Category: Issue Comments

BCE Inc. published their conversion notice for BCE.PR.F on December 18, 2019:

Holders of fixed-rate BCE Inc. Series AF Preferred Shares have the right to convert all or part of their shares, effective on February 1, 2020, on a one-for-one basis into floating-rate Cumulative Redeemable First Preferred Shares, Series AE of BCE Inc. (the “Series AE Preferred Shares”). In order to convert their shares, holders must exercise their right of conversion during the conversion period which runs from December 18, 2019 until 5:00 p.m. (Eastern time) on January 20, 2020.
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As of February 1, 2020, the Series AF 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 product of: (a) the yield to maturity compounded semi-annually (the “Government of Canada Yield”), computed on January 13, 2020 by two investment dealers appointed by BCE Inc., that would be carried by a non-callable Government of Canada bond with a 5-year maturity, multiplied by (b) the “Selected Percentage Rate”. The “Selected Percentage Rate” determined by BCE Inc. is 239%. The annual dividend rate applicable to the Series AF Preferred Shares will be published on January 16, 2020 in the national edition of The Globe and Mail, the Montreal Gazette and Le Devoir and will be posted on the BCE Inc. website at www.bce.ca.

There is a similar conversion notice for BCE.PR.E.

The Five-Year Canada rate is now 1.60%, if that is the case on the determination date of 2020-1-13, the dividend rate of BCE.PR.F will be 3.824%, or $0.956 p.a.

BCE.PR.F is a FixedFloater which was added to the HIMIPref™ database in December 2008, when it was paying 4.40%. It reset in 2010 to 4.541% and after a net conversion to BCE.PR.F the issue pair was about 90% FixedFloater. It reset in 2015 to 3.110% and after a massive conversion the issue pair was about 60% RatchetRate.

BCE.PR.E is a RatchetRate preferred, interconvertible every five years with BCE.PR.F. It was added to the HIMIPref™ database in May, 2012.

The most logical way to analyze the question of whether or not to convert is through the theory of Preferred Pairs, for which a calculator is available. Briefly, a Strong Pair is defined as a pair of securities that can be interconverted in the future (e.g., BCE.PR.F and the RatchetRate BCE.PR.E that will continue to exist if enough holders want it). Since they will be interconvertible on this future date, it may be assumed that they will be priced identically on this date (if they aren’t then holders will simply convert en masse to the higher-priced issue). And since they will be priced identically on a given date in the future, any current difference in price must be offset by expectations of an equal and opposite value of dividends to be received in the interim. And since the dividend rate on one element of the pair is both fixed and known, the implied average rate of the other, floating rate, instrument can be determined. Finally, we say, we may compare these average rates and take a view regarding the actual future course of that rate relative to the implied rate, which will provide us with guidance on which element of the pair is likely to outperform the other until the next interconversion date, at which time the process will be repeated.

We can show the break-even rates for each FixedFloater / RatchetRate Strong Pair graphically by plotting the implied average prime rate against the next Exchange Date (which is the date to which the average will be calculated). Inspection of the graph and the overall average break-even rates for extant pairs will provide a guide for estimating the break-even rate for the pair now under consideration assuming, of course, that enough conversions occur so that the pair is in fact created.

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The market seems to be doing a pretty good job of arbitraging this series of issues; the seven BCE issues have an average break-even prime rate of 4.15%, close to the current prime of 3.95% although there is more variation than might be expected. Whatever might be the result of the next few Bank of Canada overnight rate decisions, I suggest that it is unlikely that the average rate over the next five years will be lower than current – but if you disagree, of course, you may interpret the data any way you like.

