Category: New Issues

TransAlta Corporation has announced:

that it has agreed to issue to a syndicate of underwriters led by RBC Capital Markets, CIBC and Scotiabank for distribution to the public 6,000,000 Cumulative Redeemable Rate Reset First Preferred Shares, Series G (the “Series G Shares”). The Series G Shares will be issued at a price of $25.00 per Series G Share, for aggregate gross proceeds of $150 million. Holders of the Series G Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 5.30% annually for the initial period ending September 30, 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 3.80%.

Holders of Series G Shares will have the right, at their option, to convert their shares into Cumulative Redeemable Floating Rate Reset First Preferred Shares, Series H (the “Series H Shares”), subject to certain conditions, on September 30, 2019 and on September 30 every five years thereafter. Holders of the Series H Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.80%.

TransAlta Corporation 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 G Shares at the same offering price. The Series G Shares will be offered by way of prospectus supplement under the short form base shelf prospectus of TransAlta Corporation dated December 9, 2013. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the offering will be used for general corporate purposes in support of our business, to reduce short term indebtedness and to fund capital investments of the Corporation and its affiliates. The offering is expected to close on or about August 15, 2014.

This issue will join the extant issues:

The issue looks quite expensive according to Implied Volatility Theory, which estimates its fair value at about 24.45:

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About half of this calculated richness is due to today’s tumble in the extant issues – the last bids on 2014-8-5 were 18.87, 22.28 and 24.40, respectively. Plugging those bids into the model results in a Spread of 311bp, Volatility of 19%, a better fit to the curve, and a theoretical price of 24.73 for the new issue.

Equitable Group Inc. has announced:

that it has agreed to issue 2,800,000 Non-cumulative 5-Year Rate Reset Preferred Shares Series 3 (the “Series 3 Preferred Shares”) on a bought deal basis to a syndicate of underwriters led by TD Securities Inc. and Scotiabank for distribution to the public. The Series 3 Preferred Shares will be issued at a price of $25.00 per share, for aggregate gross proceeds of $70,000,000. Holders of the Series 3 Preferred Shares will be entitled to receive non-cumulative preferential quarterly fixed dividends yielding 6.35% annually for the initial period ending September 30, 2019. Thereafter, the dividend rate will be reset every five years at a rate equal to the then current 5-year Government of Canada bond yield plus 4.78%.

The Company has granted to the underwriters an over-allotment option, exercisable for a period of 30 days following closing of the offering, to purchase up to an additional 200,000 Series 3 Preferred Shares which, if exercised in full, would increase the gross offering size to $75,000,000. The Series 3 Preferred Shares will be offered in all provinces and territories of Canada by way of a supplement to the Company’s existing short form base shelf prospectus dated June 24, 2014.

“Preferred shares have long formed a fundamental part of our Bank’s efficient capital structure and of our strategy of supporting growth with non-dilutive forms of capital,” said Andrew Moor, President and CEO of Equitable Group and its wholly owned subsidiary, Equitable Bank. “This attractive offering will keep our capital position well above most industry benchmarks as we deliver profitable growth across our lines of business.”

Holders of Series 3 Preferred Shares will have the right, at their option, to convert their Series 3 Preferred Shares into Non-cumulative Floating Rate Preferred Shares Series 4 of the Company (the “Series 4 Preferred Shares”), subject to certain conditions, on September 30, 2019 and on September 30 every five years thereafter. Holders of the Series 4 Preferred Shares will be entitled to receive non-cumulative preferential quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 4.78%.

The proceeds of this offering will be used by the Company to acquire Basel III compliant Non-cumulative 5-Year Rate Reset Preferred Shares Series 3 of Equitable Bank (the “Bank”), which will form part of the Bank’s Tier I capital base. The Bank will in turn use the proceeds for corporate purposes and to redeem its existing Series 1 Preferred Shares, subject to the receipt of all necessary regulatory approvals. The Company likewise intends to redeem its currently outstanding Non-cumulative 5-year Rate Reset Preferred Shares Series 1 on September 30, 2014 in accordance with the terms of such shares.

“Equitable’s capital ratios have consistently exceeded minimum regulatory standards as a result of years of disciplined capital allocation,” said Tim Wilson, Chief Financial Officer of Equitable Group and Equitable Bank. “Giving effect to the issuance of Series 3 and the redemption of Series 1, on a pro forma basis our Total and Tier I Capital Ratios would improve by 80 basis points to 17.4% and 14.6% respectively on an all-in basis, based on our reported position at the end of our first quarter.”

The offering is expected to close on or about August 8, 2014. The Company will make an application to list the Series 3 Preferred Shares and Series 4 Preferred Shares on the Toronto Stock Exchange.

It’s kind of an interesting issue, because it’s being issued by the holding company with proceeds being invested in virtually identical private shares of the operating company. The OpCo’s shares will be NVCC-compliant, but the HoldCo’s shares are unregulated and do not have a forced-conversion-to-equity clause; thus, it is possible that the OpCo’s shares could be converted into OpCo common while the HoldCo’s shares still represent a $25 claim on HoldCo. While I’m sure that in such a case that this claim would not be trading at par, it sounds like a good thing, even if all it ever does is make the lawyers rich.

It is also interesting that the coupon of this issue, at 6.35%, is lower than the initial coupon on the issue it is refunding, EQB.PR.A, issued as ETC.PR.A. However, the Issue Reset Spread on the issue is higher, 478bp as opposed to 453bp. How times change!

This issue is unrated and will not be tracked by HIMIPref™. This is not because I worship the Credit Rating Agencies and am unable to do anything without them; it is because I feel that a public announcement by the CRAs of imminent downgrades do an admirable job of concentrating the minds of management and the directors on fixing the problem. Such announcements by Hymas Investment Management Inc. or Joe Blogger do not carry the same weight.

Update, 2016-3-9: This trades as EQB.PR.C

The Toronto-Dominion Bank has announced:

a domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”).

TD has entered into an agreement with a group of underwriters led by TD Securities Inc. to issue, on a bought deal basis, 12 million Series 3 Shares at a price of $25.00 per share to raise gross proceeds of $300 million. TD has also granted the underwriters an option to purchase, on the same terms, up to an additional 2 million Series 3 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 Series 3 Shares will yield 3.80% annually, payable quarterly, as and when declared by the Board of Directors of TD, for the initial period ending July 31, 2019. Thereafter, the dividend rate will reset every five years at a level of 2.27% over the then five-year Government of Canada bond yield.

Subject to regulatory approval, on July 31, 2019 and on July 31 every 5 years thereafter, TD may redeem the Series 3 Shares, in whole or in part, at $25.00 per share. Subject to TD’s right of redemption, holders of the Series 3 Shares will have the right to convert their shares into Non-Cumulative Floating Rate Preferred Shares, Series 4 (the “Series 4 Shares”), subject to certain conditions, on July 31, 2019, and on July 31 every five years thereafter. Holders of the Series 4 Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of TD, equal to the three-month Government of Canada Treasury bill yield plus 2.27%.

The expected closing date is July 31, 2014. TD will make an application to list the Series 3 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

Later, they added:

that as a result of strong investor demand for its previously announced domestic public offering of Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”), the size of the offering has been increased to 20 million Series 3 Shares. The gross proceeds of the offering will now be $500 million. The offering will be underwritten by a group of underwriters led by TD Securities Inc.

The expected closing date is July 31, 2014. TD will make an application to list the Series 3 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of the offering will be used for general corporate purposes.

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It is difficult to come to any conclusions regarding the Implied Volatility. The two issues with the highest Issue Reset Spreads, TD.PR.I and TD.PR.K, have been called for redemption and otherwise the issues available for calculation are not well distributed – the low-spread issues are not NVCC-compliant, while the higher-spread issues are.

Bank of Montreal has announced:

a Basel III-compliant domestic public offering of $300 million of Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 31 (the “Preferred Shares Series 31”). The offering will be underwritten on a bought-deal basis by a syndicate of underwriters led by BMO Capital Markets.

The Preferred Shares Series 31 will be issued to the public at a price of $25.00 per share. Holders will be entitled to receive non-cumulative preferential fixed quarterly dividends for the initial period ending November 25, 2019, as and when declared by the board of directors of the Bank, payable in the amount of $0.2375 per share, to yield 3.80 per cent annually.

