Category: New Issues

Talisman Energy has announced:

that it has agreed to issue to a syndicate of underwriters led by RBC Capital Markets and CIBC for distribution to the public 8,000,000 Cumulative Redeemable Rate Reset First Preferred Shares, Series 1 (the “Series 1 Preferred Shares”). The Series 1 Preferred Shares will be issued at a price of $25.00 per Series 1 Preferred Share, for aggregate gross proceeds of $200 million. Holders of the Series 1 Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend at an annual rate of 4.20% for the initial period ending December 31, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.77%.

Holders of Series 1 Preferred Shares will have the right, at their option, to convert their shares into Cumulative Redeemable Rate Reset First Preferred Shares, Series 2 (the “Series 2 Preferred Shares”), subject to certain conditions, on December 31, 2016 and on December 31 every five years thereafter. Holders of the Series 2 Preferred 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 2.77%.

Talisman 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 1 Preferred Shares at the same offering price.

The net proceeds from this offering will be used to contribute to funding capital projects, reducing indebtedness and for general corporate purposes, as the need may arise and as management may consider appropriate at the time. The offering is expected to close on or about December 13, 2011.

The Series 1 Preferred Shares will be offered only in Canada by way of prospectus supplement to the short form base shelf prospectus of Talisman dated March 22, 2010.

As has often been the case in the past year, I am pleased to see a new issuer coming to market, but annoyed that it is another junk FixedReset! It’s interesting to see that their cost of funds is lower than last week’s MFC 4.40%+290 announcement.

Update, 2011-12-7: DBRS rates it as Pfd-3(high).

Manulife Financial Corporation has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 5 (“Series 5 Preferred Shares”). Manulife will issue eight million Series 5 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 led by RBC Capital Markets and Scotia Capital Inc. and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is December 6, 2011. Manulife has also granted the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to closing, to purchase up to an additional two million Series 5 Preferred Shares. The maximum gross proceeds raised under the offering will be $250 million should this option be exercised in full. Manulife intends to file a prospectus supplement to its September 3, 2010 base shelf prospectus in respect of this issue.

“We issue preferred shares and other capital instruments from time to time to bolster capital, believing that this action is prudent when faced with uncertain market and economic conditions. Our capital position remains strong but we recognize that there could be pressure on our common share price and bond spreads if our capital ratios decline,” said Donald Guloien, President and CEO of Manulife.

Holders of the Series 5 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 4.40 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending December 19, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.90 per cent.

Holders of Series 5 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 6 (“Series 6 Preferred Shares”), subject to certain conditions, on December 19, 2016 and on December 19 every five years thereafter. Holders of the Series 6 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 2.90 per cent.

The net proceeds from the offering will be utilized for general corporate purposes, which may include investments in subsidiaries.

TransAlta Corporation has announced:

that it has agreed to issue to a syndicate of underwriters led by CIBC, RBC Capital Markets and Scotia Capital Inc. for distribution to the public 8,000,000 Cumulative Rate Reset First Preferred Shares, Series C (the “Series C Shares”). The Series C Shares will be issued at a price of $25.00 per Series C Share, for aggregate gross proceeds of $200 million. Holders of the Series C Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 4.60% annually for the initial period ending June 30, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.10%.

Holders of Series C Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Reset First Preferred Shares, Series D (the “Series D Shares”), subject to certain conditions, on June 30, 2017 and on June 30 every five years thereafter. Holders of the Series D 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 3.10%.

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 C Shares at the same offering price. The Series C Shares will be offered by way of prospectus supplement under the short form base shelf prospectus of TransAlta Corporation dated November 15, 2011. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the Offering will be used to partially fund capital projects, for other general corporate purposes and to reduce short term indebtedness of the Corporation and its affiliates. The offering is expected to close on or about November 30, 2011.

They announced shortly afterwards that they:

increased its previously announced bought deal financing to $275 million. TransAlta Corporation has agreed to issue to a syndicate of underwriters led by CIBC, RBC Capital Markets and Scotia Capital Inc. for distribution to the public 11,000,000 Cumulative Rate Reset First Preferred Shares, Series C (the “Series C Shares”). The Series C Shares will be issued at a price of $25.00 per Series C Share, for aggregate gross proceeds of $275 million.