If we plug in the current bid price of the BCE.PR.F FixedFloater, we may construct the following table showing consistent prices for its RatchetRate counterpart BCE.PR.E given a variety of Implied Breakeven yields consistent with issues currently trading:

Based on current market conditions, I suggest that BCE.PR.E will likely to trade roughly equal to the price of their counterparts, BCE.PR.F. Therefore, it seems likely that I will recommend that holders of either issue make their decision based on their own portfolio and other financial circumstances and outlook, but I will wait until it’s closer to the January 20 notification deadline before making a final pronouncement. I will note that once the conversion period has passed it may be a good trade to swap one issue for the other in the market once both elements of each pair are trading and you can – hopefully – do it with a reasonably good take-out in price, rather than doing it through the company on a 1:1 basis. But that, of course, will depend on the prices at that time and your forecast for the path of policy rates over the next five years. There are no guarantees – my recommendation is based on the assumption that current market conditions with respect to the pairs will continue until after the conversion and that the relative pricing of the two new pairs will reflect these conditions.

Emera Incorporated has announced (on 2020-1-7):

that it does not intend to exercise its right to redeem all or any part of the currently outstanding Cumulative Rate Reset First Preferred Shares, Series F of the Company (the “Series F Shares”) on February 15, 2020. There are currently 8,000,000 Series F Shares outstanding.

Subject to certain conditions set out in the prospectus supplement of the Company dated June 2, 2014, to the short form base shelf prospectus dated May 2, 2013, relating to the issuance of the Series F Shares, the holders of the Series F Shares have the right, at their option, to convert all or any of their Series F Shares, on a one-for-one basis, into Cumulative Floating Rate First Preferred Shares, Series G of the Company (the “Series G Shares”) on February 15, 2020 (the “Conversion Date”).

On such date, holders who do not exercise their right to convert their Series F Shares into Series G Shares will continue to hold their Series F Shares.

The foregoing conversion right is subject to the following:

if the Company determines that there would be less than 1,000,000 Series G Shares outstanding on the Conversion Date, then holders of Series F Shares will not be entitled to convert their shares into Series G Shares, and
alternatively, if the Company determines that there would remain outstanding less than 1,000,000 Series F Shares on the Conversion Date, then all remaining Series F Shares will automatically be converted into Series G Shares on a one-for-one basis on the Conversion Date.
In either case, Emera will give written notice to that effect to holders of Series F Shares no later than February 8, 2020.

The dividend rate applicable for the Series F Shares for the five-year period commencing on February 15, 2020 and ending on (and inclusive of) February 14, 2025, and the dividend rate applicable to the Series G Shares for the 3-month period commencing on February 15, 2020 and ending on (and inclusive of) May 14, 2020, will be determined on January 16, 2020 and notice of such dividend rates shall be provided to the holders of the Series F Shares on that day.

Beneficial owners of Series F 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 16, 2020 until 5:00 p.m. (EDT) on January 31, 2020.

EMA.PR.F is a FixedReset, 4.25%+263, that commenced trading 2014-6-9 after being being announced 2014-5-29. It is tracked by HIMIPref™ and assigned to the FixedReset Discount subindex.

National Bank of Canada has announced (on 2019-12-19):

that it does not intend to exercise its right to redeem all or part of the currently outstanding 12,000,000 Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series 32 (the “Series 32 Preferred Shares”) on February 15, 2020. As a result, subject to certain conditions, the holders of the Series 32 Preferred Shares have the right to convert all or part of their Series 32 Preferred Shares on a one-for-one basis into Non-cumulative Floating Rate First Preferred Shares Series 33 (the “Series 33 Preferred Shares”) on February 15, 2020 in accordance with the terms of the Series 32 Preferred Shares described in the prospectus supplement dated October 2, 2014 to the short form base shelf prospectus dated October 5, 2012.

Holders of Series 32 Preferred Shares who do not exercise their right to convert their Series 32 Preferred Shares into Series 33 Preferred Shares on February 15, 2020 will retain their Series 32 Preferred Shares.

The foregoing conversions are subject to the conditions that: (i) if National Bank determines that there would remain outstanding on February 15, 2020 less than 1,000,000 Series 33 Preferred Shares, after having taken into account all Series 32 Preferred Shares tendered for conversion into Series 33 Preferred Shares, then holders of Series 32 Preferred Shares will not be entitled to convert their shares into Series 33 Preferred Shares, and (ii) alternatively, if National Bank determines that there would remain outstanding on February 15, 2020 less than 1,000,000 Series 32 Preferred Shares, after having taken into account all Series 32 Preferred Shares tendered for conversion into Series 33 Preferred Shares, then all remaining Series 32 Preferred Shares will automatically be converted into Series 33 Preferred Shares without the consent of the holders on February 15, 2020.

