2020, no Series 9 Shares will be converted into Series 10 Shares on the Conversion Date. There are currently 9,000,000 Series 9 Shares outstanding.

With respect to any Series 9 Shares that remain outstanding after December 1, 2020, 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 9 Shares for the five-year period from and including December 1, 2020 to, but excluding, December 1, 2025 will be 4.302 percent, being equal to the five-year Government of Canada bond yield of 0.392 percent determined as of today plus 3.91 percent, in accordance with the terms of the Series 9 Shares.

With respect to any Series 10 Shares that may be issued on December 1, 2020, 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 Series 10 Shares for the three-month floating rate period from and including December 1, 2020 to, but excluding, March 1, 2021 will be 3.996 percent, being equal to the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 0.086 percent plus 3.91 percent, in accordance with the terms of the Series 10 Shares (the “Floating Quarterly Dividend Rate”). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series 9 Shares who wish to exercise their right of conversion during the conversion period, which runs from November 2, 2020 until 3:00 (MT) / 5:00 pm (ET) on November 16, 2020, 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 December 1, 2020 to holders of the Series 9 Shares of record on November 2, 2020 will be $0.296875 per Series 9 Share, consistent with the dividend rate in effect since issuance of the Series 9 Shares. For more information on the terms of the Series 9 Shares and the Series 10 Shares, please see the prospectus supplement dated April 2, 2015 which can be found on SEDAR, under the profile of Pembina Pipeline Corporation, at www.sedar.com.

PPL.PR.I is a FixedReset, 4.75%+391, that commenced trading 2015-4-10 after being announced 2015-3-31. It is tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

Canadian Utilities Limited has announced:

that it has notified the registered shareholder of its Cumulative Redeemable Second Preferred Shares Series FF (“Series FF Preferred Shares”) of a conversion privilege and applicable dividend rates. As a result, subject to certain conditions, the holders of Series FF Preferred Shares will have the right to choose one of the following options with regard to their shares:

To retain any or all of their Series FF Preferred Shares and continue to receive a fixed rate quarterly dividend; or
To convert, on a one-for-one basis, any or all of their Series FF Preferred Shares into Cumulative Redeemable Second Preferred Shares Series GG (“Series GG Preferred Shares”) of Canadian Utilities Limited and receive a floating rate quarterly dividend.
Effective December 1, 2020, the annual dividend rate for the Series FF Preferred Shares is set at 4.50% for the five-year period from and including December 1, 2020 to but excluding December 1, 2025 and the dividend rate for the Series GG Preferred Shares is set at an annual rate of 3.78% for the three-month period commencing December 1, 2020 to but excluding March 1, 2021. The dividend rate for the Series GG Preferred Shares will be reset each quarter. Both rates were calculated according to the terms described in the prospectus supplement of Canadian Utilities Limited dated September 16, 2015.

Beneficial owners of Series FF Preferred Shares who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to meet the deadline to exercise such right, which is 3 p.m. (Calgary time) / 5 p.m. (Toronto time) on November 16, 2020. Any notices received after this deadline will not be valid. As such, it is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary with time to complete the necessary steps.

The foregoing conversions are subject to the conditions that: (i) if Canadian Utilities Limited determines that there would be less than 2,000,000 Series FF Preferred Shares outstanding on December 1, 2020, then all remaining Series FF Preferred Shares will automatically be converted into Series GG Preferred Shares on December 1, 2020, and (ii) alternatively, if Canadian Utilities Limited determines that there would be less than 2,000,000 Series GG Preferred Shares outstanding on December 1, 2020 after giving effect to conversion notices received, no Series FF Preferred Shares will be converted into Series GG Preferred Shares. If either of these scenarios occurs, Canadian Utilities Limited will issue a news release to that effect on or before November 23, 2020.

Holders of the Series FF Preferred Shares and the Series GG Preferred Shares, as applicable, will have the opportunity to convert their shares again on December 1, 2025, and every five years thereafter as long as the shares remain outstanding.

For more information on the terms of, and risks associated with an investment in, the Series FF Preferred Shares and the Series GG Preferred Shares, please see Canadian Utilities Limited’s prospectus supplement dated September 16, 2015, which can be found under Canadian Utilities Limited’s profile on SEDAR at www.sedar.com.