Update 2011-11-24: Rated Pfd-3 by DBRS

Bell Aliant has announced:

that its subsidiary Bell Aliant Preferred Equity Inc. (the “Company”) will be issuing 4,000,000 Cumulative Rate Reset Preferred Shares, Series C (the “Series C Preferred Shares”), at a price of $25.00 per Series C Preferred Share, for aggregate gross proceeds of $100 million on a bought-deal basis to a syndicate of underwriters led by RBC Capital Markets, Scotia Capital and BMO Capital Markets.

The underwriters have been granted an over-allotment option to purchase an additional 600,000 Series C Preferred Shares at the offering price. Should the over-allotment option be fully exercised, the total gross proceeds of the Series C Preferred Share offering will be $115 million.

The Series C Preferred Shares will pay cumulative dividends of $1.1375 per share per annum, yielding 4.55 per cent, payable quarterly if, as and when declared by the Company’s board of directors (with the first quarterly dividend to be paid on March 31, 2012), for the initial five-year period ending March 31, 2017. The dividend rate will be reset on March 31, 2017 and every five years thereafter at a rate equal to the five-year Government of Canada bond yield plus 3.09 per cent. The Series C Preferred Shares will be redeemable by the issuer on or after March 31, 2017, in accordance with their terms.

Holders of the Series C Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preferred Shares, Series D, (the “Series D Preferred Shares”) subject to certain conditions, on March 31, 2017 and on March 31 every five years thereafter. Holders of the Series D Preferred 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 3.09 per cent, if, as and when declared by the Company’s board of directors.

The Series C Preferred Shares will be offered for sale to the public in each of the provinces and territories of Canada pursuant to a short form prospectus to be filed with Canadian securities regulatory authorities in all Canadian provinces and territories. The offering is scheduled to close on or about December 7, 2011, subject to certain conditions, including obtaining all necessary regulatory approvals.

The net proceeds of this offering will be used to make a lump-sum voluntary contribution to certain of Bell Aliant’s pension plans and for general corporate purposes.

The ‘use of funds ‘ is fascinating, especially since their 11Q3 press release notes that they made a $200-million contribution in 11Q1. The 11Q3 report notes:

Net benefit plans cost included in operating costs (pension expense) in 2011 will be $60–$65 million based on a discount rate of 5.3 per cent and a long-term rate of return on plan assets of 6.1 per cent, up from a comparable 2010 IFRS-based pension expense of $53 million;

The Statement of Comprehensive Income includes $150.2-million “Actuarial losses on defined benefit pension (DB) and other post-employment benefits (OPEB) plans”; the year-to-date figure is $176.4-million. Note 5 of the 11Q3 report is kind of horrific …they have a “Net benefit obligation as at September 30, 2011” of a little over $1-billion. Maybe we’ll see some more preferred share issues from these guys!

The issue is rated Pfd-3(high) by DBRS.

RioCan Real Estate Investment Trust has announced:

that it has reached an agreement to issue to the public on a bought deal basis, subject to regulatory approval, 5.2 million Cumulative Rate Reset Preferred Trust Units, Series C (the “Series C Units”) at a price of $25 per unit for aggregate gross proceeds of $130 million.

The Series C Units are being issued by a syndicate of underwriters co-led by RBC Capital Markets, CIBC and TD Securities Inc. The Series C Units will pay fixed cumulative distributions of $1.1750 per unit per annum, yielding 4.70% per annum, payable on the last day of March, June, September and December of each year, as and when declared by the board of trustees of RioCan, for the initial approximately five and a half-year period ending June 30, 2017. The first quarterly distribution, if declared, shall be payable on December 31, 2011 and shall be $0.0998 per unit, based on the anticipated closing of the offering of Series C Units of November 30, 2011. The distribution rate will be reset on June 30, 2017 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 3.18%. The Series C Units are redeemable by RioCan, at its option, on June 30, 2017 and on June 30 of every fifth year thereafter.

Holders of Series C Units will have the right to reclassify all or any part of their units as Cumulative Floating Rate Preferred Trust Units, Series D (the “Series D Units”), subject to certain conditions, on June 30, 2017 and on June 30 of every fifth year thereafter. Such reclassification privilege may be subject to certain tax considerations (to be disclosed in the prospectus supplement). Holders of Series D Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 3.18%, as and when declared by the board of trustees of RioCan.