In either case, National Bank shall give a notice to that effect to all registered holders of Series 32 Preferred Shares no later than February 7, 2020.

On January 17, 2020, National Bank will give notice of:

i. the annual fixed dividend rate applicable to the Series 32 Preferred Shares to which a holder of Series 32 Preferred Shares will be entitled for the 5-year period from February 16, 2020 up to and including February 15, 2025; and

ii. the floating quarterly dividend rate applicable to the Series 33 Preferred Shares to which a holder of Series 33 Preferred Shares will be entitled for the 3-month period from February 16, 2020 up to and including May 15, 2020.

Beneficial owners of Series 32 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 will run from January 17, 2020 until January 31, 2020 at 5:00 p.m. (EST).

NA.PR.W is a FixedReset, 3.90%+225, that commenced trading 2014-10-9 after being announced 2014-9-30. It is tracked by HIMIPref™ and is assigned to the FixedReset (Discount) subindex.

Canadian Imperial Bank of Commerce has announced (on December 31):

the dividend rates applicable to its Non-cumulative Rate Reset Class A Preferred Shares Series 41 (Non-Viability Contingent Capital (NVCC)) (the “Series 41 Shares”) and Non-cumulative Floating Rate Class A Preferred Shares Series 42 (Non-Viability Contingent Capital (NVCC)) (the “Series 42 Shares”).

The fixed dividend rate applicable to the Series 41 Shares, should any remain outstanding after January 31, 2020, for the five-year period from and including January 31, 2020 to but excluding January 31, 2025 is 3.909%, payable quarterly as and when declared by the Board of Directors of CIBC.

The floating dividend rate applicable to the Series 42 Shares, should any be issued, for the three-month period from and including January 31, 2020 to but excluding April 30, 2020 is 3.911%, payable for the period as defined as and when declared by the Board of Directors of CIBC. CIBC has designated the Series 42 Shares as eligible to participate in the CIBC Shareholder Investment Plan.

Beneficial owners of Series 41 Shares who wish to exercise their conversion right should instruct their broker or other nominee to exercise such right during the conversion period, which runs from January 1, 2020 until 5:00 p.m. (Eastern Standard Time) on January 16, 2020. Any notices received after this deadline will not be valid.

CM.PR.P is a FixedReset, 3.75%+224, that commenced trading 2014-12-16 after being announced 2014-12-8. In December, notice of extension was published. CM.PR.P is tracked by HIMIPref™ and is assigned to the FixedReset-Discount subindex.

The most logical way to analyze the question of whether or not to convert is through the theory of Preferred Pairs, for which a calculator is available. Briefly, a Strong Pair is defined as a pair of securities that can be interconverted in the future (e.g., CM.PR.P and the FloatingReset that will exist if enough holders convert). Since they will be interconvertible on this future date, it may be assumed that they will be priced identically on this date (if they aren’t then holders will simply convert en masse to the higher-priced issue). And since they will be priced identically on a given date in the future, any current difference in price must be offset by expectations of an equal and opposite value of dividends to be received in the interim. And since the dividend rate on one element of the pair is both fixed and known, the implied average rate of the other, floating rate, instrument can be determined. Finally, we say, we may compare these average rates and take a view regarding the actual future course of that rate relative to the implied rate, which will provide us with guidance on which element of the pair is likely to outperform the other until the next interconversion date, at which time the process will be repeated.

We can show the break-even rates for each FixedReset / FloatingReset Strong Pair graphically by plotting the implied average 3-month bill rate against the next Exchange Date (which is the date to which the average will be calculated). Inspection of the graph and the overall average break-even rates for extant pairs will provide a guide for estimating the break-even rate for the pair now under consideration assuming, of course, that enough conversions occur so that the pair is in fact created.

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The market has little enthusiasm for floating rate product; the implied rates until the next interconversion are generally well below the current 3-month bill rate as the averages for investment-grade and junk issues are at +0.75% and +1.41%, respectively, ignoring the outliers FTS.PR.H/FTS.PR.I and SLF.PR.G/SLF.PR.J for investment grade (due to a very short term until the next reset) and AIM.PR.A/AIM.PR.B for junk (due to a ludicrous quotation spread on AIM.PR.B). Whatever might be the result of the next few Bank of Canada overnight rate decisions, I suggest that it is unlikely that the average rate over the next five years will be lower than current – but if you disagree, of course, you may interpret the data any way you like.

Since credit quality of each element of the pair is equal to the other element, it should not make any difference whether the pair examined is investment-grade or junk, although we might expect greater variation of implied rates between junk issues on grounds of lower liquidity, and this is just what we see.

If we plug in the current bid price of the CM.PR.P FixedReset, we may construct the following table showing consistent prices for its soon-may-be-issued FloatingReset counterpart given a variety of Implied Breakeven yields consistent with issues currently trading:

Based on current market conditions, I suggest that the FloatingResets that will result from conversion are likely to trade below the price of their FixedReset counterparts, TD.PF.C. Therefore, it seems likely that I will recommend that holders of CM.PR.P continue to hold the issue and not to convert, but I will wait until it’s closer to the January 16 notification deadline before making a final pronouncement. I will note that once the conversion period has passed it may be a good trade to swap one issue for the other in the market once both elements of each pair are trading and you can – hopefully – do it with a reasonably good take-out in price, rather than doing it through the company on a 1:1 basis. But that, of course, will depend on the prices at that time and your forecast for the path of policy rates over the next five years. There are no guarantees – my recommendation is based on the assumption that current market conditions with respect to the pairs will continue until the FloatingResets commence trading and that the relative pricing of the two new pairs will reflect these conditions.

The Toronto-Dominion Bank has announced (on January 2):

the applicable dividend rates for its Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 5 (Non-Viability Contingent Capital (NVCC)) (the “Series 5 Shares”) and Non-Cumulative Floating Rate Preferred Shares, Series 6 (NVCC) (the “Series 6 Shares”).

With respect to any Series 5 Shares that remain outstanding after January 31, 2020, holders of the Series 5 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 January 31, 2020 to but excluding January 31, 2025 will be 3.876%, being equal to the 5-Year Government of Canada bond yield determined as at January 2, 2020 plus 2.25%, as determined in accordance with the terms of the Series 5 Shares.

With respect to any Series 6 Shares that may be issued on January 31, 2020, holders of the Series 6 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 January 31, 2020 to but excluding April 30, 2020, will be 3.921%, being equal to the 90-day Government of Canada Treasury Bill yield determined as of January 2, 2020 plus 2.25%, as determined in accordance with the terms of the Series 6 Shares.

Beneficial owners of Series 5 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 January 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.C is a FixedReset, 3.75%+225, that commenced trading 2014-12-16 after being announced 2014-12-5. Notice of extension was reported in December, 2019. TD.PF.C is tracked by HIMIPref™ and is assigned to the FixedReset-Discount subindex.

The most logical way to analyze the question of whether or not to convert is through the theory of Preferred Pairs, for which a calculator is available. Briefly, a Strong Pair is defined as a pair of securities that can be interconverted in the future (e.g., TD.PF.C and the FloatingReset that will exist if enough holders convert). Since they will be interconvertible on this future date, it may be assumed that they will be priced identically on this date (if they aren’t then holders will simply convert en masse to the higher-priced issue). And since they will be priced identically on a given date in the future, any current difference in price must be offset by expectations of an equal and opposite value of dividends to be received in the interim. And since the dividend rate on one element of the pair is both fixed and known, the implied average rate of the other, floating rate, instrument can be determined. Finally, we say, we may compare these average rates and take a view regarding the actual future course of that rate relative to the implied rate, which will provide us with guidance on which element of the pair is likely to outperform the other until the next interconversion date, at which time the process will be repeated.

We can show the break-even rates for each FixedReset / FloatingReset Strong Pair graphically by plotting the implied average 3-month bill rate against the next Exchange Date (which is the date to which the average will be calculated). Inspection of the graph and the overall average break-even rates for extant pairs will provide a guide for estimating the break-even rate for the pair now under consideration assuming, of course, that enough conversions occur so that the pair is in fact created.

Click for Big

The market has little enthusiasm for floating rate product; the implied rates until the next interconversion are generally well below the current 3-month bill rate as the averages for investment-grade and junk issues are at +0.75% and +1.41%, respectively, ignoring the outliers FTS.PR.H/FTS.PR.I and SLF.PR.G/SLF.PR.J for investment grade (due to a very short term until the next reset) and AIM.PR.A/AIM.PR.B for junk (due to a ludicrous quotation spread on AIM.PR.B). Whatever might be the result of the next few Bank of Canada overnight rate decisions, I suggest that it is unlikely that the average rate over the next five years will be lower than current – but if you disagree, of course, you may interpret the data any way you like.

Since credit quality of each element of the pair is equal to the other element, it should not make any difference whether the pair examined is investment-grade or junk, although we might expect greater variation of implied rates between junk issues on grounds of lower liquidity, and this is just what we see.

If we plug in the current bid price of the TD.PF.C FixedReset, we may construct the following table showing consistent prices for its soon-may-be-issued FloatingReset counterpart given a variety of Implied Breakeven yields consistent with issues currently trading:

Based on current market conditions, I suggest that the FloatingResets that will result from conversion are likely to trade below the price of their FixedReset counterparts, TD.PF.C. Therefore, it seems likely that I will recommend that holders of TD.PF.C continue to hold the issue and not to convert, but I will wait until it’s closer to the January 16 notification deadline before making a final pronouncement. I will note that once the conversion period has passed it may be a good trade to swap one issue for the other in the market once both elements of each pair are trading and you can – hopefully – do it with a reasonably good take-out in price, rather than doing it through the company on a 1:1 basis. But that, of course, will depend on the prices at that time and your forecast for the path of policy rates over the next five years. There are no guarantees – my recommendation is based on the assumption that current market conditions with respect to the pairs will continue until the FloatingResets commence trading and that the relative pricing of the two new pairs will reflect these conditions.

DBRS has announced that it:

downgraded the rating of the Preferred Shares issued by Brompton Oil Split Corp. (the Company) to Pfd-5 from Pfd-4 (low). The Company invests in common shares of at least 15 large capitalization North American oil and gas issuers (the Portfolio) selected from the S&P 500 Index and the S&P/TSX Composite Index. The Company may also invest up to 25% of the Portfolio value in the common shares of issuers listed on the S&P 500 Index or the S&P/TSX Composite Index that satisfy its investment criteria, operating in energy subsectors including equipment, services, pipelines, transportation, and infrastructure. The Portfolio is approximately equally weighted, actively managed, and rebalanced at least semi-annually. A portion of the Portfolio’s investments are denominated in U.S. dollars; however, substantially all of this exposure is hedged back to Canadian dollars. The Company has the ability to write covered call options or engage in securities lending in order to generate additional income.
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The dividend coverage ratio was approximately 0.3 times as of December 11, 2019.
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As of December 11, 2019, the downside protection available to holders of the Preferred Shares was 0.6%. It has averaged around this level in the last three months as a result of depressed prices of energy stocks and the oil market struggling to recover from lower demand and oversupply. Subsequently, because of the downside protection reduction below acceptable levels for a prolonged period of time and weak dividend coverage, which creates further grind on the Portfolio, DBRS Morningstar downgraded the rating on the Preferred Shares to Pfd-5.

The maturity date of the Preferred Shares is March 31, 2020. On March 9, 2019, the Company announced an extension of the term for another three to five years. The details of the term extension will be announced at least 60 days before the maturity date.

The Whole Unit NAVPU was 10.92 as of December 23, according to Brompton’s figures for the Capital Unit NAVPU and Preferred Share NAVPU, for an Asset Coverage Ratio of 1.1-:1, equivalent to Downside Protection of about 8%. It’s not clear to me how the DBRS figure of 0.6% was derived.

Last year Standard & Poor’s announced (on 2018-12-27):

• On Dec. 27, 2019, S&P Global Ratings revised its outlook on Innergex Renewable Energy Inc. to negative from stable, and affirmed its ratings, including its ‘BBB-‘ long-term issuer credit rating, on Innergex.
• We expect Innergex to have weak financial metrics in 2018 due to the timing and financing of acquisitions, although it expects these to improve in 2019.
• Innergex is issuing nonrecourse debt at the asset level and intends to sell its HS Orka geothermal assets in Iceland, using proceeds to reduce parent-level debt; however, this introduces incremental execution risk.
• If the debt reduction strategy is delayed or the amount is lower than expected, financial metrics might not recover to the 24%-26% range, which could result in a downgrade.

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S&P Global Ratings today took the rating actions listed above. Innergex has completed a number of acquisitions in 2018 that have increased leverage both through acquired debt and development financing at the corporate level. Although the company expects to de-lever in 2019 through asset level financing and asset sales, we believe that there is execution risk with this strategy. Our financial forecasts
project Innergex moving back into the stable range of 24%-26% funds from operations (FFO)-to-debt in 2019. However, they are predicated on completing asset sales, which raises significant execution risk and reflects our outlook revision to negative from stable.

The negative outlook reflects significantly lower FFO-to-debt ratios of about 18% in 2018, compared with expectations of 23% at the ‘BBB-‘ level. S&P Global Ratings’ expects Innergex to face execution risk with its strategy of improving forecast financial metrics through asset level financing and asset sales, and the outlook reflects the deteriorating financial performance. S&P Global Ratings expects FFO-to-debt to recover to the 24%-26% range in 2019 and 2020.

A downgrade could happen if the FFO-to-debt ratio does not recover and remains above 23% over our two-year outlook period. This could result from Innergex’s inability to execute on its asset sale plan that it would use to reduce nonrecourse debt. In addition, given the limited cushion in financial metrics above the 23% FFO-to-debt downgrade trigger, lower-than-expected distributions from its subsidiary assets or an increase in nonrecourse debt used to finance development or acquisition opportunities could lead to a downgrade.

An outlook revision to stable could occur if Innergex deleverages, by paying down bridge and revolving credit facility with asset sales, such that FFO-to-debt metrics return to, and stay in, the 24%-26% range.

S&P has now announced:

• On Dec. 23, 2019, S&P Global Ratings placed its ‘BBB-‘ issuer credit rating on Innergex Renewable Energy Inc. (Innergex) and its ‘BB’ issue-level ratings on the company’s preferred shares on CreditWatch with negative implications.
• The CreditWatch placement reflects notable weakness in Innergex’s credit metrics from last year.
• We intend to resolve the CreditWatch in the next 90 days.

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S&P Global Ratings today took the rating actions listed above. The company has been on an aggressive growth path and, since the beginning of 2018, has either acquired or developed 1.5 gigawatts of cumulative incremental capacity. While a considerable portion of these capacity additions have ultimately been financed with project-level debt, Innergex’s corporate debt includes the equity contributions from both previous transactions, as well as for projects that are in development or under construction. The company sold its Icelandic asset in 2019 and used the proceeds to reduce holdco debt; however, its debt levels have nevertheless remained elevated due to continued investments in newer projects. We believe that if Innergex does not take credit-positive actions to address the continuing amount of heightened leverage, there would be negative implications for the rating.

The CreditWatch placement reflects continuing amounts of heightened leverage at the holdco level. If Innergex does not take steps to reduce debt, we would lower the rating. We intend to resolve the CreditWatch in the next 90 days.

Affected issues are INE.PR.A and INE.PR.C.

DREAM Unlimited Corp announced (on November 13):

that it will redeem all of its outstanding First Preference Shares, Series 1 (“Series 1 Shares�?) on December 20, 2019 (the “Redemption Date�?), in accordance with their terms. The Series 1 Shares will be redeemed at a price of $7.16 per share, plus all accrued and unpaid dividends from September 30, 2019 up to but excluding the Redemption Date. There are currently 4,005,729 Series 1 Shares issued and outstanding. Following the Redemption Date, the Series 1 Shares are expected to be delisted from the Toronto Stock Exchange.

The formal notice of redemption will be delivered to registered holders of the Series 1 Shares on behalf of the Corporation by Computershare Trust Company of Canada, the transfer agent and registrar for the Series 1 Shares.

From and after the Redemption Date, holders of the Series 1 Shares will cease to be entitled to dividends or to exercise any rights of shareholders in respect of the Series 1 Shares, except for the right to receive the Redemption Price for their Series 1 Shares.

Payment of the redemption amount for the Series 1 Shares will be made to registered holders of such securities on or after the Redemption Date. Beneficial holders of the Series 1 Shares should contact their financial institution, broker or other intermediary through which they hold the Series 1 Shares to confirm how they will receive their redemption proceeds.

They further announced (on December 20):

that it has redeemed all of its outstanding First Preference Shares, Series 1 (“Series 1 Shares�?), in accordance with their terms. The cash redemption price for the Series 1 Shares was $7.16 per share, plus all accrued and unpaid dividends from September 30, 2019 up to and including the Redemption Date, for aggregate proceeds of $29.1 million. The Series 1 Shares have been delisted from the Toronto Stock Exchange.

DRM.PR.A came into existence as partial consideration on the exchange of DC.PR.A (the other consideration was DC.PR.C, which has had an interesting series of transitions of its own) following approval by shareholders despite my urging that exchange offer was coercive. The original ticker symbol for the issue was DBC.PR.A.

TC Energy Corporation has announced:

that 173,954 of its 9,498,423 fixed rate Cumulative Redeemable First Preferred Shares, Series 1 (Series 1 Shares) have been elected for conversion on December 31, 2019, on a one-for-one basis, into floating rate Cumulative Redeemable First Preferred Shares, Series 2 (Series 2 Shares); and 5,252,715 of its 12,501,577 Series 2 Shares have been elected for conversion, on a one-for-one basis, into Series 1 Shares. As a result of the conversions, TC Energy will have 14,577,184 Series 1 Shares and 7,422,816 Series 2 Shares issued and outstanding. The Series 1 Shares and Series 2 Shares will continue to be listed on the Toronto Stock Exchange (TSX) under the symbols TRP.PR.A and TRP.PR.F respectively.

The Series 1 Shares will pay on a quarterly basis, for the five-year period beginning on December 31, 2019, as and when declared by the Board of Directors of TC Energy, a fixed dividend at an annualized rate of 3.479 per cent.

The Series 2 Shares will pay a floating rate quarterly dividend for the five-year period beginning on December 31, 2019, as and when declared by the Board of Directors of TC Energy. The dividend rate for the Series 2 Shares for the first quarterly floating rate period commencing December 31, 2019 to, but excluding March 30, 2020, is 3.572 per cent, and will be reset every quarter.

Holders of Series 1 Shares and Series 2 Shares will have the opportunity to convert their shares again on December 31, 2024 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 1 Shares and the Series 2 Shares, please see the prospectus supplement dated September 22, 2009 which is available on sedar.com or on our website.

TRP.PR.A commenced trading 2009-9-30 after being announced 2009-9-22. It commenced life as a FixedReset, 4.60%+192, that reset to 3.266% effective 2014-12-31. Assiduous Readers may recall that I have blamed the 2014 reset of TRP.PR.A for what we might now call ‘the first half’ of the current bear market. I recommended conversion to TRP.PR.F in 2014 and there was a conversion rate of about 62%. The company announced the extension to 2024 on 2019-11-21. TRP.PR.A will reset at 3.479% effective December 31, 2019. I recommended holding, or converting to, TRP.PR.A.

TRP.PR.F commenced trading 2014-12-31 after a partial conversion from TRP.PR.A.