Archive for the ‘Issue Comments’ Category

FFN.PR.A Upgraded to Pfd-3(low) by DBRS

Wednesday, February 5th, 2025

DBRS has announced that it:

has upgraded its credit rating on the Preferred Shares issued by North American Financial 15 Split Corp. (the Company) to Pfd-3 (low) from Pfd-4. The rating upgrade takes into consideration the increase in downside protection to 45.5% as of January 15, 2025, from 32.7% as of January 31, 2024, the decrease in the Preferred Shares’ distribution rate to 8.75% annually on the Preferred Share’s redemption value of $10 for the fiscal year beginning December 1, 2024, from 9.5% annually for the fiscal year beginning December 1, 2023, the dividend coverage ratio of 0.4 times (x), a projected grind of 6.1% per year over the remaining term and unhedged foreign currency exposure.

The Company invests in a portfolio (the Portfolio) consisting primarily of common shares of 15 high-quality North American financial services companies: Bank of America Corporation; Bank of Montreal; The Bank of Nova Scotia; Canadian Imperial Bank of Commerce; CI Financial Corp.; Citigroup Inc.; The Goldman Sachs Group, Inc.; Great-West Lifeco Inc.; JPMorgan Chase & Co.; Manulife Financial Corporation; National Bank of Canada; Royal Bank of Canada; Sun Life Financial Inc.; The Toronto-Dominion Bank; and Wells Fargo & Company. The Company may invest up to 15% of the net asset value (NAV) in securities of issuers other than the core 15, and no more than 10% of the NAV may be invested in any single issuer. As of May 31, 2024, 11.3% of the Portfolio was also invested in Fifth Third Bancorp, U.S. Bancorp, and Morgan Stanley, and 6.7% was held in cash. Quadravest Capital Management Inc. is acting as the manager (the Manager) for this Company.

A portion of the Company’s Portfolio is exposed to currency risk as it includes securities denominated in U.S. dollars (USD), while the NAV of the Company is expressed in Canadian dollars. The Company has not entered into currency hedging contracts for the USD portion of the Portfolio, although the Company may use derivatives for hedging purposes. As of May 31, 2024, 61.6% of the Portfolio was invested in USD-denominated assets.

The Company has an at-the-market equity program (the ATM Program) that allows the Company to issue Preferred Shares and Class A Shares to the public from time to time at the Company’s discretion, effective until October 6, 2026, unless terminated prior to such date by the Company. The maximum gross proceeds from the issuance of the shares will be $350 million. During the six-month period ended May 31, 2024, 1,829,400 Preferred Shares were sold through the ATM Program at an average selling price of $10.17 per Preferred Share, raising gross proceeds worth $18.6 million. During the same period, 991,200 Class A Shares were sold through the ATM Program at an average selling price of $5.61 per Class A Share, raising gross proceeds worth $5.6 million.

The Company’s termination date can be extended for additional terms of five years at the Company’s discretion, but shareholders will be provided with a special retraction right in connection with such extension. On March 12, 2024, the Company announced the extension of the termination date of the Company for a further five-year period from December 1, 2024 to December 1, 2029. In connection with the extension of its term, holders of the Preferred Shares were provided with a special retraction right that allowed them to tender one or both classes of shares and receive a retraction price based on the November 29, 2024, NAV per unit (Unit, consisting of one Preferred Share and one Class A Share). At maturity, the holders of the Preferred Shares will be entitled to the value of the Company, up to the face amount of the Preferred Shares, in priority to the holders of the Class A Shares. Holders of the Class A Shares will receive the remaining value of the Company.

The Preferred Shares dividend rate is set by the board of directors annually and is subject to a minimum of 7.0% annually until 2029. The Preferred Share dividend rate for the fiscal year commencing December 1, 2024 was set at 8.75%, 75 basis points below the dividend rate set for the prior year. Holders of the Class A Shares are currently receiving monthly distributions of $0.11335 per share, equivalent to 9.1% per annum on the issue price of $15. No distributions will be paid to the Class A Shares if the NAV per Unit falls below $15.

