Category: New Issues

Husky Energy has announced that it:

has agreed to issue to a syndicate of underwriters led by Scotia Capital Inc. and TD Securities Inc. (collectively the “Underwriters”) for distribution to the public 8,000,000 Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”).

The Series 3 Shares will be issued at a price of $25.00 per Series 3 Share, for aggregate gross proceeds of $200 million. Holders of the Series 3 Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 4.50 percent annually for the initial period ending December 31, 2019. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 3.13 percent.

Holders of Series 3 Shares will have the right, at their option, to convert their shares into Cumulative Rate Reset Preferred Shares, Series 4 (the “Series 4 Shares”), subject to certain conditions, on December 31, 2019 and on December 31 every five years thereafter. Holders of the Series 4 Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 90-day Government of Canada Treasury Bill rate plus 3.13 percent.

Husky has granted the Underwriters an option, exercisable in whole or in part prior to closing, to purchase up to an additional 2,000,000 Series 3 Shares at the same offering price. The Series 3 Shares will be offered by way of prospectus supplement to the short form base shelf prospectus of Husky Energy dated December 31, 2012.

The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada, except Quebec.

The net proceeds from this offering will be used to further support the Company’s strong balance sheet and business plan as well as for general corporate purposes, which may include, among other things, the partial repayment of the 3.75% medium-term notes due in 2015.

The offering is expected to close on or about December 9, 2014, subject to customary closing conditions and receipt of required regulatory approvals.

This is a useful issue, as it provides a good distinction with HSE.PR.A, which is a FixedReset, 4.45%+173, which closed 2011-3-18. One hundred and forty basis points difference in Issue Reset Spread is not to be sneezed at!

Update, 2014-12-2 : Upsized:

Husky Energy (TSX:HSE) is increasing the size of its previously announced offering of Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”) to 10 million shares, due to positive investor response.

The aggregate gross proceeds from the upsized offering will be $250 million. Closing of the offering is expected on or about December 9, 2014, subject to customary closing conditions and receipt of required regulatory approvals.

Manulife Financial Corporation has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 19 (“Series 19 Preferred Shares”). Manulife will issue 8 million Series 19 Preferred Shares priced at $25 per share to raise gross proceeds of $200 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., CIBC World Markets and RBC Capital Markets and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is December 3, 2014. Manulife intends to file a prospectus supplement to its June 23, 2014 base shelf prospectus in respect of this issue.

Holders of the Series 19 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 3.80 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending March 19, 2020. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.30 per cent.

Holders of Series 19 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 20 (“Series 20 Preferred Shares”), subject to certain conditions, on March 19, 2020 and on March 19 every five years thereafter. Holders of the Series 20 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.30 per cent.

Manulife intends to use the net proceeds from the offering for general corporate purposes, including future refinancing requirements.

“Our financing activities take into account future refinancing needs. We have over $2 billion in potential refinancing requirements over the next 12 months. We have taken the opportunity to issue preferred shares in favourable markets,” said Senior Executive Vice President and Chief Financial Officer Steve Roder.

Manulife’s Canadian life insurance company subsidiary, The Manufacturers Life Insurance Company, also intends to issue a minimum of $250 million principal amount of fixed/floating subordinated debentures. The debentures will be fully and unconditionally guaranteed on a subordinated basis by Manulife.

They later announced:

that as a result of strong investor demand for its previously announced Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 19 (“Series 19 Preferred Shares”), the size of the offering has been increased to 10 million shares. The gross proceeds of the offering will now be $250 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., CIBC World Markets and RBC Capital Markets and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is December 3, 2014. Manulife intends to file a prospectus supplement to its June 23, 2014 base shelf prospectus in respect of this issue.

Manulife intends to use the net proceeds from the offering for general corporate purposes, including future refinancing requirements.

They also announced an issue of sub-debt with a five-year pretend-maturity:

The Manufacturers Life Insurance Company (“MLI”), the Canadian insurance company subsidiary of Manulife Financial Corporation, announced today that it intends to issue $500 million principal amount of 2.64% fixed/floating subordinated debentures due January 15, 2025 (the “Debentures”). MLI intends to file a prospectus supplement to its December 13, 2013 base shelf prospectus in respect of this issue.

The Debentures will bear interest at a fixed rate of 2.64% until January 15, 2020 and thereafter at a rate of 0.73% over the three month CDOR. The Debentures mature on January 15, 2025.

Subject to prior regulatory approval, MLI may redeem the Debentures, in whole or in part, on or after January 15, 2020 at a redemption price equal to par, together with accrued and unpaid interest to the date fixed for redemption. The Debentures will constitute subordinated indebtedness, ranking equally and rateably with all other subordinated indebtedness of MLI from time to time issued and outstanding.

The Debentures will be fully and unconditionally guaranteed on a subordinated basis by Manulife Financial Corporation, as to payment of principal, premium, if any, interest and redemption price, if any.

The offering is being done on a best efforts agency basis by a syndicate co-led by RBC Capital Markets, BMO Capital Markets and TD Securities and consisting of CIBC World Markets, Scotiabank Global Banking and Markets, Bank of America Merrill Lynch, National Bank Financial, HSBC Securities, Desjardins Securities, Canaccord Capital, Laurentian Bank Securities and Manulife Securities Incorporated. The offering is expected to close on December 1, 2014.

MLI intends to use the net proceeds from the offering for general corporate purposes, including future refinancing requirements.

“Our financing activities take into account future refinancing needs. We have over $2 billion in potential refinancing requirements over the next 12 months. We have taken the opportunity to issue subordinated debt in favourable markets,” said Senior Executive Vice President and Chief Financial Officer Steve Roder.

Implied Volatility theory suggests that this issue is about $0.20 cheap to theory:

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Pacific & Western Bank of Canada has announced:

that it has filed and was receipted by the securities regulatory authorities in Ontario, Manitoba, Saskatchewan, Alberta and British Columbia for a preliminary short form prospectus for an offering of a minimum of $10,000,000 and a maximum of $25,000,000 of non-cumulative 5-year rate reset preferred shares, series 1 (the “Series 1 Preferred Shares”) in the capital of the Bank at a price of $25.00 per share (the “Offering”).

The syndicate of agents for this Offering is being led by Industrial Alliance Securities Inc. and includes Dundee Securities Ltd., Haywood Securities Inc., Mackie Research Capital Corporation, PI Financial Corp., Burgeonvest Bick Securities Limited, and Leede Financial Markets Inc. The Bank has granted the Agents an option, exercisable in whole or in part, to sell, as agents, such number of Series 1 Preferred Shares equal to 15% of the number of Series 1 Preferred Shares sold pursuant to the Offering on the same terms as set out above, to cover over-allotments, if any, and for market stabilization purposes, exercisable at any time within 30 days of closing.

The Series 1 Preferred Shares will yield 7.0% annually, payable quarterly, as and when declared by the Board of Directors of the Bank, for the initial period ending October 31, 2019, based on the stated issued price per share. Thereafter, the dividend rate will reset every five years at a level of 543 basis points over the then 5-year Government of Canada bond yield.

Subject to regulatory approval, the Bank has the right to redeem up to all of the then outstanding Series 1 Preferred Shares on October 31, 2019, and on October 31 every five years thereafter at a price of $25.00 per share.

Should the Bank choose not to exercise its right to redeem the Series 1 Preferred Shares, holders of these shares will have the right to convert their shares into an equal number of non-cumulative floating rate preferred shares, series 2 (the “Series 2 Preferred Shares”), subject to certain conditions, on October 31, 2019, and on October 31 every five years thereafter. Holders of the Series 2 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of the Bank, equal to the 90-day Government of Canada Treasury Bill rate plus 543 basis points.

The net proceeds of the Offering are expected to qualify as Tier 1 capital of the Bank and will be used for general corporate purposes.

The Offering is scheduled to close on or about October 30, 2014 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange and other applicable securities regulatory authorities.

The Bank, a Canadian Schedule I chartered bank, raises deposits through various deposit brokers located across Canada and invests these deposits in loans, leases, commercial mortgages, residential development mortgages and debt of corporations.

