Category: Issue Comments

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:

The Toronto-Dominion Bank has announced (on October 1):

the applicable dividend rates for its Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 9 (Non-Viability Contingent Capital (NVCC)) (the “Series 9 Shares”) and Non-Cumulative Floating Rate Preferred Shares, Series 10 (NVCC) (the “Series 10 Shares”).

With respect to any Series 9 Shares that remain outstanding after November 2, 2020 (being the first business day following the conversion date of October 31, 2020, which falls on a Saturday), holders of the Series 9 Shares will be entitled to receive quarterly fixed non-cumulative preferential cash dividends, as and when declared by the Board of Directors of TD, subject to the provisions of the Bank Act (Canada). The dividend rate for the 5-year period from and including October 31, 2020 to but excluding October 31, 2025 will be 3.242%, being equal to the 5-Year Government of Canada bond yield determined as at October 1, 2020 plus 2.87%, as determined in accordance with the terms of the Series 9 Shares.

With respect to any Series 10 Shares that may be issued on November 2, 2020, holders of the Series 10 Shares 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 TD, subject to the provisions of the Bank Act (Canada). The dividend rate for the floating rate period from and including October 31, 2020 to but excluding January 31, 2021, will be 3.006%, being equal to the 90-day Government of Canada Treasury Bill yield determined as of October 1, 2020 plus 2.87%, as determined in accordance with the terms of the Series 10 Shares.

Beneficial owners of Series 9 Shares who wish to exercise their conversion right should communicate as soon as possible with their broker or other nominee to obtain instructions for exercising such right on or prior to the deadline for exercise, which is 5:00 p.m. (Toronto time) on October 16, 2020.

Inquiries should be directed to TD’s Registrar and Transfer Agent, AST Trust Company (Canada), at 1-800-387-0825 (or in Toronto 416-682-3860).

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. The issue is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

AltaGas Ltd. has announced (strikethroughs added; see following press release):

that 35,180 of its 8,000,000 Cumulative Redeemable Five-Year Fixed Rate Reset Preferred Shares, Series A (the “Series A Preferred Shares”) (TSX: ALA.PR.A) were tendered for conversion into Cumulative Floating Rate Preferred Shares, Series B (the “Series B Preferred Shares”) (TSX: ALA.PR.B) and that 1,270,639 of its Series B Preferred Shares were tendered for conversion into Series A Preferred Shares. As a result of the conversions AltaGas has 5,511,220 Series A Preferred Shares and 2,488,780 Series B Preferred Shares issued and outstanding.

The Series A Preferred Shares will continue to pay on a quarterly basis, for the five-year period beginning on September 30, 2020, as and when declared by the Board of Directors of AltaGas, a fixed dividend based on an annual fixed dividend rate of 3.060 percent. The Series A Preferred Shares will continue to be listed on the Toronto Stock Exchange (TSX) under the symbol ALA.PR.A.

The Series B Preferred Shares will pay a floating quarterly dividend for the five-year period beginning on September 30, 2020, as and when declared by the Board of Directors of AltaGas. The floating quarterly dividend rate for the Series B Preferred Shares for the quarterly floating rate period (being the period from September 30, 2020 to but excluding, December 31, 2020) is 2.809 percent and will be reset every quarter. The Series B Preferred Shares will continue to be listed the TSX under the symbol ALA.PR.B.

For more information on the terms of, and risks associated with an investment in, the Series A Preferred Shares and the Series B Preferred Shares, please see the prospectus supplement dated August 11, 2010 which is available on SEDAR at www.sedar.com.

AltaGas is a leading North American energy infrastructure company that connects NGLs and natural gas to domestic and global markets. AltaGas creates value by growing and optimizing its energy infrastructure, including a focus on clean energy sources. For more information visit: www.altagas.ca

They later announced their wish:

to correct an error in its press release entitled “AltaGas Ltd. Announces Results of Series A and Series B Preferred Share Conversions” issued on September 30, 2020. As a result of the conversions AltaGas has 6,746,679 Series A Preferred Shares and 1,253,321 Series B Preferred Shares issued and outstanding rather than the 5,511,220 Series A Preferred Shares and 2,488,780 Series B Preferred Shares referred to in AltaGas’ previous press release. This correction does not change any other amounts or information reported in the prior press release.