As of January 15, 2025, the asset coverage ratio was at 1.8x. The downside protection available to holders of the Preferred Shares has increased to 45.5% from 32.7% a year ago. The dividend coverage remains at 0.4x, indicating that the current dividend income earned by the Company is not enough to fully cover the Company’s expenses and targeted distributions on the Preferred Shares. Without giving consideration to capital appreciation potential or any source of income other than the dividends earned by the Portfolio, the current Preferred Share dividends together with the distributions on the Class A Shares will create a projected grind on the NAV of the Portfolio of approximately 6.1% per year for the remaining term of the Preferred Shares. To supplement the Portfolio income, the Company may engage in covered call options or cash covered put options on all or a portion of the shares held in the Portfolio.

The main constraints to the credit rating are the following:

(1) Volatility in stock prices, along with changes in the dividend policies of the underlying issuers, may result in significant reductions in the Preferred Shares’ dividend coverage or downside protection from time to time.

(2) A Preferred Shares’ dividend coverage that is less than one time.

(3) Reliance on the manager to generate a high yield, through methods such as option writing, on the investment portfolio to meet distributions and other expenses without having to liquidate portfolio securities.

(4) The monthly cash distributions to holders of the Class A Shares which create grind on the Portfolio. This risk is mitigated by a NAV test.

(5) The concentration of the Portfolio in one industry.

(6) The unhedged portion of the USD-denominated Portfolio that exposes the Portfolio to foreign currency risk.

Morningstar DBRS’ credit rating on the Preferred Shares addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the cumulative preferential monthly cash dividends and the return of the original issue price of $10 per Preferred Share to holders of the Preferred Shares on the termination date.

Morningstar DBRS’ credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations.

The affected issue is FFN.PR.A.

FTN.PR.A Upgraded to Pfd-3 by DBRS

Wednesday, February 5th, 2025

DBRS has announced that it:

has upgraded its credit rating on the Preferred Shares issued by Financial 15 Split Corp. (the Company) to Pfd-3 from Pfd-4 (high). The rating upgrade takes into consideration the increase in downside protection to 52.0% as of January 15, 2025, from 42.4% as of January 31, 2024, the decrease in the Preferred Shares’ distribution rate to 8.5% annually on the Preferred Share’s redemption value of $10 for the fiscal year beginning December 1, 2024, from 9.25% annually for the fiscal year beginning December 1, 2023, the dividend coverage ratio of 0.4 times (x), a projected grind of 9.6% per year over the remaining term and unhedged foreign currency exposure.

The Company invests in a portfolio (the Portfolio) consisting primarily of common shares of 15 financial services companies made up of Canadian and U.S. issuers as follows: Bank of America Corporation; Bank of Montreal; The Bank of Nova Scotia; Canadian Imperial Bank of Commerce; CI Financial Corp.; Citigroup Inc.; The Goldman Sachs Group, Inc.; Great-West Lifeco Inc.; JPMorgan Chase & Co.; Manulife Financial Corporation; National Bank of Canada; Royal Bank of Canada; Sun Life Financial Inc.; The Toronto-Dominion Bank; and Wells Fargo & Company. The Company may invest up to 15% of the Net Asset Value (NAV) in securities of issuers other than the core 15 and no more than 10% of the NAV may be invested in any single issuer. As of May 31, 2024, 1.1% of the Portfolio was also invested in Fifth Third Bancorp and AGF Management, and 13.6% was held in cash. Quadravest Capital Management Inc. is acting as the manager (the Manager) for this Company.

A portion of the Company’s Portfolio is exposed to currency risk because it includes securities denominated in U.S. dollars (USD), while the NAV of the Company is expressed in Canadian dollars. The Company has not entered into currency-hedging contracts for the USD portion of the Portfolio, although the Company may use derivatives for hedging purposes. As of May 31, 2024, 44.9% of the Portfolio was invested in USD-denominated assets.