The prospectus – available at SEDAR, I am not permitted to provide a direct link because the Alberta Securities Commission believes that investor scum should have to jump through hoops to get access to public documents – contains additional useful information:

The TSX has conditionally approved the listing of the Series 1 Preferred Shares under the symbol “PWB.PR.A” and the Common Shares into which such shares may be converted upon a Contingent Conversion, subject to the Bank fulfilling all of the requirements of TSX on or before December 29, 2014. The Common Shares of the Bank are listed and posted for trading on the TSX under the symbol “PWB”, and their closing price on October 21, 2014 was $5.73. The Series 2 Preferred Shares are not listed on the TSX and no application for listing of the Series 2 Preferred Shares has been made to the TSX.
…
As disclosed in the Annual Information Form, the only person or company that is, or has been within the immediate two preceding years, a promoter of the Bank or a subsidiary of the Bank under applicable securities laws is PWC Capital Inc. (formerly Pacific & Western Credit Corp.) (“PWC”). As of the date hereof, the number and percentage of each class of voting securities and equity securities of the Bank or any of its subsidiaries beneficially owned, or controlled or directed, directly or indirectly, by PWC are as follows:

Designation of Class	Type of Ownership	Number of Securities	Percentage of Securities
Common Shares	Of record and beneficial	17,210,839	88.5%

So the parent bank holding company is PWC, which has preferred shares trading under the symbol PWC.PR.B, which have been discussed on PrefBlog.

This new issue will not be tracked by HIMIPref™ since it does not have a credit rating. Public credit ratings can serve as a marvellous impulse to focus the minds of the directors and managers of the company during bad times and this is a very useful trait. An additional reason for not tracking it is the extremely small size of the issue – not known precisely at this point, but the maximum is $25-million.

Many thanks to Assiduous Reader prefQC for bringing this new issue to my attention.

Brookfield Office Properties Inc. has announced:

that it has agreed to issue to a syndicate of underwriters led by RBC Capital Markets, CIBC, Scotia Capital Inc. and TD Securities Inc., for distribution to the public, ten million Cumulative Rate Reset Class AAA Preference Shares, Series AA (the “Preferred Shares, Series AA”). The Preferred Shares, Series AA will be issued at a price of C$25.00 per share, for aggregate proceeds of C$250 million. Holders of the Preferred Shares, Series AA will be entitled to receive a cumulative quarterly fixed dividend yielding 4.75% annually for the initial period ending December 31, 2019. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 3.15%.

Holders of Preferred Shares, Series AA will have the right, at their option, to convert their shares into Cumulative Floating Rate Class AAA Preference Shares, Series BB (the “Preferred Shares, Series BB”), subject to certain conditions, on December 31, 2019 and on December 31 every five years thereafter. Holders of Preferred Shares, Series BB will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 90-day Government of Canada Treasury Bill yield plus 3.15%.

Brookfield Office Properties has granted the underwriters an option, exercisable in whole or in part anytime up to two business days prior to closing, to purchase an additional 1,500,000 Preferred Shares, Series AA at the same offering price. Should the option be fully exercised, the total gross proceeds of the financing will be C$287.5 million.

The Preferred Shares, Series AA will be offered in Canada pursuant to a short form prospectus to be filed with the securities commissions and other similar regulatory authorities in each of the provinces of Canada, pursuant to National Instrument 44-101 – Short Form Prospectus Distributions.

The net proceeds of the issue will be used for general corporate purposes.

They later announced:

that as a result of strong investor demand for its previously announced public offering of 4.75% Cumulative Rate Reset Class AAA Preference Shares, Series AA (the “Preferred Shares, Series AA”), it has agreed to increase the size of the offering from C$250 million to C$300 million with no underwriters’ option, or from 10,000,000 to 12,000,000 Preferred Shares, Series AA.

They look as if they might be a little cheap compared to other BPO FixedResets, but it’s hard to tell.

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Update, 2014-10-21: Rated Pfd-3 [Stable] by DBRS

Brookfield Asset Management has announced:

that it has agreed to issue 8,000,000 Class A Preferred Shares, Series 42 on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., RBC Capital Markets, CIBC and Scotiabank for distribution to the public. The Preferred Shares, Series 42 will be issued at a price of C$25.00 per share, for gross proceeds of C$200,000,000. Holders of the Preferred Shares, Series 42 will be entitled to receive a cumulative quarterly fixed dividend yielding 4.50% annually for the initial period ending June 30, 2020. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.84%.

Brookfield has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Preferred Shares, Series 42 which, if exercised, would increase the gross offering size to C$250,000,000. The Preferred Shares, Series 42 will be offered in all provinces of Canada by way of a supplement to Brookfield’s existing short form base shelf prospectus. The Preferred Shares, Series 42 may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

Brookfield intends to use the net proceeds of the issue of Preferred Shares, Series 42 for general corporate purposes. The offering of Preferred Shares, Series 42 is expected to close on or about October 8, 2014.

Later, they further announced:

that as a result of strong investor demand for its previously announced offering it has agreed to increase the size of the offering to 12,000,000 Class A Preferred Shares, Series 42. The Preferred Shares, Series 42 will be issued at a price of C$25.00 per share, for gross proceeds of C$300,000,000. There will not be an underwriters’ option as was previously granted. The Preferred Shares, Series 42 are being offered on a bought deal basis by a syndicate of underwriters led by TD Securities Inc., RBC Capital Markets, CIBC and Scotiabank.

This issue looks fairly priced against BAM.PF.F, a FixedReset 4.50+286, that started trading in June, but looks reasonably cheap against its lower-spread siblings, according to Implied Volatility Theory:

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National Bank of Canada has announced (although not yet on their website):

that it has entered into an agreement with a group of underwriters led by National Bank Financial Inc. for an issue on a bought deal basis of 8 million non-cumulative 5-year rate reset first preferred shares series 32 (the “Series 32 Preferred Shares”), at a price of $25.00 per share, to raise gross proceeds of $200 million.

National Bank has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series 32 Preferred Shares. This option is exercisable in whole or in part by the underwriters at any time up to two business days prior to closing. The maximum gross proceeds raised under the offering will be $250 million should this option be exercised in full.

The Series 32 Preferred Shares will yield 3.90% annually, payable quarterly, as and when declared by the Board of Directors of National Bank, for the initial period ending February 15, 2020. The first of such dividends, if declared, shall be payable on February 15, 2015. Thereafter, the dividend rate will reset every five years at a level of 225 basis points over the then 5-year Government of Canada bond yield. Subject to regulatory approval, National Bank may redeem the Series 32 Preferred Shares in whole or in part at par on February 15, 2020 and on February 15 every five years thereafter.

Holders of the Series 32 Preferred Shares will have the right to convert their shares into an equal number of non-cumulative floating rate first preferred shares series 33 (the “Series 33 Preferred Shares”), subject to certain conditions, on February 15, 2020, and on February 15 every five years thereafter. Holders of the Series 33 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of National Bank, equal to the 90-day Government of Canada Treasury Bill rate plus 225 basis points.

The net proceeds of the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for National Bank. The expected closing date is on or about October 9, 2014. National Bank intends to file in Canada a prospectus supplement to its October 5, 2012 base shelf prospectus in respect of this issue.

They later announced (again, not yet on their website):

that as a result of strong investor demand for its previously announced domestic public offering of Non-cumulative 5-Year Rate Reset First Preferred Shares Series 32, the size of the offering has been increased to 12 million shares. The gross proceeds of the offering will now be $300 million. The offering will be underwritten by a syndicate led by National Bank Financial Inc. The expected closing date is October 9, 2014.

The net proceeds of the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for National Bank.

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell eight million Cumulative Redeemable Preference Shares, Series 15 (the “Series 15 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on September 23, 2014.

The holders of Series 15 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.10 per share, payable quarterly on the first day of March, June, September and December, as and when declared by the Board of Directors of Enbridge, yielding 4.40 per cent per annum, for the initial fixed rate period to but excluding September 1, 2020. The first quarterly dividend payment date is scheduled for December 1, 2014. The dividend rate will reset on September 1, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.68 per cent. The Series 15 Preferred Shares are redeemable by Enbridge, at its option, on September 1, 2020 and on September 1 of every fifth year thereafter.

The holders of Series 15 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 16 (the “Series 16 Preferred Shares”), subject to certain conditions, on September 1, 2020 and on September 1 of every fifth year thereafter. The holders of Series 16 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Enbridge, at a rate equal to the sum of the 90-day Government of Canada Treasury bill rate plus 2.68 per cent.

Enbridge has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2 million Series 15 Preferred Shares at a price of $25.00 per share.

The offering is being made only in Canada by means of a prospectus supplement to the base shelf prospectus of the Corporation dated September 2, 2014. Proceeds will be used to partially fund capital projects, to reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

The syndicate of underwriters is led by TD Securities Inc., CIBC World Markets, RBC Capital Markets, and Scotiabank.

Later, they added:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Preference Shares, Series 15 (the “Series 15 Preferred Shares”), the size of the offering has been increased to 11 million Series 15 Preferred Shares. The aggregate gross proceeds will be C$275 million. Closing of the offering is expected on September 23, 2014.

Of the many very closely related ENB FixedResets available, the new issue is most comparable to ENB.PF.C, 4.40%+264, which closed today at 24.99-19, 9×29, and ENB.PF.E, 4.40%+266, which closed at 25.00-02, 17×19. Not much of a new-issue concession here!

Update, 2014-9-17: Rated Pfd-2(low) [Stable] by DBRS.

Fortis Inc. has announced:

that it has entered into an agreement with a syndicate of underwriters led by Scotiabank and RBC Capital Markets (collectively, the “Underwriters”), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, from Fortis and sell to the public (the “Offering”) 12,000,000 Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series M of the Corporation (the “Series M First Preference Shares”). The purchase price of $25.00 per Series M First Preference Share will result in gross proceeds for Fortis of $300,000,000.

Fortis has granted the Underwriters the option to purchase up to an additional 1,800,000 Series M First Preference Shares to cover over-allotments, if any, and for market stabilization purposes, during the 30 days following the closing of the Offering (the “Over-Allotment Option”). If the Over-Allotment Option is exercised in full, the Offering will result in gross proceeds to the Corporation of $345,000,000.

The net proceeds of the Offering will be used to repay a portion of the amounts borrowed by Fortis under its acquisition credit facility in connection with the acquisition of UNS Energy Corporation completed on August 15, 2014.

The holders of Series M First Preference Shares will be entitled to receive fixed cumulative preferential cash dividends, if, as and when declared by the Board of Directors of the Corporation (the “Board of Directors”), for the initial period commencing on the date of issue and ending on but excluding December 1, 2019 (the “Initial Period”) at a rate of 4.10%, in an amount equal to $1.0250 per Series M First Preference Share per annum paid in equal quarterly instalments. The first of such dividends, if declared, will be payable on December 1, 2014 for the period commencing on the date of issue in the amount of $0.2050 per Series M First Preference Share. The dividend rate will be reset on December 1, 2019 and thereafter every five years at a level of 2.48% above the five‑year Government of Canada Bond yield.

At the end of the Initial Period and every five years thereafter, the holders of Series M First Preference Shares will, subject to certain conditions and the right of the Corporation to redeem those shares, have the option to convert any or all of their Series M First Preference Shares into an equal number of Cumulative Redeemable Floating Rate First Preference Shares, Series N of the Corporation (the “Series N First Preference Shares”). The holders of Series N First Preference Shares will be entitled to receive floating rate cumulative preferential cash dividends, if, as and when declared by the Board of Directors, at the rate of the three-month Government of Canada Treasury Bill average yield plus 2.48%, reset on a quarterly basis.

The Offering is subject to the receipt of all necessary regulatory and stock exchange approvals. Closing is expected to occur on or about September 19, 2014 but not later than October 24, 2014.

They announced later:

that due to strong investor demand it has agreed to increase the aggregate size of its previously announced bought deal offering of Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series M (the “Series M First Preference Shares”) from $300,000,000 to $600,000,000 (the “Offering”). The Offering is being made pursuant to an agreement with a syndicate of underwriters led by Scotiabank and RBC Capital Markets (collectively, the “Underwriters”) who have agreed to purchase 24,000,000 Series M First Preference Shares at a price of $25.00 per share.

The Offering will result in gross proceeds to the Corporation of $600,000,000. There will be no over-allotment option on the Offering. All other terms of the Offering are as set forth in the press release relating to the Offering issued by Fortis earlier today.

That’s a whopper! This issue will join FTS’ other three FixedResets:

And according to Implied Volatility analysis, it is cheap relative to the other FTS issues:

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Update, 2014-9-12: Rated Pfd-2(low) [Review Developing] by DBRS.

Pembina Corporation has announced:

that it has entered into an agreement with a syndicate of underwriters co-led by CIBC and Scotiabank (together, the “Underwriters”) pursuant to which the Underwriters have agreed to purchase from Pembina 6,000,000 cumulative redeemable rate reset class A preferred shares, Series 7 (the “Series 7 Preferred Shares”) at a price of $25.00 per share for distribution to the public.

The holders of Series 7 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.125 per share, payable quarterly on the 1st day of March, June, September and December, as and when declared by the Board of Directors of Pembina, yielding 4.50 per cent per annum, for the initial fixed rate period to but excluding December 1, 2019. The first quarterly dividend payment date is scheduled for December 1, 2014. The dividend rate will reset on December 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.94 per cent. The Series 7 Preferred Shares are redeemable by Pembina, at its option, on December 1, 2019 and on December 1 of every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.

The holders of Series 7 Preferred Shares will have the right to convert their shares into cumulative redeemable floating rate class A preferred shares, Series 8 (the “Series 8 Preferred Shares”), subject to certain conditions, on December 1, 2019 and on December 1 of every fifth year thereafter. The holders of Series 8 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Pembina, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 2.94 per cent.

Pembina has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2,000,000 Series 7 Preferred Shares at a price of $25.00 per share.

Closing of the offering is expected on September 11, 2014, subject to customary closing conditions.

The proceeds from the offering will be used to help fund a portion of Pembina’s proposed purchase of the Vantage pipeline system and the Saskatchewan Ethane Extraction Plant from Mistral Midstream Inc. and other entities controlled by Riverstone Holdings LLC (the “Transaction”), as well as to fund a portion of the remainder of the Company’s 2014 capital expenditure program and for general corporate purposes. The Transaction is subject to regulatory approvals including approval of the National Energy Board and under the Competition Act (Canada) and the Canada Transportation Act, required consents and other customary closing conditions. Further details about the Transaction are set out in a separate press release from Pembina dated today’s date, and which may be found on Pembina’s SEDAR profile atwww.sedar.com. The closing of the offering of the Series 7 Preferred Shares is not conditional on the closing of the Transaction. If the Transaction does not close, the portion of proceeds to be allocated to the Transaction will be reallocated to fund a portion of the remainder of the Company’s 2014 capital expenditure program, and for general corporate purposes.

The offering is being made by means of a prospectus supplement under the short form base shelf prospectus filed by the Company on February 22, 2013 in each of the provinces of Canada.

They later announced:

that as a result of strong investor demand for its previously announced offering of cumulative redeemable rate reset class A preferred shares, Series 7 (the “Series 7 Preferred Shares”), the size of the offering has been increased to 10 million shares. The offering no longer includes the previously granted underwriters’ option. The aggregate gross proceeds will be $250 million.

The acquisition of the Vantage Pipeline System was discussed in the Globe:

Pembina said in a separate news release Tuesday that the Vantage ethane pipeline being acquired from Riverstone Holdings LLC provides long-term, fee-for-service cash flow and strategic access to the expanding North Dakota Bakken play.

“We have watched the development of these assets with great interest as they represent an excellent opportunity to expand our footprint into one of the most promising hydrocarbon plays in North America and, as such, the Transaction is a low-risk, logical step-out for Pembina,” company president and chief executive officer Mike Dilger said.

As part of the Vantage transaction, Pembina is also acquirinig Mistral Midstream Inc.’s interest in the Saskatchewan Ethane Extraction Plant, a development-stage, 60-million-cubic-feet-per-day deep cut gas processing facility, as well as pipeline infrastructure currently under construction.

The plant has a long-term ethane sales agreement and a long-term, fee-for-service processing agreement, Pembina said; the facility is expected to produce about 4,500 barrels per day and will connect into Vantage.

Additional capital expenditures of about $100-million are anticipated before the end of 2015 in order to complete construction of the ethane extraction plant and the associated gathering and delivery infrastructure, Pembina said.

DBRS comments:

DBRS notes today that Pembina Pipeline Corporation (Pembina or the Company; rated BBB with a Stable trend by DBRS) has announced that it has entered into an agreement to acquire the Vantage pipeline system (Vantage) and Mistral Midstream Inc.’s interest in the Saskatchewan Ethane Extraction Plant (SEEP) for total consideration of USD 650 million (the Acquisition). DBRS views that the proposed Acquisition is not expected to have a material impact on Pembina’s credit profile in the short term. However, it could have a modestly positive impact on the business risk profile over the long term, reflecting the geographical diversification benefit and relatively stable cash flow from long-term take-or-pay transportation contracts and fee-for-service processing contracts associated with the Acquisition. The proposed Acquisition is subject to regulatory approvals and other customary closing conditions, including the approval of the Toronto Stock Exchange.
…
Based on DBRS’s view of Pembina’s long-term corporate financing strategy and its Acquisition financing plan, DBRS believes that the impact on the financial risk profile is expected to be neutral. Pembina intends to finance the Acquisition with a mix of equity (40%), preferred shares (20%) and debt (40%). This financing plan should not have a material impact on the current debt leverage, cash flow and interest coverage metrics, which improved in the last 12 months ended June 2014, compared with 2013 and previous years’ metrics due to much stronger EBIT and cash flow and marginally lower net debt. In the long term, Pembina is committed to maintaining its debt-to-capital ratio around the 40% range. Overall, DBRS does not consider the financing of the proposed Acquisition to have a material impact on the Company’s financial risk profile.

This issue will join PPL’s other three FixedResets:

This illustrates an important point about FixedReset analysis with respect to the interactions between Current Rate, Issue Reset Spread and Price. PPL.PR.E will pay 0.5% more than the new issue until its reset date, despite having a roughly identical Issue Reset Spread. Fifty bp more per annum over the five year term comes to about sixty cents; therefore one would expect PPL.PR.E to be priced roughly $0.60 more than the new issue, since the rates after reset (assuming, of course, that they both do get reset) will be almost identical.

The yields to worst, however, are greatly different, since the premium on PPL.PR.E is enough to make the yield-to-call less than the yield-to-perpetuity, even though the projected yields to perpetuity (4.39% for PPL.PR.E when priced at 25.90; 4.41% for the new issue when priced at 25.00) are almost identical.

It will be most interesting to see how they trade relative to each other once the new issue closes.

Update, 2014-9-4: Pfd-3 from DBRS.

Manulife Financial Corporation has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 17 (“Series 17 Preferred Shares”). Manulife will issue 10 million Series 17 Preferred Shares priced at $25 per share to raise gross proceeds of $250 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., RBC Capital Markets and TD Securities and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is August 15, 2014. Manulife intends to file a prospectus supplement to its June 23, 2014 base shelf prospectus in respect of this issue.

Holders of the Series 17 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 3.90 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending December 19, 2019. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.36 per cent.

Holders of Series 17 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 18 (“Series 18 Preferred Shares”), subject to certain conditions, on December 19, 2019 and on December 19 every five years thereafter. Holders of the Series 18 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.36 per cent.

Manulife intends to use the net proceeds from the offering to partially fund the redemption of Manulife’s Non-cumulative Rate Reset Class 1 Shares Series 1 (the “Series 1 Preferred Shares”) on September 19, 2014.

Later, they added:

that as a result of strong investor demand for its previously announced Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 17 (“Series 17 Preferred Shares”), the size of the offering has been increased to 14 million shares. The gross proceeds of the offering will now be $350 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., RBC Capital Markets and TD Securities and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is August 15, 2014. Manulife intends to file a prospectus supplement to its June 23, 2014 base shelf prospectus in respect of this issue.

Manulife intends to use the net proceeds from the offering to fund the redemption of Manulife’s Non-cumulative Rate Reset Class 1 Shares Series 1 (the “Series 1 Preferred Shares”) on September 19, 2014.

This issue is priced in-line with extant issues, according to Implied Volatility theory:

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I continue to be puzzled about why the Implied Volatility for MFC FixedResets is so high.