Category: New Issues

Issue: Dundee Corporation Cumulative 5-Year Rate Reset First Preference Shares Series 2

Size: $100-million (=4-million shares) plus greenshoe $15-million (=600,000 shares)

Dividends: 6.75% on par value to first Exchange Date, then resets to 5-Year Canada +410bp. Dividends are cumulative. First dividend $0.49469 payable 2009-12-31.

Exchange Dates: 2014-9-30 and every five years thereafter.

Convertible: Every Exchange Date to and from Series 3, which pay 3-month Bills + 410, reset quarterly.

Redeemable: Every Exchange Date at 25.00. There is also a Special Redemption Right. The Series 3 Floaters are redeemable every Exchange Date at 25.00, at all other times 25.50, and also have a Special Redemption Right.

Special Redemption Right: If anything comes up that would allow the preferred shareholders to vote (e.g., an amalgamation) then the company has a redemption right: $26.25 if redeemed before 2010-9-30; redemption price declines by $0.25 annually until 2014-9-30; redeemable at $25.00 thereafter. Series 3 Floaters are redeemable at 25.00 in such an instance.

Credit Ratings: S&P: P-3; DBRS: Pfd-3(low)

Closing: 2009-9-15

Update: It is my understanding that due to strong demand the deal has been increased to 4.6-million shares (=$115-million) plus a 0.6-million share greenshoe (=$15-million).

Only very skimpy information is available to date – the following is from TD Waterhouse:

The coupon rate (to be determined) will be fixed until March 31, 2015. Thereafter, on and after March 31, 2015, and reset each anniversary thereafter, the Dividend Rate will be XXX% above the 5-year Government of Canada benchmark bond rate.

The Preferred Shares will be convertible into Common Shares of the Company at the option of the holder at any time or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of (to be determined) per Common Share, being at a rate of (to be determined) Common Shares per $100 Par Value of Preferred Shares The conversion right shall be subject to the standard anti-dilution provisions. In the event that the holder of Preferred Shares exercises their conversion right following the notice of redemption, such holders will be entitled to receive declared and unpaid dividends.

The Preferred Shares will not be redeemable prior to September 12, 2012. On and after September 12, 20012 and prior to September 30, 2009, the Preferred Shares will be redeemable at the option of the Company, in whole or from time to time in part, on at least 30 days’ notice at a redemption price equal to Par plus accrued and unpaid interest, provided that the volume weighted average trading price of the Common Shares on The Toronto Stock Exchange (the “TSX”) for at least 20 trading days in any consecutive 30 day period ending five trading days prior to the date on which notice of redemption is given exceeds 135% of the Conversion Price. On and after September 30, 2014, the Preferred Shares will be redeemable at the option of the Company at any time, in whole or from time to time in part, at a redemption price equal to Par plus all declared and unpaid dividends.

This issue is unrated.

This issue will not be tracked by HIMIPref™:

• Too small – it will be quite illiquid
• Convertible – it will be more equity-like than compatible with the HIMIPref™ analysis
• Not Rated

Updated, 2009-8-24: From the prospectus, dated 2009-8-20:

The Preferred Shares will be entitled to fixed cumulative preferential cash dividends, if, as and when declared by our board of directors at a rate of $9.00 per share per annum, to accrue from the date of original issue, payable in equal instalments of $4.50 per share on March 31 and September 30 of each year until (and including) March 31, 2015. Assuming an issue date of September 3, 2009, the first dividend will be payable on March 31, 2010 in the amount of $5.17808 per Preferred Share. From March 31, 2015 until March 31, 2016 and recalculated each anniversary thereafter, the rate of the annual dividend on the Preferred Shares (which will continue to be paid in equal semi-annual instalments on March 31 and September 30 of each year, the first such dividend to be payable on September 30, 2015) will be 6.28% above the five year Government of Canada benchmark bond rate as quoted on the Bloomberg page “GCAN5YR ” or comparable sources at 10:00 a.m. (Toronto time) on the tenth business day prior to March 31, 2015 and each subsequent anniversary date.

Update, 2009-9-3: Succesfully closed, trades as WES.PR.C.

Equitable Trust has announced:

it has entered into an agreement with a group of underwriters led by National Bank Financial Inc. and GMP Securities L.P. (the “Underwriters”) to issue 1,440,000 Non‐Cumulative 5‐Year Rate Reset Preferred Shares, Series 1 (the “Series 1 Preferred Shares”) at a price of $25.00 per share, on a bought deal basis for gross proceeds of $36 million (the “Prospectus Offering”). The Company also announced that it intends to issue on a private placement basis an additional 360,000 Series 1 Preferred Shares at a price of $25.00 per share for gross proceeds of $9 million (the “Private Placement Offering”). The sole subscriber for the Private Placement Offering will be Canadian Western Bank.
…
The Series 1 Preferred Shares will yield 7.25% annually, payable quarterly, as and when declared by the Board of Directors of the Company for an initial period ending September 30, 2014. Thereafter, the dividend rate will reset every five years at a level of 4.53% over the then five‐year Government of Canada bond yield. Holders of Series 1 Preferred Shares will, subject to certain conditions, have the option to convert their shares to Non‐Cumulative Floating Rate Preferred Shares, Series 2 (the “Series 2 Preferred Shares”) on September 30, 2014 and on September 30 every five years thereafter. Holders of the Series 2 Preferred Shares will be entitled to a floating quarterly dividend rate equal to the 90‐day Canadian Treasury Bill Rate plus 4.53%, as and when declared by the Board of Directors of the Company.

There is no word on whether the issue will be rated or not. It appears from the balance sheet that the company’s funding is over 90% GIC based, with a few bank term loans and a sub-debt issue (held by the owners?) thrown in. As they say:

The Guaranteed Investment Certificate (“GIC”)market continues to provide deep and liquid funding for Equitable Trust’s business. As such, the volatility in the credit markets has had less impact on Equitable than on many other mortgage lenders. As an approved seller under the CMB Program, Equitable Trust is also able to transact securitization activities with government-sponsored programs that continue to be available.

Without a rating, the issue will not be tracked by HIMIPref™, as was the case with RF.PR.A and CWB.PR.A, I’m not convinced that without a rating there will be much public pressure on the company to clean up its act, should its act ever need cleaning up.

Update, 2013-3-3: Trades as ETC.PR.A

BAM Split Corp has entered into a bought-deal refunding the BNA.PR.A, which pays 6.25% and matures 2010-9-30, but is redeemable at par commencing 2010-10-1.

Issue: BAM Split Corp. Cumulative Class AA preferred shares, Series 4

Size: 5-million shares (= $125-million)

Dividend: 7.25% paid quarterly (=$0.453125 quarterly, =$1.8125 p.a.). First coupon payable Sept. 7 for $0.26318, based on closing July 9.

Redemption: Will be redeemed 2014-7-9 at lesser of $25.00 or NAV. Optional redemption at $26.00 at any time – company may redeem early only if Capital Units retracted or there is a takeover bid for BAM.A

Retraction: Into Debentures. No Cash Retractions (except that the 2014-7-9 counts as a retraction for analytical purposes)! Debs pay interest of 7.35%, same maturity and – I PRESUME – are senior to prefs. Check the prospectus when available.

Update: BNA Press Release

Issue: Non-Cumulative 5-Year Rate Reset Class B Preferred Shares Series 23

Size: 8-million shares (=$200-million) + greenshoe 3-million shares (=$75-million)

Dividends: 5.40% (=$1.35 annually); reset to 5-Year Canadas + 241bp each Reset Date. First dividend lovely and fat at $0.58808 payable November 25, 2009, assuming a June 19 close.

Reset Dates: February 25, 2015 and every five years thereafter.

Convertable: By holder every Reset Date to and from Series 24, which pay 3-month bills +241bp, reset quarterly.

Redeemable: Every Reset Date at $25.00. Series 24 is redeemable every Reset Date at $25 and at $25.50 at all other times.

BMO Press Release.

Update: I am advised on good authority that the size of the deal has been increased to 14-million shares (=$350-million) with a 2-million share greenshoe (=$50-million).

Update, 2009-6-19: Press Release confirming the size increase.

Issue: Brookfield Asset Management Cumulative 5-Year Rate Reset Preference Shares, Series 22

Size: 5-million shares (=$125-million) + greenshoe 1-million shares (=$25-million)

Dividend: 7.00% (= $1.75) until First Reset Date. First Dividend $0.56575 payable September 30. Resets to 5-Year Canadas + 445bp every Reset Date. Cumulative dividend.

Convertible: Every Reset Date into Floaters, pay 3-month bills +445, reset quarterly.

Redeemable: Every Reset Date at Par. Floaters are also redeemable any time at 25.50.

Reset Dates: 2014-9-30 and every five years thereafter.

Closing: June 4

It’s good to see a BAM Fixed-Reset … it helps with calibrating between classes!

Updated: Brookfield has issued a press release.

I am advised that the issue size has been increased to 10-million shares (=$250-million) plus a greenshoe of 2-million shares (=$50-million).

Manulife Financial has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 1 (“Series 1 Preferred Shares”). Manulife will issue eight million Series 1 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 Scotia Capital Inc. and RBC Dominion Securities Inc. and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is June 3, 2009. 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 1 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 May 8, 2009 amended and restated base shelf prospectus in respect of this issue.
Holders of the Series 1 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 5.60% annually, as and when declared by the Board of Directors of Manulife, for the initial period ending September 19, 2014. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.23%.

Holders of Series 1 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 2 (“Series 2 Preferred Shares”), subject to certain conditions, on September 19, 2014 and on September 19 every five years thereafter. Holders of the Series 2 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 3.23%.

Approximately half of the net proceeds from the offering will be applied to reduce amounts outstanding under Manulife’s credit facility with Canadian chartered banks and the balance of the net proceeds will be utilized for general corporate purposes.

The first dividend is payable September 19 for $0.41425 based on a June 3 closing … perhaps not as enormously fat as some of us might like, but fat enough to be worth marking the calendars.

What a difference a quarter makes, eh? This issue closes almost exactly three months after MFC.PR.D closed: same structure, 6.60%+456.

Update: I am advised that the deal size has been increased to 14-million shares (=$350-million) with no greenshoe.

Hard on the heels of their 1Q09 Results, Sun Life Financial has brought out a new issue.

Issue: Class A Non-Cumulative 5-Year Rate Reset Preferred Shares, Series 6R

Size: 8-million shares (=$200-million) + 2-million greenshoe (=$50-million)

Dividend: $1.50 (=6.00%) until first Reset Date; GOC 5-Year + 379bp thereafter. First dividend $0.54658 payable Sept 30 – nice and fat, so mark your calendars!

Exchangeable: Every Reset Date into Series 7QR (sic), pays 3-month bills +379, reset quarterly

Redemption: Every Reset Date at $25.00. Series 7QR every reset date at 25.00, 25.50 at all other times.

Reset Date: 2014-6-30 and every five years thereafter.

Closing: 2009-5-20

Update: Press Release

Co-operators General Insurance Company has announced a new issue:

Issue Name: Non-cumulative 5-Year Rate Reset Class E Preference Shares, Series D

Issue Size: 4-million shares (=$100-million) + greenshoe 0.6-million shares (=$15-million)

Dividend: 7.25% until first Reset Date. Reset to 5-Year GOC + 521bp on each Reset Date

First Dividend: Payable 2009-9-30, $0.6505 (lovely and fat! Mark your calendars!)

Reset Dates: 2014-6-30 and every five years thereafter.

Redemption: Every Reset Data at 25.00

Exchangeable: Every Reset Date to Series E, pay 3-month Treasury Bills + 521bp, reset quarterly. Series E is redeemable on Reset Dates at 25.00 and at 25.50 at all other times.

Closing Date: Scheduled for May 22

Nice to see a new issue come out, even if the credit is not tip-top (Pfd-3 by DBRS). The extant PerpetualDiscount, CCS.PR.C closed last night at 15.20-49 to yield 8.38-20%

Update: Press Release.

Royal Bank has announced:

a domestic public offering of $200 million of Non-Cumulative, 5 year rate reset Preferred Shares Series AX.

The bank will issue 8 million Preferred Shares Series AX priced at $25 per share and holders will be entitled to receive non-cumulative quarterly fixed dividend for the initial period ending November 24, 2014 in the amount of $1.525 per share, to yield 6.10 per cent annually. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 3.0 million Preferred Shares at the same offering price.

Subject to regulatory approval, on or after November 24, 2014, the bank may redeem the Preferred Shares Series AX in whole or in part at par. Thereafter, the dividend rate will reset every five years at a rate equal to 4.13 per cent over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series AX will, subject to certain conditions, have the right to convert all or any part of their shares to non-cumulative floating rate preferred shares Series AY (the “Preferred Shares Series AY”) on November 24, 2014 and on November 24 every five years thereafter.

Holders of the Preferred Shares Series AY will be entitled to receive a non-cumulative quarterly floating dividend at a rate equal to the 3-month Government of Canada Treasury Bill yield plus 4.13 per cent. Holders of Preferred Shares Series AY will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series AX on November 24, 2019 and on November 24 every five years thereafter.

The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is April 29, 2009.

… and very shortly after that announcement, announced:

that as a result of strong investor demand for its domestic public offering of Non-Cumulative, 5 year rate reset Preferred Shares Series AX (the “Preferred Shares Series AX”), the size of the offering has been increased to 12 million shares. The gross proceeds of the offering will now be $300 million. In addition, the bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 1 million Preferred Shares Series AX at a price of $25 per share. The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is April 29, 2009.

The first coupon is another fat one: $0.48884, payable August 24. Mark your calendars – there could be some good trades lying around just before the ex-Date!

This issue is good news for the continued health of the Fixed-Reset market: it marks the first time that a new issue has come out with a lower initial fixed rate and lower reset. The fact that they got advice to the effect that they only needed a week to bring it to market and then increased the issue size shows that – whatever else might be going on in the heads of the buyers – they are not blindly addicted to escalating coupons. A small item of cheer, but cheerful nevertheless.