The Company has an at-the-market equity program (the ATM Program) that allows the Company to issue Preferred Shares and Class A Shares to the public from time to time at the Company’s discretion, effective until January 20, 2026, unless terminated prior to such date by the Company. The maximum gross proceeds from the issuance of the shares will be $400 million. During the six-month period ended May 31, 2024, 6,772,600 Preferred Shares were sold through the ATM Program at an average selling price of $10.16 per Preferred Share, raising gross proceeds worth $68.8 million. During the same period, 7,173,300 Class A Shares were sold through the ATM Program at an average selling price of $7.77 per Class A Share, raising gross proceeds worth $55.8 million.

The Company’s termination date is December 1, 2025. At maturity, the holders of the Preferred Shares will be entitled to the value of the Company, up to the face amount of the Preferred Shares, in priority to the holders of the Class A Shares. Holders of the Class A Shares will receive the remaining value of the Company. The termination date can be extended for additional terms of five years at the Company’s discretion, but shareholders are provided with a special retraction right in connection with such extension.

The Preferred Shares dividend rate is set by the board of directors annually and subject to a minimum of 5.5% until 2025. The Preferred Share dividend rate for the fiscal year commencing December 1, 2024 was set at 8.5%, 75 basis points below the dividend rate set for the prior fiscal year. Holders of the Class A Shares are currently receiving monthly distributions of $0.1257 per share, equivalent to 10.1% per annum on the issue price of $15. No distributions will be paid to the Class A Shares if the NAV per unit (Unit, consisting of one Preferred Share and one Class A Share) falls below $15. The NAV per Unit remained above $15 during 2024, and distributions to the Class A Shares were regularly paid out.

As of January 15, 2025, the asset coverage ratio is at 2.1x. The downside protection available to holders of the Preferred Shares has increased to 52.0% from 42.4% a year ago. The dividend coverage ratio remains at 0.4x, indicating that the current dividend income is not enough to fully cover the cumulative preferential monthly cash dividends on the Preferred Shares. Without giving consideration to capital appreciation potential or any source of income other than the dividends earned by the Portfolio, the current Preferred Share dividends together with the distributions on the Class A Shares will create a projected grind on the NAV of the Portfolio of approximately 9.6% per year for the remaining term of the Preferred Shares. To supplement the Portfolio income, the Company may engage in covered call options or cash covered put options on all or a portion of the shares held in the Portfolio.

The main constraints to the rating are the following:

(1) Volatility in stock prices along with changes in the dividend policies of the underlying issuers may result in significant reductions in the Preferred Shares’ dividend coverage or downside protection from time to time.

(2) A Preferred Shares’ dividend coverage that is less than one time.

(3) Reliance on the manager to generate a high yield, through methods such as option writing, on the investment portfolio to meet distributions and other expenses without having to liquidate portfolio securities.

(4) The monthly cash distributions to holders of the Class A Shares which create grind on the Portfolio. This risk is mitigated by a NAV test.

(5) The concentration of the Portfolio in one industry.

(6) The unhedged portion of the USD-denominated Portfolio that exposes the Portfolio to foreign currency risk.

Morningstar DBRS’ credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transactions’ respective press releases at issuance.

The affected issue is FTN.PR.A.

CWB Upgraded to Pfd-2 by DBRS

Monday, February 3rd, 2025

DBRS has announced that it:

has today taken a number of credit rating actions following the completion of the acquisition of Canadian Western Bank (CWB or the Bank) by National Bank of Canada (National; rated AA with a Stable trend). Morningstar DBRS has equalized all CWB’s credit ratings with those of National, including upgrading the Bank’s Long-Term Issuer Rating to AA from A (low) and Short-Term Issuer Rating to R-1 (high) from R-1 (low), and assigned Stable trends. The Support Assessment (SA) designation of SA1 is assigned to the Bank, reflecting Morningstar DBRS’ expectation of timely internal support from National. These actions remove CWB’s credit ratings from Under Review with Positive Implications where they were placed on June 12, 2024. The full list of credit ratings is provided in the table at the end of this press release.

KEY CREDIT RATING CONSIDERATIONS
Following the close of the acquisition, Morningstar DBRS considers CWB as a core banking subsidiary of National. This is a key element underpinning the equalization of the Bank’s credit ratings with those of National. CWB’s credit ratings will be maintained as the Bank will operate with a separate bank charter until its amalgamation with National, which is expected to occur on March 1, 2025.

In Morningstar DBRS’ view, the acquisition will bolster National’s diversification of revenue, both geographically and by product. CWB helps National become less concentrated in Québec, significantly bolstering National’s presence in Western Canada, including British Columbia and Alberta.

CREDIT RATING DRIVERS
As a fully owned banking subsidiary, CWB’s credit ratings will move in tandem with National’s credit ratings. Over the longer term, Morningstar DBRS would upgrade the credit ratings if National were to further build scale and diversification, both geographically as well as by revenues, while maintaining a similar risk profile.

Conversely, National’s credit ratings would be downgraded if there were significant integration issues with the acquisition. A sustained deterioration in asset quality or an inability to rebuild capital post-acquisition, would also result in a credit ratings downgrade.

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

Thanks to Assiduous Reader RAV4guy for bringing this to my attention!

ENB.PF.C To Reset To 5.477%

Thursday, January 30th, 2025

Enbridge Inc. has announced:

that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series 11 (Series 11 Shares) (TSX: ENB.PF.C) on March 1, 2025. As a result, subject to certain conditions, the holders of the Series 11 Shares have the right to convert all or part of their Series 11 Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series 12 of Enbridge (Series 12 Shares) on March 1, 2025. Holders who do not exercise their right to convert their Series 11 Shares into Series 12 Shares will retain their Series 11 Shares.

The foregoing conversion right is subject to the conditions that: (i) if Enbridge determines that there would be less than 1,000,000 Series 11 Shares outstanding after March 1, 2025, then all remaining Series 11 Shares will automatically be converted into Series 12 Shares on a one-for-one basis on March 1, 2025; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series 12 Shares outstanding after March 1, 2025, no Series 11 Shares will be converted into Series 12 Shares. There are currently 20,000,000 Series 11 Shares outstanding.

With respect to any Series 11 Shares that remain outstanding after March 1, 2025, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The new annual dividend rate applicable to the Series 11 Shares for the five-year period commencing on March 1, 2025 to, but excluding, March 1, 2030 will be 5.477 percent, being equal to the five-year Government of Canada bond yield of 2.837 percent determined as of today plus 2.64 percent in accordance with the terms of the Series 11 Shares.

With respect to any Series 12 Shares that may be issued on March 1, 2025, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The dividend rate applicable to the Series 12 Shares for the three-month floating rate period commencing on March 1, 2025 to, but excluding, June 1, 2025 will be 1.41151 percent, based on the annual rate on three month Government of Canada treasury bills for the most recent treasury bills auction of 2.96 percent plus 2.64 percent in accordance with the terms of the Series 12 Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.

Beneficial holders of Series 11 Shares who wish to exercise their right of conversion during the conversion period, which runs from January 30, 2025 until 5:00 p.m. (EST) on February 14, 2025, 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 time to complete the necessary steps. Any notices received after this deadline will not be valid.

ENB.PF.C was issued as a FixedReset, 4.40%+264, that commenced trading 2014-5-22 after being announced 2014-5-12. ENB.PF.C reset at 3.938% effective March 1, 2020. I recommended against conversion and there was no conversion. The issue is tracked by HIMIPref™ but is relegated to the Scraps – FixedReset – Discount subindex on credit concerns.