Subject to regulatory approval, on or after November 25, 2019, the Bank may redeem the Preferred Shares Series 31 in whole or in part at par. On November 25, 2019, the dividend rate will reset and will reset thereafter every five years to be equal to the 5-Year Government of Canada Bond Yield plus 2.22 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 31 into an equal number of Non-Cumulative Floating Rate Class B Preferred Shares Series 32 (“Preferred Shares Series 32”) on November 25, 2019, and on November 25 of every fifth year thereafter. Holders of the Preferred Shares Series 32 will be entitled to receive non-cumulative preferential floating rate quarterly dividends, as and when declared by the board of directors of the Bank, equal to the then 3-month Government of Canada Treasury Bill yield plus 2.22 per cent. Subject to certain conditions, holders may elect to convert any or all of their Preferred Shares Series 32 into an equal number of Preferred Shares Series 31 on November 25, 2024, and on November 25 of every fifth year thereafter.

The anticipated closing date is July 30, 2014. The net proceeds from the offering will be used by the Bank for general corporate purposes.

The Implied Volatility calculation for BMO FixedResets is very interesting – it appears that the slope of the three NVCC-compliant issues is much less than the 40% calculation that is obtained when all issues, including those which are not NVCC-compliant and therefore virtually certain to be called on one of the next two possible dates – are thrown into the mix.

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Of course, the range of Issue Reset Spreads for the NVCC compliant issues is very small, and the issue price has been used for the new issue calculations, so one cannot draw many conclusions just yet, but … we will see!

Holy Smokes, Enbridge just keeps pounding them out!

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell ten million Cumulative Redeemable Preference Shares, Series 13 (the “Series 13 Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on July 17, 2014.

The holders of Series 13 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 June 1, 2020. The first quarterly dividend payment date is scheduled for December 1, 2014. The dividend rate will reset on June 1, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.66 per cent. The Series 13 Preferred Shares are redeemable by Enbridge, at its option, on June 1, 2020 and on June 1 of every fifth year thereafter.

The holders of Series 13 Preferred Shares will have the right to convert their shares into Cumulative Redeemable Preference Shares, Series 14 (the “Series 14 Preferred Shares”), subject to certain conditions, on June 1, 2020 and on June 1 of every fifth year thereafter. The holders of Series 14 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 2.66 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 two million Series 13 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 June 6, 2013. 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 CIBC World Markets, RBC Capital Markets, TD Securities, and Scotiabank.

That’s a nice long first coupon – there may be some dividend capture possibilities in November!

Later, they announced:

that as a result of strong investor demand for its previously announced offering of Cumulative Redeemable Preference Shares, Series 13 (the “Series 13 Preferred Shares”), the size of the offering has been increased to 14 million Series 13 Preferred Shares. The aggregate gross proceeds will be C$350 million. Closing of the offering is expected on July 17, 2014.

Update, 2014-7-11: Rated Pfd-2(low) [Stable] by DBRS.

AltaGas Ltd. has announced:

that it will issue 6,000,000 Cumulative Redeemable Rate Reset Preferred Shares, Series G (the “Series G Preferred Shares”), at a price of $25.00 per Series G Preferred Share (“the Offering”) for aggregate gross proceeds of $150 million on a bought deal basis. The Series G Preferred Shares will be offered to the public through a syndicate of underwriters co-led by RBC Capital Markets, Scotiabank and TD Securities Inc.

Holders of the Series G Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend for the initial period ending on but excluding September 30, 2019 (the “Initial Period”) at an annual rate of 4.75%, payable on the last day of March, June, September and December, as and when declared by the Board of Directors of AltaGas. The first quarterly dividend payment is payable on September 30, 2014 and shall be $0.2896 per Series G Preferred Share. The dividend rate will reset on September 30, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.06%. The Series G Preferred Shares are redeemable by AltaGas, at its option, on September 30, 2019 and on September 30 of every fifth year thereafter.

Holders of Series G Preferred Shares will have the right to convert all or any part of their shares into Cumulative Redeemable Floating Rate Preferred Shares, Series H (the “Series H Preferred Shares”), subject to certain conditions, on September 30, 2019 and on September 30 every fifth year thereafter. Holders of Series H Preferred Shares will be entitled to receive a cumulative quarterly floating dividend at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 3.06%, as and when declared by the Board of Directors of AltaGas.

The Offering is expected to close on or about July 3, 2014. Net proceeds will be used to reduce outstanding indebtedness and for general corporate purposes. AltaGas has granted to the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to closing of the Offering, to purchase up to an additional 2,000,000 Series G Preferred Shares at a price of $25.00 per share.

The Series G Preferred Shares will be issued pursuant to a prospectus supplement that will be filed with securities regulatory authorities in Canada under AltaGas’ short form base shelf prospectus dated August 23, 2013. The Offering is only made by way of a prospectus. The prospectus contains important detailed information about the securities being offered. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.

This looks like it is being issued with some concession to the market – ALA.PR.E, which is a FixedReset 5.00%+317, closed today at 25.46-55, 2×21, on heavy volume.

Partners Value Split Corp. has announced (although not yet on their website [update: here it is]):

that it has entered into an agreement to sell 8,000,000 Class AA Preferred Shares, Series 6 (the “Series 6 Preferred Shares”) to a syndicate of underwriters led by Scotiabank, CIBC, RBC Capital Markets, and TD Securities Inc. on a bought deal basis. The Series 6 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $200,000,000. The Series 6 Preferred Shares will carry a fixed coupon of 4.50% and will have a final maturity of October 8, 2021. The Series 6 Preferred Shares have a provisional rating of Pfd-2 (low) from DBRS. The net proceeds of the offering will be used to redeem the Company’s outstanding Class AA Preferred Shares, Series 4 and to pay a special cash dividend to holders of the Company’s capital shares.

The Company has granted the underwriters an option, exercisable at any time, not later than 30 days after closing, to purchase up to an additional 1,200,000 Series 6 Preferred Shares, which, if exercised, would increase the gross offering size to $230,000,000. Closing of the offering is expected to occur on or about July 4, 2014.

The Company owns a portfolio consisting of 53,160,644 Class A Limited Voting Shares of Brookfield Asset Management Inc. (the “Brookfield Shares”), which is expected to yield quarterly dividends that are sufficient to fund quarterly fixed cumulative preferential dividends for the holders of the Company’s preferred shares and to enable the holders of the Company’s capital shares to participate in any capital appreciation of the Brookfield Shares. Brookfield Asset Management Inc. (“Brookfield”) is a global alternative asset manager with over $175 billion in assets under management. Brookfield has over a 100-year history of owning and operating assets with a focus on property, renewable energy, infrastructure and private equity and is co-listed on the New York and Toronto Stock Exchanges under the symbols BAM and BAM.A, respectively, and on NYSE Euronext under the symbol BAMA.

This issue is more-or-less in-line with BNA’s other issues at today’s close:

Update, 2014-6-19: Rated Pfd-2(low) by DBRS.

Element Financial Corporation has announced that it (emphasis added):

has entered into an agreement to sell, on a bought deal basis, 4,000,000 Series E Preferred Shares at a price of $25.00 per Series E Preferred Share for gross proceeds of $100 million (the “Preferred Share Offering”, and with the Subscription Receipt Offering and the Debenture Offering, the “Offerings”). Holders of the Series E Preferred Shares will be entitled, if, as and when declared by the Board of Directors of Element, to receive a cumulative quarterly fixed dividend for the initial five-year period ending September 30, 2019 of 6.4% per annum. Thereafter, the dividend rate will reset every five years to an annual dividend rate equal to the 5-Year Government of Canada Bond Yield as quoted on Bloomberg on the 30th day prior to the first day of the relevant subsequent five year fixed rate period plus 4.72%.

Holders of the Series E Preferred Shares will have the right to convert their shares into cumulative floating rate preferred shares, Series F of Element (“Series F Preferred Shares”), subject to certain conditions and Element’s right to redeem the Series E Preferred Shares, on September 30, 2019 and on September 30 every five years thereafter. Holders of the Series F Preferred Shares will be entitled to receive a quarterly floating rate dividend, if, as and when declared by the Board of Directors of Element, equal to the then current three-month Government of Canada Treasury Bill plus 4.72%. Holders of the Series F Preferred Shares may convert their Series F Preferred Shares into Series E Preferred Shares, subject to certain conditions and Element’s right to redeem the Series F Preferred Shares, on September 30, 2024 and on September 30 every five years thereafter. The Series E Preferred Shares will not be rated. If the Acquisition does not proceed, the net proceeds from the Preferred Share Offering will be used by Element for general corporate purposes.

The Preferred Share Offering is being led by BMO Nesbitt Burns Inc. and includes CIBC World Markets Inc., GMP Securities L.P., Barclays Capital Canada Inc., National Bank Financial Inc., TD Securities Inc., Credit Suisse Securities (Canada) Inc., RBC Dominion Securities Inc., Scotia Capital Inc., Cormark Securities Inc. and Manulife Securities Inc. (collectively, the “Preferred Share Underwriters”).

This is part of a major capital-raising exercise:

• Bought deal financing of $750 million subscription receipts, $250 million extendible convertible debentures and $100 million cumulative 5-year rate reset preferred shares
• Amended and restated revolving credit facility for aggregate commitment of $1 billion
• US$1.36 billion bridge financing commitment obtained

… which is in turn due to a major acquisition announcement:

Element Financial Corporation (TSX:EFN) (“Element” or the “Company”), one of North America’s leading equipment finance companies, today announced that it has entered into a definitive agreement to acquire the assets and operations of PHH Arval, PHH Corporation’s North American fleet management services business (the “Transaction”). Under the terms of the agreement, Element will pay approximately US$1.4 billion for the business in an all-cash transaction representing a purchase price multiple of 1.56 times the adjusted book value of the acquired business. At March 31, 2014, PHH Arval reported more than US$4.6 billion in total assets, of which US$4.0 billion represented net investment in fleet leases, and generated annual origination volumes of approximately US$1.7 billion during 2013.
…
The Transaction, which is expected to close on or before July 31, 2014, is subject to customary closing conditions, including regulatory approvals, and post-closing purchase price adjustments.

This issue joins EFN’s other FixedResets outstanding, EFN.PR.A, FixedReset, 6.60%+471 and EFN.PR.C, FixedReset, 6.50%+481.

As with the two previous issues, this issue will not be tracked by HIMIPref™ on the grounds that it is not rated. This is not because I can’t come to my own views regarding credit quality, or because I worship the Credit Rating Agencies, but because I feel the threat of an imminent downgrade from a major agency does an excellent job of focussing the minds of the directors and management that they have a problem that really should be addressed. A ‘Review-Negative’ by Hymas Investment Management does not have quite the same effect.

Canadian Imperial Bank of Commerce has announced:

that it had entered into an agreement with a group of underwriters led by CIBC World Markets Inc. for an issue of 10 million Basel III-compliant non-cumulative Rate Reset Class A Preferred Shares, Series 39 (the “Series 39 Shares”) priced at $25.00 per Series 39 Share to raise gross proceeds of $250 million.

CIBC has granted the underwriters an option to purchase up to an additional 2 million Series 39 Shares at the same offering price, exercisable at any time up to two days prior to closing. Should the underwriters’ option be fully exercised, the total gross proceeds of the financing will be $300 million.

The Series 39 Shares will yield 3.90% per annum, payable quarterly, as and when declared by the Board of Directors of CIBC, for an initial period ending July 31, 2019. On July 31, 2019, and on July 31 every five years thereafter, the dividend rate will reset to be equal to the then current five-year Government of Canada bond yield plus 2.32%.

Subject to regulatory approval and certain provisions of the Series 39 Shares, on July 31, 2019, and on July 31 every five years thereafter, CIBC may, at its option, redeem all or any part of the then outstanding Series 39 Shares at par.

Subject to the right of redemption, holders of the Series 39 Shares will have the right to convert their shares into non-cumulative Floating Rate Class A Preferred Shares, Series 40 (the “Series 40 Shares”), subject to certain conditions, on July 31, 2019 and on July 31 every five years thereafter. Holders of the Series 40 Shares will be entitled to receive a quarterly floating rate dividend, as and when declared by the Board of Directors of CIBC, equal to the three-month Government of Canada Treasury Bill yield plus 2.32%.

Holders of the Series 40 Shares may convert their Series 40 Shares into Series 39 Shares, subject to certain conditions, on July 31, 2024 and on July 31 every five years thereafter.

The expected closing date is June 11, 2014. CIBC will make an application to list the Series 39 Shares as of the closing date on the Toronto Stock Exchange. The net proceeds of this offering will be used for general purposes of CIBC.

They later announced:

that as a result of strong investor demand for its previously announced domestic public offering of non-cumulative Rate Reset Class A Preferred Shares, Series 39, the size of the offering has been increased to 16 million shares. The gross proceeds of the offering will now be $400 million. The offering will be underwritten by a syndicate led by CIBC World Markets Inc. The expected closing date is June 11, 2014.

The net proceeds from this transaction will be used for general purposes of CIBC.

Since CM.PR.K and CM.PR.M are being redeemed and the only other extant CM issues CM.PR.D, CM.PR.E and CM.PR.G are NVCC-Compliant through the back door, this means that CM will be the first bank to have all its preferred issues NVCC compliant.

Update: Provisionally rated Pfd-2 [Stable] by DBRS.

Rated P-2(low) by S&P:

The ‘BBB-‘ issue rating stands three notches below the ‘a-‘ stand-alone credit profile (SACP) assigned to CIBC, incorporating:

• •A deduction of two notches, the minimum downward notching from the SACP under our criteria for a bank hybrid capital instrument; and
• •The deduction of an additional notch to reflect that the preferred shares feature a contingent conversion trigger provision. Should a trigger event occur (as defined by The Office of the Superintendent of Financial Institutions’ [OSFI] guideline for Capital Adequacy Requirements, Chapter 2), each outstanding preferred share will automatically and immediately be converted, without the holder’s consent, into a number of fully paid and freely tradable common shares of the bank determined in accordance with a conversion formula.

Emera Incorporated has announced:

that it will issue eight million Cumulative Rate Reset First Preferred Shares, Series F (the “Series F Preferred Shares”) at a price of $25.00 per share and at an initial annual dividend rate of 4.25 per cent, for aggregate gross proceeds of $200 million on a bought deal basis to a syndicate of underwriters in Canada led by Scotiabank.

The holders of the Series F Preferred Shares will be entitled to receive fixed cumulative preferential cash dividends at an annual rate of $1.0625 per share, payable quarterly, as and when declared by the board of directors of Emera, yielding 4.25 per cent per annum, for the initial period ending on February 15, 2020. The first of such dividends, if declared, shall be payable on August 15, 2014, and shall be $0.1950 per Series F Preferred Share, based on the anticipated closing of the offering on June 9, 2014. The dividend rate will be reset on February 15, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.63 per cent. The Series F Preferred Shares are redeemable by Emera, at its option, on February 15, 2020 and on February 15 of every fifth year thereafter.

The holders of Series F Preferred Shares will have the right to convert their shares into Cumulative Floating Rate First Preferred Shares, Series G (the “Series G Preferred Shares”), subject to certain conditions, on February 15, 2020 and on February 15 of every fifth year thereafter. The holders of the Series G Preferred Shares will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the board of directors of Emera, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 2.63 per cent.

The offering is subject to the receipt of all necessary regulatory and stock exchange approvals. The net proceeds of the offering will be used for general corporate purposes.

This joins their two extant FixedReset issues, EMA.PR.A, 4.40%+184, resets 2015-8-15, and EMA.PR.C, 4.10%+265, resets 2018-8-15. Both issues got hammered today … EMA.PR.A closed at 21.31-49, down 34 cents; EMA.PR.C closed at 24.81-95, down 29 cents.

Their PerpetualDiscount, EMA.PR.E, was yielding 5.11% at the closing bid yesterday, so the Break Even Rate Shock on this issue is 1.00%, a very low figure by recent standards. FixedResets haven’t been fashionable lately!