CU.PR.I is a FixedReset, 4.50%+369M450, that commenced trading 2015-9-24 after being announced 2015-9-14. It is tracked by HIMIPref™ and is assigned to the FixedReset-Premium subindex.

It is of interest to note that CU.PR.I is very expensive relative to CU Straights according to Implied Volatility Theory:

Click for Big

The Current Yield on the issue is 4.49% vs. a theoretical yield (derived from the Straights) of 4.79% – a price difference of $1.59. To rationalize this, one must assume the market is assigning a very high probability to much higher interest rates in the future.

TC Energy Corporation has announced:

that it does not intend to exercise its right to redeem its Cumulative Redeemable First Preferred Shares, Series 11 (Series 11 Shares) on November 30, 2020. As a result, subject to certain conditions, the holders of Series 11 Shares have the right to choose one of the following options regarding their shares:

to retain any or all of their Series 11 Shares and continue to receive a fixed rate quarterly dividend; or

to convert, on a one-for-one basis, any or all of their Series 11 Shares into Cumulative Redeemable First Preferred Shares, Series 12 (Series 12 Shares) of TC Energy and receive a floating rate quarterly dividend.
Should holders of Series 11 Shares choose to retain their shares, such shareholders will receive the new annual fixed dividend rate applicable to the Series 11 Shares of 3.351% for the five-year period commencing November 30, 2020 to, but excluding, November 28, 2025.

Should holders of Series 11 Shares choose to convert their shares to Series 12 Shares, holders of Series 12 Shares will receive the floating quarterly dividend rate applicable to the Series 12 Shares of 3.046% for the first quarterly floating rate period commencing November 30, 2020 to, but excluding, February 26, 2021. The floating quarterly dividend rate will be reset every quarter.

Beneficial owners of Series 11 Shares who want to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions to meet the deadline to exercise such right, which is 5 p.m. (EDT) on November 16, 2020. Any notices received after this deadline will not be valid. It is recommended that this be done well in advance of the deadline to provide the broker or other nominee with time to complete the necessary steps.

Beneficial owners of Series 11 Shares who do not exercise their conversion right through their broker or other nominee by the deadline will retain their Series 11 Shares and receive the new annual fixed dividend rate applicable to the Series 11 Shares, subject to the conditions stated below.

The foregoing conversions are subject to the conditions that: (i) if TC Energy determines that there would be less than one million Series 11 Shares outstanding after November 30, 2020, then all remaining Series 11 Shares will automatically be converted into Series 12 Shares on a one-for-one basis on November 30, 2020 and (ii) alternatively, if TC Energy determines that there would be less than one million Series 12 Shares outstanding after November 30, 2020, no Series 11 Shares will be converted into Series 12 Shares. In either case, TC Energy will issue a news release to that effect no later than November 23, 2020.

Holders of Series 11 Shares and Series 12 Shares will have the opportunity to convert their shares again on November 28, 2025 and the last business day of November in every fifth year thereafter as long as the shares remain outstanding. For more information on the terms of, and risks associated with an investment in the Series 11 Shares and the Series 12 Shares, please see the Corporation’s prospectus supplement dated February 23, 2015 which is available on sedar.com or on our website.

TRP.PR.G is a FixedReset, 3.80%+296, that commenced trading 2015-3-2 after being announced 2015-2-23. It is tracked by HIMIPref™ and is assigned to the FixedReset-Discount subindex.

Royal Bank of Canada has announced (on October 26):

the applicable dividend rates for its Non-Viability Contingent Capital (NVCC) Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series BF (RY.PR.M on TSX ) (the “Series BF shares”) and NVCC Non-Cumulative Floating Rate First Preferred Shares, Series BG (the “Series BG shares”).

With respect to any Series BF shares that remain outstanding after November 24, 2020, holders will be entitled to receive quarterly fixed rate non-cumulative preferential cash dividends, as and when declared by the Board of Directors of Royal Bank of Canada, subject to the provisions of the Bank Act (Canada).

The dividend rate for the 5-year period from and including November 24, 2020 to, but excluding, November 24, 2025 will be 3.00% for the Series BF shares, being equal to the 5-Year Government of Canada bond yield determined as of October 26, 2020 plus 2.62%, as determined in accordance with the terms of the Series BF shares.

With respect to any Series BG shares that may be issued on November 24, 2020, holders will be entitled to receive quarterly floating rate non-cumulative preferential cash dividends, calculated on the basis of the actual number of days elapsed in such quarterly period divided by 365, as and when declared by the Board of Directors of Royal Bank of Canada, subject to the provisions of the Bank Act (Canada).

The dividend rate for the floating rate period from and including November 24, 2020 to, but excluding, February 24, 2021 will be 2.71% for the Series BG shares, being equal to the 3-month Government of Canada Treasury Bill yield determined as of October 26, 2020 plus 2.62%, as determined in accordance with the terms of the Series BG shares.

Beneficial owners of Series BF shares who wish to exercise their conversion rights should instruct their broker or other nominee to exercise such rights on or prior to the deadline for notice of intention to convert, which is 5:00 p.m. (EST) on November 9, 2020.

RY.PR.M is a FixedReset, 3.60%+262, NVCC-compliant, that commenced trading 2015-3-15 after being announced 2015-3-5. The company announced extension earlier in October. The issue is tracked by HIMIPref™ and is assigned to the FixedReset-Discount subindex.

Husky Energy Inc. has announced:

a transaction to create a new integrated Canadian oil and natural gas company with an advantaged upstream and downstream portfolio that is expected to provide enhanced free funds flow generation and superior return opportunities for investors.

The companies have entered into a definitive arrangement agreement under which Cenovus and Husky will combine in an all-stock transaction valued at $23.6 billion, inclusive of debt. The combined company will operate as Cenovus Energy Inc. and remain headquartered in Calgary, Alberta. The transaction has been unanimously approved by the Boards of Directors of Cenovus and Husky and is expected to close in the first quarter of 2021.

Transaction highlights:

• Accretive to all shareholders on cash flow and free funds flow per share
• Anticipated annual run rate synergies of $1.2 billion, largely achieved within the first year, independent of commodity prices
• Expected free funds flow break-even at West Texas Intermediate (WTI) pricing of US$36 per barrel (bbl) in 2021, and at less than WTI US$33/bbl by 2023
• Low exposure to Western Canadian Select (WCS) locational differential risk while maintaining healthy exposure to global commodity prices
• Increased and more stable cash flows support investment grade credit profile
• Net-debt-to-adjusted-EBITDA ratio of less than 2x expected to be achieved in 2022
• Anticipated quarterly dividend of $0.0175 per share (upon Board approval) and positioned for consistent growth
• Husky shareholders will receive 0.7845 of a Cenovus share plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share

…
The transaction is structured through a plan of arrangement in respect of the securities of Husky under the Business Corporations Act (Alberta), and is subject to the approval of at least two-thirds of the votes cast by holders of Husky common shares. Hutchison Whampoa Europe Investments S.à r.l., which holds 40.19% of the Husky common shares and L.F. Investments S.à r.l., which holds 29.32% of the Husky common shares, have each entered into a separate irrevocable voting support agreement with Cenovus pursuant to which each has committed to vote all of its Husky common shares, representing, in total, approximately 70% of the Husky common shares, in favour of the transaction at the special meeting of Husky shareholders. In addition, Husky will also seek the approval of at least two-thirds of the votes cast by holders of outstanding Husky preferred shares voting together as a single class. If Husky preferred shareholder approval is obtained, each Husky preferred share will be exchanged for one Cenovus preferred share with substantially the same commercial terms and conditions as the Husky preferred shares. The transaction is not conditional on Husky preferred shareholder approval and, if not obtained, the Husky preferred shares will remain outstanding in a subsidiary of the combined company.

As a consequence DBRS placed HSE under Review-Negative:

DBRS Limited (DBRS Morningstar) placed Husky Energy Inc.’s (Husky or the Company) Issuer Rating and Senior Unsecured Notes and Debentures rating of BBB (high), Commercial Paper rating of R-2 (high), and Preferred Shares – Cumulative rating of Pfd-3 (high) Under Review with Negative Implications.
…
DBRS Morningstar assesses the business risk profile of the Combined Entity to be moderately stronger relative to Husky’s stand-alone business risk profile. However, the Under Review with Negative Implications status reflects DBRS Morningstar’s opinion that the impact of the stronger business risk profile will be more than offset by the weakness in the financial risk profile of the Combined Entity due to a material increase in debt levels at close and weaker financial metrics.
…
DBRS Morningstar expects to resolve the Under Review with Negative Implications status by the close of the transaction. Assuming the transaction closes as described in the plan of arrangement and based on DBRS Morningstar’s assumptions, the ratings of Husky by close is likely to be one notch lower than its current ratings.

… while placing CVE under Review-Positive:

DBRS Limited (DBRS Morningstar) placed Cenovus Energy Inc.’s (Cenovus or the Company) Issuer Rating and Senior Unsecured Debt rating of BBB (low) Under Review with Positive Implications.
…
The Under Review with Positive Implications status reflects DBRS Morningstar’s opinion that the Combined Entity’s overall risk profile will be stronger relative to Cenovus’s stand-alone risk profile given the material improvement in the business risk profile and a modest improvement in the financial risk profile.
…
DBRS Morningstar expects to resolve the Under Review with Positive Implications status by the close of the transaction. Assuming the transaction closes as described in the plan of arrangement and based on DBRS Morningstar’s assumptions, the ratings of Cenovus by close is likely to be one notch higher than its current ratings.

Meanwhile, S&P placed HSE on Review-Negative:

• On Oct. 25, 2020, Husky Energy Inc. and Cenovus Energy Inc. announced their intention to merge under a plan of arrangement.
• At the close of the transaction, Husky’s existing shareholders will own 39% of the combined company, which will operate under the Cenovus name.
  Upon completion, we expect the ownership interest of entities related to C.K. Hutchison Holdings Ltd. (A/Stable/–) will fall to 27%; accordingly, the one-notch uplift we currently apply to our issuer credit rating on Husky, based on our assessment of Husky as a moderately strategic investment for C.K. Hutchison, would no longer apply.

• As a result, S&P Global Ratings placed all of its ratings on Husky, including its ‘BBB’ long-term issuer credit rating, on CreditWatch with negative implications.
• We expect to resolve the CreditWatch placement when the transaction closes in the first quarter of 2021. The downside risk to all ratings is limited to one notch.

…
Despite the normalizing cash flow contribution from the company’s midstream assets and downstream operations, we expect the heavy oil-dominant upstream product mix will continue to amplify cash flow volatility. Our projected two-year (2021-2022) cash flow and leverage metrics, and overall financial risk profile estimate pro forma adjusted funds from operations to debt in the mid 20% area.

We expect to resolve the CreditWatch placement when the transaction is completed in the first quarter of 2021. The rating downside on the issuer credit rating on Husky is limited to one notch.

… while retaining the Negative Outlook for CVE:

• On Oct. 25, 2020, Cenovus Energy Inc. and Husky Energy Inc. announced their intention to combine in an all-stock transaction valued at C$23.6 billion, under a plan of arrangement. The new integrated Canadian oil and natural gas company will operate under the Cenovus name.
• At closing, pro forma share ownership for Cenovus and Husky shareholders is estimated at 61% and 39%, respectively. We expect the ownership interest of entities related to Husky’s major shareholder, C.K. Hutchison Holdings Ltd. (A/Stable/–), will decrease to about 27% of the pro forma company.
• We take into account our ‘BBB-‘ issuer credit rating on Cenovus, and the ‘bbb-‘ stand-alone credit profile on Husky, before rating enhancement for Husky’s strategic relationship with its major shareholder, also at the same level.
• S&P Global Ratings affirmed its ‘BBB-‘ long-term issuer credit and senior unsecured debt ratings on Cenovus.
• The outlook remains negative pending completion of the combination.

…
The negative outlook continues to reflect the very weak near-term leverage metrics, and the risk cash flow and leverage ratios could underperform our base-case assumptions, if hydrocarbon prices again weaken beyond 2020. The substantial deterioration of the current year’s cash flow ratios highlights the company’s vulnerability to volatility in crude oil prices and heavy oil differentials, as bitumen production will continue to account for the majority of Cenovus’ upstream product mix.