Thus there has been a net conversion of 1,235,459 shares from ALA.PR.B to ALA.PR.A, or 15% of the total issue size.

ALA.PR.A is a FixedReset issued at 5.00%+266bp, which commenced trading August 19, 2010 after being announced August 10, 2010. In 2015 the issue reset to 3.38% and I recommended holders retain the issue. Despite this, there was a 31% conversion to FloatingResets. The issue has now reset to 3.06%.

ALA.PR.B is a FloatingReset, Bills+266bp, which arose via a partial conversion from ALA.PR.A in 2015.

The Toronto-Dominion Bank has announced (on September 17):

that it does not intend to exercise its right to redeem all or any part of the currently outstanding 8 million Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 9 (Non-Viability Contingent Capital (NVCC)) (the “Series 9 Shares”) of TD on October 31, 2020. As a result and subject to certain conditions set out in the prospectus supplement dated April 17, 2015 relating to the issuance of the Series 9 Shares, the holders of the Series 9 Shares have the right to convert all or part of their Series 9 Shares, on a one-for-one basis, into Non-Cumulative Floating Rate Preferred Shares, Series 10 (NVCC) (the “Series 10 Shares”) of TD on November 2, 2020 (being the first business day following the conversion date of October 31, 2020, which falls on a Saturday). Holders who do not exercise their right to convert their Series 9 Shares into Series 10 Shares on such date will continue to hold their Series 9 Shares.

The foregoing conversion right is subject to the conditions that: (i) if TD determines that there would be less than 1,000,000 Series 10 Shares outstanding after taking into account all shares tendered for conversion on November 2, 2020, then holders of Series 9 Shares will not be entitled to convert their shares into Series 10 Shares, and (ii) alternatively, if TD determines that there would remain outstanding less than 1,000,000 Series 9 Shares after taking into account all shares tendered for conversion on November 2, 2020, then all remaining Series 9 Shares will automatically be converted into Series 10 Shares on a one-for-one basis on November 2, 2020. In either case, TD will give written notice to that effect to holders of Series 9 Shares no later than October 26, 2020 (being the first business day following the notice date of October 24, 2020, which falls on a Saturday).

The dividend rate applicable to the Series 9 Shares for the 5-year period from and including October 31, 2020 to but excluding October 31, 2025, and the dividend rate applicable to the Series 10 Shares for the 3-month period from and including October 31, 2020 to but excluding January 31, 2021, will be determined and announced by way of a press release on October 1, 2020.

Beneficial owners of Series 9 Shares who wish to exercise their conversion right should communicate as soon as possible with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from October 1, 2020 until 5:00 p.m. (Toronto time) on October 16, 2020.

Inquiries should be directed to TD’s Registrar and Transfer Agent, AST Trust Company (Canada), at 1-800-387-0825 (or in Toronto 416-682-3860).

TD.PF.E is a FixedReset, 3.70%+287, that commenced trading 2015-4-24 after being announced 2015-4-15. It is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

The Toronto-Dominion Bank has announced:

that it will exercise its right to redeem all of its 6,000,000 outstanding Non-cumulative Class A First Preferred Shares, Series 11 (Non-Viability Contingent Capital) (the “Series 11 Shares”) on October 31, 2020 at the price of $26.00 per Series 11 Share for an aggregate total of approximately $156 million.

On August 27, 2020, TD announced that dividends of $ 0.30625 per Series 11 Share had been declared. These will be the final dividends on the Series 11 Shares, and will be paid in the usual manner on October 31, 2020 to shareholders of record on October 9, 2020, as previously announced. After October 31, 2020, the Series 11 Shares will cease to be entitled to dividends and the only remaining rights of holders of such shares will be to receive payment of the redemption amount.

Beneficial holders who are not directly the registered holder of Series 11 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 should be directed to our Registrar and Transfer Agent, AST Trust Company (Canada), at 1-800-387-0825 (or in Toronto 416-682-3860).

TD.PF.F is a 4.90% NVCC-compliant Straight Perpetual that commenced trading 2015-7-21 after being announced 2015-7-9. It is currently assigned to the PerpetualPremium sub-index.

This is a noteworthy event for two reasons: firstly, this is the first time an NVCC-compliant issue has been redeemed and secondly because as of the close 2020-9-28 it was quoted at 25.19-28, meaning that holders have captured a large capital gain overnight, given that it is quoted 2020-9-29 at 26.23-26.

It is something of a puzzle as to why it has been redeemed, but a look at the TD Annual Report for 2019 provides a clue. This report discloses Risk-Weighted Assets of 456-billion and preferred share capital of 5.8-billion. It will be remembered that the total allowance for Alternative Tier 1 Capital is 1.5% of RWA, of which up to half may be the new LRCN structure.

This implies that the AT1 Limit for TD Bank is 6.84-billion; given that preferred share capital is already 5.8-billion, they only have room for 1-billion in LRCN issuance unless they redeem something. TD may well have decided that redeeming this $150-million preferred share issue, even at a premium, was worthwhile. Note, however that TD.PF.E, a FixedReset 3.70%+287, will be extended, so there are limits to TD’s desire to expand their LRCN issuance room!

Brompton Group has announced:

Brompton Split Banc 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 Tuesday, September 29, 2020. The offering is expected to close on or about October 6, 2020 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 $9.10 per Class A Share for a distribution rate of 13.2% on the issue price, and the Preferred Shares will be offered at a price of $9.95 per Preferred Share for a yield to maturity of 5.3%. (1) The closing price on the TSX for each of the Class A and Preferred Shares on September 25, 2020 was $9.31 and $10.12, 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 September 24, 2020), as adjusted for dividends and certain expenses to be accrued prior to or upon settlement of the offering.

The Company invests in a portfolio (the “Portfolio”) consisting of common shares of the six largest Canadian banks: Royal Bank of Canada, The Bank of Nova Scotia, National Bank of Canada, The Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Bank of Montreal. In addition, the Company may hold up to 10% of the total assets of the Portfolio in investments in global financial companies for the purpose of enhanced diversification and return potential.

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 $0.125 per Preferred Share, and to return the original issue price to holders of Preferred Shares on November 29, 2022.

The syndicate of agents for the offering is being led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank.

The NAVPU was 18.24 on 2020-9-24 and this offering is for Whole Units at 19.05, so the premium is 4.44% – not the biggest ever seen, but quite enough to be worth doing!

Update, 2020-9-30: They raised 23.6-million.

Partners Value Split Corp. has announced a new issue and as part of the announcement stated:

The net proceeds of the offering will be used to partially fund the redemption of the Company’s Class AA Preferred Shares, Series 6.

The Series 6 Preferreds that are going to be redeemed are PVS.PR.D, currently redeemable at 25.50, redeemable commencing 2020-10-8 at 25.25 and maturing 2021-10-8 at 25.00. It only pays 4.50%, so it’s a bit surprising that they’re going to call it at a premium – although that is not yet 100% certain. PVS.PR.D was originally issued as BNA.PR.F, which commenced trading 2014-7-4 after being announced 2014-6-16.

Quadravest has announced:

North American Financial 15 Split Corp. (the “Company”) is pleased to announce the Preferred Share dividend rate for the fiscal year beginning December 1, 2020. Monthly payments to the FFN.PR.A Preferred Share will be $0.05625 per Share for an annual yield of 6.75% on their $10 redemption value. This is an increase of one and a quarter percent over the current rate.

The Company invests in an actively managed, high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows:

Bank of Montreal	National Bank of Canada	Bank of America Corp.
The Bank of Nova Scotia	Manulife Financial Corporation	Citigroup Inc.
Canadian Imperial Bank of Commerce	Sun Life Financial Services of Canada Inc.	Goldman Sachs Group Inc.
Royal Bank of Canada	Great-West Lifeco Inc.	JP Morgan Chase & Co.
The Toronto-Dominion Bank	CI Financial Corp.	Wells Fargo & Co.