AQN: Trend Positive, Says DBRS

Thursday, January 30th, 2025

DBRS has announced that it:

changed the trends on Algonquin Power & Utilities Corp’s (APUC or the Company) Issuer Rating and Preferred Shares rating to Positive from Stable and confirmed the credit ratings at BBB.

KEY CREDIT RATING CONSIDERATIONS
Algonquin Power & Utilities Corp.’s (APUC or the Company) credit ratings are primarily based on (1) the credit profile of APUC’s principal subsidiary, Liberty Utilities Co. (LUCO), the guarantor of the debt issued by Liberty Utilities Finance GP1 (LUF; rated BBB (high) with a Positive trend by Morningstar DBRS). (2) the financial risk assessment, which is based on consolidated APUC forecast. The positive trends reflect our view that (1) APUC’s business risk profile should witness an improvement with the completion of its sale of relatively higher-risk renewable assets and its transition to a pure regulated player, which is partially offset by the decrease in diversification; (2) APUC’s leverage will decline, assuming the Company uses the proceeds from the sale to pay down the debt as planned; (3) APUC’s financial risk profile should benefit from the reduction in its capital expenditures (capex) and dividend payouts over the next few years, resulting in the Company’s consolidated key credit metrics remaining supportive of a BBB (high) credit rating on a sustained basis. The Company’s credit rating also incorporates the structural subordination of its debt to the debt of its subsidiaries.

On January 8, 2025, APUC announced that it completed the sale of its renewable energy business to a wholly owned subsidiary of LS Power. APUC intends to use the net proceeds of the sale to pay down existing debt and strengthen its balance sheet. Morningstar DBRS notes that with the completion of the sale coupled with the recent sale of the Company’s 42.2% ownership stake in Atlantica Sustainable Infrastructure plc in December 2024, APUC will become a pure-play regulated utilities group. APUC’s business risk profile is supported by its relatively low-risk, regulated utility subsidiaries, and its financial flexibility and liquidity at the holding company level. These strengths are partially offset by the structural subordination of the debt at APUC and operational and regulatory risks at its subsidiaries.

CREDIT RATING DRIVERS
Morningstar DBRS may consider a credit rating upgrade over the near term should the Company’s current business risk profile remain stable and its consolidated key credit metrics remain supportive of the BBB (high) credit rating category. Although it is unlikely, a negative credit rating action may occur should APUC’s business risk profile or its consolidated credit metrics weaken significantly to a level that no longer supports the current credit rating category on a sustained basis. (i.e., cash flow-to-debt below 12.5% and debt-to-capital above 65%).

EARNINGS OUTLOOK
The increase in APUC’s EBITDA in 2023 was driven by the higher revenues in its regulated businesses. However, the EBITDA for the last 12 months ended September 30, 2024, decreased significantly because only revenues from the Company’s hydro assets were accounted for in the non-regulated business. Morningstar DBRS expects APUC’s earnings to be more stable and predictable after its transition to a pure regulated player, and APUC’s 2025 consolidated EBITDA to decline compared with previous years because of the sale of the renewable energy business. However, Morningstar DBRS also expects earnings from APUC’s regulated businesses to increase as the Company continues to benefit from the implementation of higher approved rates and rate base year over year.

FINANCIAL OUTLOOK
APUC’s consolidated key credit metrics were weaker in 2023 mainly because of the higher drawn amount of its senior unsecured revolving credit facilities for the period, which were used for the Company’s capex need. However, these credit metrics improved moderately in the 12 months to September 30, 2024, and Morningstar DBRS expects APUC’s financial risk assessment to improve modestly and be supportive of its BBB (high) credit rating category, reflecting stable cash flows and reasonable leverage at its regulated business as well as its lower consolidated leverage ratio after the renewable business sale. Morningstar DBRS also believes that all capex and investment activities occurring at the Company’s subsidiaries are mostly self-financed except for major acquisitions, in which case APUC would issue subordinated debt and inject it into the subsidiaries.