In an environment of persistently weak crude oil prices and weak refining margins, we could lower the rating to ‘BB+’ if our estimate of the company’s three-year, weighted-average FFO-to-debt ratio remained near 20%, with limited prospects for improvement during our 24-month outlook period.

With the company’s capital spending expected to remain near maintenance levels throughout our 24-month rating outlook period, we believe cash flow metrics could only improve in tandem with rising crude oil prices. We could revise our outlook to stable if Cenovus was able to strengthen and sustain its three-year, weighted-average FFO-to-debt ratio at the upper end of the 20%-30% range, while continuing to generate positive discretionary cash flow (DCF).

Affected issues are HSE.PR.A, HSE.PR.B, HSE.PR.C, HSE.PR.E and HSE.PR.G.

Assiduous Reader ER writes in and says:

I was wondering if you could talk about what might happen to Husky preferred share holders on prefblog. What are the possible outcomes?

Assuming that the deal goes through, there are two possibilities for the HSE preferreds:

• They are replaced by equivalent CVE preferreds, or
• They remain as HSE preferreds, with HSE becoming a wholly-owned subsidiary of CVE

Of the two possibilities, the second is preferable for the preferred shareholders, since HSE is the better credit. Thus, I suggest that HSE preferred shareholders vote against the deal in order to ensure the continued existence of the HSE entity.

The logical thing for CVE to do to avoid this would be to offer a little sweetener to the preferred shareholders to vote yes … a few beeps extra on the Issue Reset Spreads, for instance, or an outright cash payment. This, however, would be a very rare happening.

The Toronto-Dominion Bank has announced:

that none of its 8 million Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 9 (Non-Viability Contingent Capital (NVCC)) (the “Series 9 Shares”) will be converted on November 2, 2020 (being the first business day following the conversion date of October 31, 2020) into Non-Cumulative Floating Rate Preferred Shares, Series 10 (NVCC) (the “Series 10 Shares”) of TD.

During the conversion period, which ran from October 1, 2020 to October 16, 2020, 52,872 Series 9 Shares were tendered for conversion into Series 10 Shares, which is less than the minimum 1,000,000 shares required to give effect to the conversion, as described in the prospectus supplement for the Series 9 Shares dated April 17, 2015. As a result, no Series 10 Shares will be issued on November 2, 2020 and holders of Series 9 Shares will retain their Series 9 Shares.

The Series 9 Shares are currently listed on the Toronto Stock Exchange under the symbol TD.PF.E. As previously announced on October 1, 2020, the dividend rate for the Series 9 Shares for the 5 year period from and including October 31, 2020 to but excluding October 31, 2025 will be 3.242%.

TD.PF.E is a FixedReset, 3.70%+287, that commenced trading 2015-4-24 after being announced 2015-4-15. Notice of extension was provided on 2020-9-17. TD.PF.E will reset at 3.242% effective 2020-10-31. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

Royal Bank of Canada has announced:

that it does not intend to exercise its right to redeem all or any part of the currently outstanding Non-Viability Contingent Capital (NVCC) Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series BF (RY.PR.M on TSX) (the “Series BF shares”) on November 24, 2020. There are currently 12,000,000 Series BF shares outstanding.

Subject to certain conditions set out in the prospectus supplement dated March 9, 2015 relating to the issuance of the Series BF shares, the holders of the Series BF shares have the right to convert all or part of their Series BF shares, on a one-for-one basis, into NVCC Non-Cumulative Floating Rate First Preferred Shares, Series BG (the “Series BG shares”) on November 24, 2020. On such date, holders who do not exercise their right to convert their Series BF shares into Series BG shares will continue to hold their Series BF shares. The foregoing conversion rights are subject to the following:

if Royal Bank of Canada determines that there would be less than 1,000,000 Series BG shares outstanding after taking into account all shares tendered for conversion on November 24, 2020, then holders of Series BF shares will not be entitled to convert their shares into Series BG shares, and
alternatively, if Royal Bank of Canada determines that there would remain outstanding less than 1,000,000 Series BF shares after taking into account all shares tendered for conversion on November 24, 2020, then all remaining Series BF shares will automatically be converted into Series BG shares on a one-for-one basis on November 24, 2020.
In either case, Royal Bank of Canada will give written notice to that effect to holders of Series BF shares no later than November 17, 2020.