The Series C Units and the Series D Units will rank equally with each other and with the outstanding Series A Preferred Trust Units and the Series B Preferred Trust Units into which they may be reclassified.

DBRS Limited (“DBRS”) has assigned a preliminary rating of Pfd-3 (High) for the Series C Units. It is a condition of closing that Standard & Poor’s, a division of the McGraw Hill Companies, Inc. (“S&P”) assign a rating of P-3 (High) for the Series C Units.

RioCan has also granted the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase a further 780,000 Series C Units at the issue price which, if fully exercised, would result in additional gross proceeds of $19.5 million.

RioCan will use a portion of the proceeds from this offering to redeem its $120 million 5.70% Series K senior unsecured debentures due September 11, 2012 and the balance to repay certain indebtedness, for property acquisitions, to fund development and for general trust purposes.

The offering is being made under RioCan’s amended and restated base shelf short form prospectus dated December 21, 2010 amending and restating the base shelf short form prospectus dated July 6, 2010. The terms of the offering will be described in a prospectus supplement to be filed with Canadian securities regulators. The offering is expected to close on or about November 30, 2011.

DBRS Rates Pfd-3(high):

DBRS has today assigned a rating of Pfd-3 (high) with a Stable trend to the new 5.2 million cumulative five-year rate-reset preferred trust units, Series C (the Preferred Units) issued by RioCan Real Estate Investment Trust (RioCan or the Trust) for total proceeds of $130 million.

The Preferred Units will rank pari passu with every other series and will rank prior to RioCan’s trust units as to the payment of distributions and return of capital in the event of the liquidation, dissolution or winding up of the Trust.

RioCan will use a portion of the proceeds from this offering to redeem its $120 million 5.70% Series K senior unsecured debentures due September 11, 2012, and the balance to repay certain indebtedness, for property acquisitions, to fund development and for general trust purposes.

S&P rates P-3H:

• We assigned our ‘BB+’ global scale rating and our ‘P-3 (High)’ Canadian national scale rating to RioCan’s series C cumulative rate reset preferred trust units.
• The company plans to use net proceeds for general corporate purposes, including debt repayment, and to fund acquisitions and development.
• Our ratings on RioCan reflect the company’s leading market position as a retail landlord in Canada, the stability of its cash flow, and its adequate liquidity profile.
• The outlook is stable as the company’s well-leased portfolio should generate cash flow growth which, along with recent refinancing activity, supports our expectation for modest improvement to debt coverage measures over the next year.

Enbridge has announced:

that it has entered into an agreement with a group of underwriters to sell 12 million cumulative redeemable preference shares, series D (the “Series D Preferred Shares”) at a price of $25.00 per share for distribution to the public. Closing of the offering is expected on November 23, 2011.

The holders of Series D Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.00 per share, payable quarterly on the 1st day of March, June, September and December, as and when declared by the board of directors of Enbridge, yielding 4.00 per cent per annum, for the initial fixed rate period ending March 1, 2018. The first quarterly dividend payment date is scheduled for March 1, 2012. The dividend rate will reset on March 1, 2018 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.37 per cent. The Series D Preferred Shares are redeemable by Enbridge, at its option, on March 1, 2018 and on March 1 of every fifth year thereafter.

The holders of Series D Preferred Shares will have the right to convert their shares into cumulative redeemable preference shares, series E (the “Series E Preferred Shares”), subject to certain conditions, on March 1, 2018 and on March 1 of every fifth year thereafter. The holders of Series E 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 then 90-day Government of Canada treasury bill rate plus 2.37 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 D Preferred Shares at a price of $25.00 per share.

The offering is being made only in Canada by means of a prospectus. 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 co-led by TD Securities Inc. RBC Capital Markets and Scotia Capital Inc.

It was super-sized shortly afterwards:

Enbridge Inc. (TSX:ENB)(NYSE:ENB) today announced that as a result of strong investor demand for its previously announced offering of cumulative redeemable preference shares, series D (the “Series D Preferred Shares”), the size of the offering has been increased to 18 million Series D Preferred Shares. The aggregate gross proceeds will now be $450 million.

Update, 2011-11-17: DBRS rates Pfd-2(low).

Sun Life Financial has announced:

a Canadian public offering of $250 million of Class A Non-Cumulative Rate Reset Preferred Shares Series 12R (the “Series 12R Shares”). The Series 12R Shares will be issued to the public at a price of $25.00 per share and holders will be entitled to receive non-cumulative preferential fixed quarterly dividends for the initial period ending December 31, 2016, as and when declared by the Company’s board of directors, payable in the amount of $0.26563 per Preferred Share, to yield 4.25 per cent annually.

On December 31, 2016, and every five years thereafter, the dividend rate will reset at a rate equal to the 5-Year Government of Canada bond yield plus 2.73 per cent. Subject to certain conditions, holders may elect to convert any or all of their Series 12R Shares into an equal number of Class A Non-Cumulative Floating Rate Preferred Shares Series 13QR (the “Series 13QR Shares”) on December 31, 2016 and on the 31st of December every fifth year thereafter. Holders of the Series 13QR Shares will be entitled to receive non-cumulative preferential floating rate quarterly dividends, as and when declared by the Company’s board of directors, equal to the then 3-month Government of Canada Treasury Bill yield plus 2.73 per cent.

The net proceeds of the offering will be used for general corporate purposes. The offering will be underwritten by a syndicate led by Scotia Capital Inc., CIBC and TD Securities Inc. on a bought deal basis, and is expected to close on November 10, 2011. The proceeds from this domestic public offering are expected to qualify as Tier 1 capital of Sun Life Financial Inc. under current capital adequacy guidelines established by the Office of the Superintendent of Financial Institutions (OSFI).

The underwriters have been granted an option to purchase up to an additional $50 million of the Series 12R Shares exercisable at any time up to two business days before closing. The maximum gross proceeds raised under the offering will be $300 million if this option is exercised in full.

Subject to regulatory approval, Sun Life Financial Inc. may redeem the Series 12R Shares in whole or in part on December 31, 2016 and on the 31st of December every five years thereafter.

An application is being made to list the Series 12R Shares as of the closing date on the Toronto Stock Exchange.

Sun Life also announced the redemption of some SLEECS:

Sun Life Capital Trust, a subsidiary of Sun Life Financial Inc. (TSX: SLF) (NYSE: SLF), today announced its intention to redeem at par on December 31, 2011, all of its outstanding $950 million principal amount of Sun Life ExchangEable Capital Securities-Series A (the “SLEECS-Series A”). The SLEECS-Series A are redeemable at the Trust’s option on December 31, 2011, at a redemption price per SLEECS-Series A equal to $1,000 plus unpaid “indicated yield” to that date. Notice will be delivered to holders of SLEECS-Series A in accordance with the terms outlined in the prospectus for the SLEECS-Series A.

After the SLEECS-Series A are redeemed, holders of SLEECS-Series A will cease to be entitled to distributions of “indicated yield” and will not be entitled to exercise any rights as holders other than to receive the redemption price.

Brookfield Asset Management has announced:

that it has agreed to issue 7,000,000 Preferred Shares, Series 30 on a bought deal basis to a syndicate of underwriters led by CIBC, RBC Capital Markets, Scotia Capital Inc. and TD Securities Inc. for distribution to the public. The Preferred Shares, Series 30 will be issued at a price of $25.00 per share, for aggregate gross proceeds of CDN$175,000,000. Holders of the Preferred Shares, Series 30 will be entitled to receive a cumulative quarterly fixed dividend yielding 4.80% annually for the initial period ending December 31, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.96%.

Holders of Preferred Shares, Series 30 will have the right, at their option, to convert their shares into cumulative Preferred Shares, Series 31, subject to certain conditions, on December 31, 2017 and on December 31 every five years thereafter. Holders of the Preferred Shares, Series 31 will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.96%.

Brookfield Asset Management Inc. has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 3,000,000 Preferred Shares, Series 30 which, if exercised, would increase the gross offering size to $250,000,000. The Preferred Shares will be offered in all provinces of Canada by way of a supplement to Brookfield Asset Management Inc.’s existing short form base shelf prospectus dated June 7, 2011.

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

Given that BAM agreed on October 19 to take up 30% of the $588-million BIP.UN new issue, I suggest that it’s not too hard to figure out what those “general corporate purposes” might be!

Update: Provisional Pfd-2(low) from DBRS.

Update, 2011-11-14: Finalized Pfd-2(low) from DBRS.