CREDIT RATING RATIONALE
APUC indirectly owns a diversified portfolio of regulated distribution, and transmission utilities in 13 states in the United States. In addition, APUC owns a small, regulated operation in Canada, Bermuda and Chile. APUC’s credit ratings are supported by the regulated business with diversified assets at its subsidiaries and its solid consolidated financial profile. This is partly offset by the regulatory and operational risks, as well as the structural subordination because of the debt at its subsidiaries.

Affected issues are AQN.PR.A and AQN.PR.D

BCE.PR.E / BCE.PR.F : Net 17% Conversion to FixedFloater

Tuesday, January 21st, 2025

BCE Inc. has announced:

that 8,050 of its 8,779,487 fixed-rate Cumulative Redeemable First Preferred Shares, Series AF (“Series AF Preferred Shares”) have been tendered for conversion on February 1, 2025, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AE (“Series AE Preferred Shares”). In addition, 2,479,334 of its 5,810,913 Series AE Preferred Shares have been tendered for conversion on February 1, 2025, on a one-for-one basis, into Series AF Preferred Shares. Consequently, excluding any Series AE Preferred Shares and Series AF Preferred Shares that may be purchased for cancellation by BCE pursuant to its normal course issuer bid between January 21, 2025 and February 1, 2025, 11,250,771 Series AF Preferred Shares and 3,339,629 Series AE Preferred Shares would be issued and outstanding on February 1, 2025. The Series AF Preferred Shares and the Series AE Preferred Shares will continue to be listed on the Toronto Stock Exchange under the symbols BCE.PR.F and BCE.PR.E, respectively.

The Series AF Preferred Shares will pay on a quarterly basis, for the five-year period beginning on February 1, 2025, as and when declared by the Board of Directors of BCE, a fixed cash dividend based on an annual fixed dividend rate of 5.496%.

The Series AE Preferred Shares will continue to pay a monthly floating adjustable cash dividend for the five-year period beginning on February 1, 2025, as and when declared by the Board of Directors of BCE. The monthly floating adjustable dividend for any particular month will continue to be calculated based on the prime rate for such month and using the Designated Percentage for such month representing the sum of an adjustment factor (based on the market price of the Series AE Preferred Shares in the preceding month) and the Designated Percentage for the preceding month.

Thus there has been a net 17% conversion to the FixedFloater issue, leaving the pair with a 77% weighting in this structure. It is of interest to note that the share numbers outstanding prior to conversion are both down about 700,000 shares from the figures reported five years ago, indicating that BCE has cancelled about 9% of the total outstanding since that time pursuant to their Normal Course Issuer Bid

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. In 2020 the issue reset to 3.865% (which was 239% of the GOC-5 rate) and there was a net 17% conversion to FixedFloaters, which thus comprised about 59% of the combined issue size. In 2025, the Selected Percentage Rate was announced as 170% and the new dividend rate subsequently reset to 5.496%.

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.

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

EMA.PR.F To Reset To 5.749%

Friday, January 17th, 2025

Emera Incorporated has announced (on 2025-1-16):

the applicable dividend rates for its Cumulative Rate Reset First Preferred Shares, Series F (the “Series F Shares”) and Cumulative Floating Rate First Preferred Shares, Series G (the “Series G Shares”), in each case, payable if, as and when declared by the Board of Directors of the Company:

  • 5.749% per annum on the Series F Shares ($0.35931 per Series F Share per quarter), being equal to the sum of the Government of Canada bond yield as at January 16, 2025, plus 2.63%, payable quarterly on the 15th of February, May, August and November of each year during the five-year period commencing on February 15, 2025 and ending on (and inclusive of) February 14, 2030; and
  • 5.764% on the Series G Shares for the three-month period commencing on February 15, 2025 and ending on (and inclusive of) May 14, 2025 ($0.35137 per Series G Share for the quarter), being equal to the sum of the three-month Government of Canada treasury bill yield rate as at January 16, 2025, plus 2.63% (calculated on the basis of the actual number of days elapsed during the quarter divided by 365), payable on the 15th of May, 2025. The quarterly floating dividend rate will be reset every quarter.

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 (collectively, the “Prospectus”), 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 Series G Shares on February 15, 2025 (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.

Holders 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, 2025 until 5:00 p.m. (EST) on January 31, 2025. Any notices received after this deadline will not be valid. Holders of Series F Shares who wish to exercise their conversion right must carefully follow the procedures and instructions received from their broker or other nominee and contact their broker or other nominee if they need assistance. Such broker or other nominee may set deadlines for the return of instructions that are well in advance of the 5:00 p.m. (EST) deadline on January 31, 2025. As such, it is recommended that holders of Series F Shares communicate instructions to their broker or other nominee well in advance of the deadline in order to provide their broker or other nominee with adequate time to complete the necessary steps prior to the deadline.

Holders of Series F Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their Series F Shares and receive the new annual fixed dividend rate applicable to the Series F Shares, subject to the conditions stated above. Holders of Series F Shares will have the opportunity to convert their shares again on February 15, 2030 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 Series F Shares and Series G Shares, please see the Company’s Prospectus, which is available on SEDAR+ at www.sedarplus.ca.

EMA.PR.F was issued as a FixedReset, 4.25%+263, that commenced trading 2014-6-9 after being being announced 2014-5-29. The company announced the extension on 2020-1-7. EMA.PR.F reset at 4.202% effective 2020-2-15. I recommended against conversion and there was no conversion. Notice of extension was provided in 2025. EMA.PR.F is tracked by HIMIPref™ but relegated to the Scraps – FixedReset Discount subindex on credit concerns.

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

BCE.PR.F To Reset At 5.496%

Thursday, January 16th, 2025

BCE Inc. has announced that it:

will, on February 1, 2025, continue to have Cumulative Redeemable First Preferred Shares, Series AF (“Series AF Preferred Shares”) outstanding if, following the end of the conversion period on January 20, 2025, BCE Inc. determines that at least one million Series AF Preferred Shares would remain outstanding. In such a case, as of February 1, 2025, the Series AF Preferred Shares will 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 average of the yields to maturity compounded semi-annually, determined on January 13, 2025, by two Canadian investment dealers selected by the Board of Directors of BCE Inc., that would be carried by non-callable Government of Canada bonds with a 5-year maturity (the “Government of Canada Yield”), multiplied by (b) a percentage rate determined by the Board of Directors of BCE Inc. (the “Selected Percentage Rate”) for such period. The “Selected Percentage Rate” determined by BCE Inc. for such period is 170%. The “Government of Canada Yield” is 3.233%. Accordingly, the annual dividend rate applicable to the Series AF Preferred Shares for the period of five years beginning on February 1, 2025 will be 5.496%.

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. In 2020 the issue reset to 3.865% (which was 239% of the GOC-5 rate) and there was a net 17% conversion to FixedFloaters, which thus comprised about 59% of the combined issue size. In 2025, the Selected Percentage Rate was announced as 170%.

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.

Issuer Bid Extended for AIM.PR.A, AIM.PR.B & AIM.PR.C

Friday, January 10th, 2025

Aimia Inc. has announced:

that due to the impact of Canada Post workers’ strike in delaying the mailout of documents related to the Company’s previously announced substantial issuer bid (the “Offers”) to purchase for cancellation all of its preferred shares in consideration for 9.75% senior unsecured notes (the “2030 Notes”), it has extended the expiry date of the Offers to 5:00 pm (Eastern time) on January 30, 2025, unless further extended, varied or withdrawn by the Company. All other terms of the Offers remain unchanged.