The dividend rate applicable for the Series BF shares for the 5-year period from and including November 24, 2020 to, but excluding, November 24, 2025, and the dividend rate applicable to the Series BG shares for the 3-month period from and including November 24, 2020 to, but excluding, February 24, 2021, will be determined and announced by way of a press release on October 26, 2020.

Beneficial owners of Series BF shares who wish to exercise their conversion rights should instruct their broker or other nominee to exercise such rights during the conversion period, which runs from October 26, 2020 until 5:00 p.m. (EST) on November 9, 2020.

Inquiries should be directed to Shareholder Relations Officer, Shirley Boudreau, at 416-955-7806.

RY.PR.M is a FixedReset, 3.60%+262, NVCC-compliant, that commenced trading 2015-3-15 after being announced 2015-3-5. It is tracked by HIMIPref™ and is assigned to the FixedReset-Discount subindex.

Partners Value Split Corp. did not issue a press release today on their site regarding the settlement of PVS.PR.I, although there is a notice on Bloomberg:

Partners Value Split Corp. (the “Company”) announced today the completion of its previously announced issue of 6,000,000 Class AA Preferred Shares, Series 11 (the “Series 11 Preferred Shares”) at an offering price of $25.00 per Series 11 Preferred Share, raising gross proceeds of $150,000,000. The Series 11 Preferred Shares carry quarterly fixed cumulative preferential dividends representing a 4.75% annualized yield on the offering price and have a final maturity of October 31, 2025. The Series 11 Preferred Shares have been listed and posted for trading on the Toronto Stock Exchange under the symbol PVS.PR.I. The net proceeds of the offering will be used to partially fund the redemption of the Company’s Class AA Preferred Shares, Series 6.

Prior to the closing of the offering, the Company subdivided the existing capital shares held by Partners Value Investments Inc. so that there are an equal number of preferred shares and capital shares outstanding.

I have also received a copy of a NYSE/ICE press release that states:

The Toronto Stock Exchange reports that Partners Value Split Corp.’s Class AA preferred shares, Series 11, will be listed at 5:01 p.m. on Oct. 5, 2020, for trading at the open on Oct. 6, 2020. According to the TSX, the listing will cover six million Series 11 shares to be issued in a public offering at $25 per share, pursuant to the terms of a prospectus supplement dated Sept. 29, 2020. The Series 11 shares will trade under the symbol PVS.PR.I, in Canadian dollars and under Cusip No. 70214J 86 3.

The TSX reports that the company will pay quarterly dividends on the Series 11 shares on or about March 7, June 7, Sept. 7 and Dec. 7 of each year at an annual dividend rate of $1.1875 per share. The initial dividend payment of 47.5 cents per Series 11 share will be payable on March 7, 2021, covering the period from the closing of the offering to Feb. 28, 2021.

According to the TSX, the Series 11 shares may be redeemed by the company at any time on or after Oct. 31, 2023, and before Oct. 31, 2025 (the redemption date), at a price that, prior to Oct. 31, 2024, will equal $25.50 per share plus accrued and unpaid dividends. The redemption price will decline by 50 cents per share on Oct. 31, 2024. All Series 11 shares outstanding on the redemption date will be redeemed for a cash amount equal to the lesser of $25 plus accrued and unpaid dividends, and the net asset value per unit.

Notwithstanding the first sentence of the previous paragraph, the company may redeem Series 11 shares before Oct. 31, 2023, for $26 per share plus accrued and unpaid dividends if, and will not redeem Series 11 shares before Oct. 31, 2023, unless: (i) capital shares have been retracted; or (ii) there is a takeover bid for the Brookfield Asset Management Inc. shares and the board of directors of the company determines that such bid is in the best interest of the holders of the capital shares.

PVS.PR.I is a SplitShare, 5-Year, 4.75%, announced 2020-9-25. It will be tracked by HIMIPref™ and has been added to the SplitShare subindex.

The long first coupon might lead to some interesting trade possibilities close to the ex-dividend date!

Vital statistics are: