Category: New Issues

This is an interesting one.

GlobalBanc Advantaged 8 Split Corp. announced today (via CCN Matthews) that:

it has filed and has received a receipt dated May 30, 2007 from the securities regulators of all the Canadian provinces and territories for the final prospectus for its offering of Preferred Shares and Class A Shares, for a total maximum offering size of up to $150 million. The Preferred Securities have been provisionally rated Pfd-2 by DBRS Limited. The offering is scheduled to close on or about June 26, 2007.  The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the shares, subject to fulfillment by the Company of the requirements of the TSX (Class A Shares – GBA; and Preferred Shares – GBA.PR.A).

….
The investment objectives with respect to the Preferred Shares are: (i) to provide holders with fixed cumulative preferential quarterly cash distributions that are expected to consist of non-taxable returns of capital and capital gains in the amount of $0.1125 per Preferred Share, representing a yield on the issue price of the Preferred Shares of 4.5% per annum; and (ii) to return $10.00 per Preferred Share at the time of redemption of such Preferred Shares on December 15, 2012. The Preferred Shares have been provisionally rated Pfd-2 by DBRS Limited.

I have not yet decided whether this issue will be included in the HIMIPref™ universe.

Update, 2007-08-12: This issue will not be tracked by HIMIPref™. The TSX reports that there are only 2.7-million shares outstanding, for a total par value of $27-million.

In order to pay for the redemption of CCS.PR.A, Co-operators General Insurance is issuing a 5% Perp.

They announced via CCN Matthews:

today announced that it has entered into an agreement with Scotia Capital Inc. on behalf of a syndicate of underwriters pursuant to which the underwriters have agreed to buy and offer for sale by way of a public offering of $100 million of Non-Cumulative Redeemable Class E Preference Shares, Series C (“Series C Preference Shares”) on a bought deal basis.

Co-operators General will issue 4 million Series C Preference Shares priced at $25.00 per share and holders will be entitled to receive fixed non-cumulative preferential quarterly cash dividends in the amount of $0.3125 per Series C Preference Share, to yield 5.00 per cent per annum. The offering is underwritten by a syndicate of investment dealers led by Scotia Capital Inc. The expected closing date for the offering is June 12, 2007.

The issue is rated P-2(low) by S&P and Pfd-3 by DBRS.

I will provide more information as it becomes available.

Update, 2007-05-29: The Preliminary Short Form Prospectus is now available on SEDAR, dated May 28, 2007. The redemption terms are:

Subject to the prior consent of the Superintendent of Financial Institutions (Canada) (the “Superintendent”) , and subject to the provisions of the Insurance Companies Act (Canada), on and after June 30, 2012, Co-operators General may redeem at any time all or from time to time any part of the outstanding Series C Preference Shares, at Co-operators General’s option, by the payment of an amount in cash (the “Redemption Price”) for each Series C Preference Share of $26.00 if redeemed during the 12 months commencing June 30, 2012, $25.75 if redeemed during the 12 months commencing June 20, 2013, $25.50 if redeemed during the 12 months commencing June 30, 2014, $25.25 if redeemed during the 12 months commencing June 30, 2015, and $25.00 if redeemed on or after June 30, 2016, together in each case with an amount equal to all declared and unpaid preferential dividends up to but excluding the date fixed for redemption. See “Details of the Offering”.

Update, 2007-05-29, #2 : Forgot the dividend information!

The initial dividend, if declared, will be payable on September 30, 2007 and will amount to $0.3767 per Series C Preference Share, based on an anticipated closing date of June 12, 2007. See “Details of the Offering”.

Update, 2007-05-29, #3: Look out below! When priced on the taxable-in-Ontario curve, the curvePrice is $23.86:

Price due to base-rate :  23.52
Price due to short-term :  -0.49
Price due to long-term :   1.80
Price due to Interest Income :   0.00
Price to to Cumulative Dividends :   0.00
Price due to SplitShareCorp :   0.00
Price due to Retractibility :   0.00
Price due to Credit Spread (2) :   0.00
Price due to Liquidity :   0.63
Price due to Floating Rate :   0.00
Price due to Credit Spread (3) :  -1.78
Price due to error :   0.18
Price due to Credit Spread (High) :   0.00
Price due to Credit Spread (Low) :   0.00

Update, 2007-5-31: It’s getting worse! The curve price is now $23.54!