Details of the Offers, including instructions for tendering the Preferred Shares, are included in the formal offers to purchase (the “Offers to Purchase”) and issuer bid circular dated November 21, 2024 (the “Circular”), as same will be amended by the notice of variation and extension dated January 10, 2025 (the “Notice of Variation” and, collectively with the Circular, the letter of transmittal and the notice of guaranteed delivery, the “Offer Documents”). The Notice of Variation will be mailed to preferred shareholders, filed with applicable Canadian securities authorities and made available without charge on SEDAR+ at www.sedarplus.ca. Preferred shareholders should carefully read the Offer Documents prior to making a decision with respect to the Offers.

Preferred Shareholders who have already deposited their Preferred Shares validly using the letter of transmittal and, if applicable, a notice of guaranteed delivery, and have not withdrawn such Preferred Shares, do not need to take any further action to accept the applicable Offers and receive the applicable purchase price (as detailed in the Offer Documents). The Company will take up and pay for Preferred Shares validly deposited under the Offers pursuant to the terms and conditions of the Offer Documents. Preferred Shares validly deposited and not withdrawn as of the initial expiry date, being 5:00 pm (Eastern Time) on January 10, 2025 will be taken up and paid for by the Company on or about January 14, 2025.

The Substantial Issuer Bid marks the first initiative introduced as a result of Aimia’s strategic review process designed to unlock the Company’s value. The Offers provide preferred shareholders with an opportunity to realize all or a portion of their investment in the Company based on (i) the limited liquidity and perpetual nature of the Preferred Shares, (ii) the higher annual yield the 2030 Notes will provide relative to the current dividend (annualized) of each series of Preferred Shares, (iii) the fixed maturity date of the 2030 Notes, and (iv) the accelerated liquidity available to holders of 2030 Notes in certain events. The Strategic Review Committee and the Board of Directors believe that the exchange of Preferred Shares for the 2030 Notes under the Offers for the purchase price (as detailed in the Offer Documents) represents an effective recapitalization of the Company and is in the best interests of the Company and its security holders.

Shareholders with questions about the Offers or how to tender can contact Aimia’s information agent, Shorecrest Group at 1-888-637-5789 (North American Toll-Free Number) or +1 647-931-7454 (outside North America) or email: contact@shorecrestgroup.com for assistance.

This news release is for informational purposes only and does not constitute an offer to buy or the solicitation of offers to sell Preferred Shares. The formal offers to purchase the Preferred Shares in consideration for 2030 Notes are detailed in the Offer Documents.

The prior announcement of this Substantial Issuer Bid was previously reported on PrefBlog.

EMA.PR.F To Be Extended

Wednesday, January 8th, 2025

Emera Incorporated has announced:

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, 2025. 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 (collectively, the “Prospectus”), 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, 2025 (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 at least seven days prior to the Conversion Date, subject to the terms set out in the Prospectus.

The dividend rate applicable for the Series F Shares for the five-year period commencing on February 15, 2025 and ending on (and inclusive of) February 14, 2030, and the dividend rate applicable to the Series G Shares for the 3-month period commencing on February 15, 2025 and ending on (and inclusive of) May 14, 2025, will be determined on January 16, 2025 and notice of such dividend rates shall be provided to the holders of the Series F Shares on that day.

Holders 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, 2025 until 5:00 p.m. (EST) on January 31, 2025. 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 their broker or other nominee with adequate time to complete the necessary steps.

Holders of Series F Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their Series F Shares and receive the new annual fixed dividend rate applicable to the Series F Shares, subject to the conditions stated above. Holders of Series F Shares will have the opportunity to convert their shares again on February 15, 2030 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 Series F Shares and Series G Shares, please see the Company’s Prospectus, which is available on SEDAR+ at www.sedarplus.ca.

EMA.PR.F was issued as a FixedReset, 4.25%+263, that commenced trading 2014-6-9 after being being announced 2014-5-29. The company announced the extension on 2020-1-7. EMA.PR.F reset at 4.202% effective 2020-2-15. I recommended against conversion and there was no conversion. EMA.PR.F is tracked by HIMIPref™ but relegated to the Scraps – FixedReset Discount subindex on credit concerns.

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