Update, 2007-06-01: Curve Price now $23.45

Update, 2007-06-04: Curve Price now $23.36

Update, 2007-06-05: Curve Price now $23.18

Update, 2007-06-06: Curve Price now $23.11

Update, 2007-06-07: Whoosh! Curve Price now $22.67

Update, 2007-06-08: Will the bleeding never stop? $22.57

Update, 2007-06-11: Scheduled to close tomorrow. $22.47

A new issue from this credit following up their 4.25% 5-Year issue from earlier this year.

They are issuing 8-million shares at 25.00, paying 5.00% p.a. quarterly. The first dividend will be for $0.37671, payable Sept. 26, based on an anticipated closing date of June 8.

Another relatively complex redemption table:

The shares are retractible by the holder on and after June 30, 2017, at $25.00.

This is a “Bought underwritten public issue”, with various escape clauses.

The S&P rating is P-3; DBRS rates it Pfd-3(high).

Update: This issue has been added to the HIMIPref™ database with the preIssue securityCode P78000.

Ah, the joys of being an “Operating Retractible”! The curvePrice on this one is $26.76:

Price due to base-rate :  24.65
Price due to short-term :  -0.80
Price due to long-term :   2.04
Price due to Interest Income :   0.00
Price to to Cumulative Dividends :   0.00
Price due to SplitShareCorp :   0.00
Price due to Retractibility :   1.10
Price due to Credit Spread (2) :   0.00
Price due to Liquidity :   0.55
Price due to Floating Rate :   0.00
Price due to Credit Spread (3) :  -0.86
Price due to error :   0.05
Price due to Credit Spread (High) :   0.02
Price due to Credit Spread (Low) :   0.00

However, before anybody starts mortgaging the farm here, I’d better note that:

• Pfd-3 issues are very hard to value – they don’t always act as much like fixed income instruments as one might like.
• Which is one reason why I don’t recommend such issues to be held other than as a small (less than 5% in a single name; less than 10% total) component of a well diversified portfolio.
• The 5-year is trading about $1 below its curve Price

I have been advised of a new issue from EPCOR Power Equity Ltd, 4.85% Perpetuals.

Issue size is 5-million shares = $125-million.

Ratings are P-2(low) by S&P, Pfd-3(high) by DBRS

Settlement is May 25.

As yet I do not have the redemption schedule, so I’ll have to update this later.

Update: The press release states:

The Issuer has also granted the underwriters an over-allotment option, exercisable at any time up to 30 days following closing of the Offering, to acquire an additional 750,000 Series 1 Shares at the issue price of $25.00 per Series 1 Share. If the option is fully exercised, it would increase the total gross proceeds of the Offering to $143.75 million….

The Series 1 Shares will pay cumulative dividends of $1.2125 per share per annum, yielding 4.85% per annum, payable quarterly on the last business day of March, June, September and December of each year. The first quarterly dividend of $0.42305 per share is expected to be paid on September 28, 2007.

The Series 1 Shares will not be redeemable by the Issuer before June 30, 2012. On or after this date, the Series 1 Shares will be redeemable by the Issuer in whole or in part, at the Issuer’s option, on at least 30 and not more than 60 days prior notice.

… but nothing about the schedule of redemption prices.

Update: I am advised that:

The Series 1 Shares are not redeemable by the Corporation before June 30, 2012. On or after June 30, 2012, the Series 1 Shares will be redeemable by the Corporation in whole or in part, at the Corporation’s option, on at least 30 and not more than 60 days prior notice by the payment of the amount in cash per Series 1 share. Such redemption may be made upon payment in cash of the amount of $26.00 per Preferred Share if redeemed during the 12 months commencing June 30, 2012; $25.75 per Preferred Share if redeemed during the 12 months commencing June 30, 2013; $25.50 per Preferred Share if redeemed during the 12 months commencing June 30, 2014; $25.25 per Preferred Share if redeemed during the 12 months commencing June 30, 2015; and, if redeemed on or after June 30, 2016 at a Redemption Price of $25.00 per Series 1 Share plus, in each case, all accrued and unpaid dividends up to but excluding the date fixed for redemption.

There are two new split-share corporations in the distribution pipelines:

S Split Corp has been announced by Mulvihill. These will be backed by shares of BNS – the Bank of Nova Scotia. The news release says that DBRS has assigned a preliminary rating of Pfd-2(low) and that the final prospectus has been filed with SEDAR – but it’s not available there right now. They may have it on-line Monday. Mulvihill has an impressive distribution pipeline and all the usual suspects are in the underwriting syndicate for this one. Depending on the terms of the issue, I may be adding this one to the HIMIPref™ universe.

ML Split Corp has been announced by Quadravest. These will be backed by shares of Merrill Lynch. A Preliminary Prospectus is available – I will not be adding these to the HIMIPref™ universe as the company is not having the “Priority Equity Shares”, as they call the preferred-sort-of-equivalent components of the split, rated by any agency.

Brookfield has announced a new Cumulative Perpetual Preferred issue, Series 18.

Size : $200-million ( = 8-million shares @ $25.00) prior to over-allotment)

Closing : May 9, 2007

Dividends : 4.75%, first dividend payable July 31 (short first coupon)

Redemption Schedule :

Brookfield Asset Management is rated Pfd-2(low) by DBRS and P-2 (stable) by S&P.

More Later

Can’t tell your players without a programme! Royal is continuing the pattern of opportunistic issuance I predicted in early February.

They have now announced the following:

Issue: 4.50% Non-Cumulative First Preferred Shares, Series AG

Size: 10-million shares, = $250-million @ the 25.00 issue price.

Redemption: Redeemable at $26.00 commencing May 24, 2012, call price declines by $0.25 every May 24 thereafter until redeemable at $25.00 from May 24, 2016 on.

Provisional ratings: Pfd-1 by DBRS, P-1 (low) by S&P

Closing: The expected closing date is April 26.

More Later.

Later, not much more: You know what? I’m not going to bother reviewing this one much at all. The dividend rate is identical to RY.PR.D & RY.PR.E, while the redemption schedule differs only in that the new issue’s schedule starts three months later. The curve price of the two comparables is in the 25.40-50 range, but a large part of this is the dividend payable on these issues – they both go ex-Dividend on 2007-04-23.

The new issue is entirely reasonable and maybe just a little bit cheap according to its curve price.

Canadian Utilities has announced an issue of Cumulative (!) Redeemable Preferred Shares Series 1.

Issue size is 4.6-million shares priced at $25.00 for gross proceeds of $115-million.

Dividends are 4.60% per annum ($1.15), payable quarterly, cumulative (!), payable on the first day of March/June/September/December. The initial dividend of $0.13863 will be paid on June 1, based on the anticipated closing date of April 18, 2007.

The call schedule is:

These are rated at Pfd-2(high) by DBRS and P-2 (high) by S&P.

The material I have indicates that the proceeds will be used to finance capital expenditures and for other general corporate purposes … but I wonder! CU.PR.T is currently callable at $25.00 with a dividend rate of $1.475 p.a. (issue size 2,277,675 according to the TSX) and CU.PR.V is currently callable at $25.00 with a dividend rate of $1.325 p.a. (issue size 2,146,730 : ibid). I have previously complained that these issues appear to be surviving due solely to regulatory boneheadism … but perhaps a ray of sunlight has penetrated Canadian capital markets. However, there is more boneheadism in heaven and earth than is dreamt of in my philosophy. We shall see.

More later.

Update : DBRS has confirmed on their site that the new issue is rated Pfd-2(high).

Interestingly, they have a different understanding of the use of proceeds from the issue than the one I saw (my bolding):

The net proceeds of the Preferred Shares are expected to be used to finance capital expenditures, to repay existing indebtedness, and for other general corporate purposes of CU Inc.’s subsidiaries, ATCO Electric Ltd. and ATCO Gas and Pipelines Ltd.

I don’t think CU.PR.T & CU.PR.V will last very much longer. And, if you look at the issue sizes and account for underwriting fees of about 3%, you might decide that “general corporate purposes” consist largely of buying a new pencil.

Scotiabank has announced (via CCN Matthews)

a domestic public offering of 12 million, 4.50% non-cumulative preferred shares Series 15 (the “Preferred Shares Series 15”) at a price of $25.00 per share, for an aggregate amount of $300 million.

The Bank has agreed to sell the Preferred Shares Series 15 to a syndicate of underwriters led by Scotia Capital Inc. on a bought deal basis. The Bank has granted to the underwriters an over-allotment option to purchase up to an additional $45 million of the Preferred Shares Series 15. This over-allotment option is exercisable at any time up to 30 days after closing.

Closing is expected to occur on or after April 5, 2007.

I have no details on the call schedule as yet, but will post more, later, when I do.

I’m pleased to see this! Scotiabank has lots of Tier 1 Capital room for new issuance!

Update & Bump 3/21 : The redemption schedule is

and some comparatives are: