Archive for the ‘New Issues’ Category

New Issue: PWF Straight Perpetual 4.50%

Wednesday, October 6th, 2021

Power Corporation of Canada and Power Financial Corporation have announced:

that Power Financial has agreed to issue 8,000,000 Non-Cumulative First Preferred Shares, Series 23 in the capital of Power Financial (the “Series 23 Shares”) on a bought deal basis, for gross proceeds of $200 million. The Series 23 Shares will be priced at $25.00 per share and will carry an annual dividend yield of 4.50%. Closing is expected on or about October 15, 2021. The issue will be underwritten by a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets and Scotiabank.

The net proceeds of this offering will be used by Power Financial for general corporate purposes. Upon completion of the offering, Power Financial intends to redeem all of its outstanding $200 million First Preferred Shares, Series I.

New Issue: GWO Straight Perpetual 4.50%

Friday, October 1st, 2021

Great-West Lifeco Inc. has announced:

that it has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets, RBC Capital Markets, Scotiabank, CIBC Capital Markets and TD Securities pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 8,000,000 Non-Cumulative First Preferred Shares, Series Y (the “Series Y Shares”) from Lifeco for sale to the public at a price of $25.00 per Series Y Share, representing aggregate gross proceeds of $200,000,000.

The Series Y Shares will yield 4.50% per annum, payable quarterly, as and when declared by the Board of Directors of the Company. The Series Y Shares will not be redeemable prior to December 31, 2026. On or after December 31, 2026, Lifeco may, on not less than 30 nor more than 60 days’ notice, redeem for cash the Series Y Shares in whole or in part, at the Company’s option, at $26.00 per share if redeemed on or after December 31, 2026 and prior to December 31, 2027; $25.75 per share if redeemed on or after December 31, 2027 and prior to December 31, 2028; $25.50 per share if redeemed on or after December 31, 2028 and prior to December 31, 2029; $25.25 per share if redeemed on or after December 31, 2029 and prior to December 31, 2030; and $25.00 per share if redeemed on or after December 31, 2030, in each case together with all declared and unpaid dividends up to but excluding the date of redemption.

The net proceeds of the offering will be used for general corporate purposes. The Series Y Share offering is expected to close on October 8, 2021 and is subject to customary closing conditions.

New Issue: EMA Straight Perpetual, 4.60%

Thursday, September 16th, 2021

Emera Incorporated has announced:

that it will issue 6,000,000 Cumulative Redeemable First Preferred Shares, Series L (the “Series L Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $150 million on a bought deal basis to a syndicate of underwriters in Canada led by TD Securities Inc. and CIBC Capital Markets. Emera has granted to the underwriters an option, exercisable at any time up to two business days prior to the closing of the offering, to purchase up to an additional 2,000,000 Series L Preferred Shares at a price of $25.00 per share (the “Underwriters’ Option”). If the Underwriters’ Option is exercised in full, the aggregate gross proceeds to Emera will be $200 million.

The holders of Series L Preferred Shares will be entitled to receive fixed cumulative preferential cash dividends at an annual rate of $1.15 per share, payable quarterly, as and when declared by the board of directors of the Company yielding 4.60% per annum. The initial dividend, if declared, will be payable on November 15, 2021 and will be $0.1638 per share, based on an anticipated closing date of September 24, 2021.

The Series L Preferred Shares will not be redeemable by the Company prior to November 15, 2026. On or after November 15, 2026 the Company may redeem all or any part of the then outstanding Series L Preferred Shares, at the Company’s option without the consent of the holder, by the payment of: $26.00 per share if redeemed before November 15, 2027; $25.75 per share if redeemed on or after November 15, 2027 but before November 15, 2028; $25.50 per share if redeemed on or after November 15, 2028 but before November 15, 2029;

$25.25 per share if redeemed on or after November 15, 2029 but before November 15, 2030; and $25.00 per share if redeemed on or after November 15, 2030, together, in each case, with all accrued and unpaid dividends up to but excluding the date fixed for redemption. The Series L Preferred Shares do not have a fixed maturity date and are not redeemable at the option of the holders of Series L Preferred Shares.

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.

The Series L Preferred Shares will be offered to the public in Canada by way of prospectus supplement to Emera’s short form base shelf prospectus dated March 12, 2021. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

They later announced:

that it has agreed to increase the size of its previously announced offering and issue 9,000,000 Cumulative Redeemable First Preferred Shares, Series L (the “Series L Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $225,000,000 on a bought deal basis to a syndicate of underwriters in Canada led by TD Securities Inc. and CIBC Capital Markets.

New Issue: PWI.PR.A, SplitShare, Five-Year, 5.00%

Monday, August 9th, 2021

Brompton Funds Limited has announced (on 2021-4-26):

that Sustainable Power & Infrastructure Split Corp. (the “Company”) has filed a preliminary prospectus dated March 31, 2021 in respect of an initial public offering of class A shares and preferred shares (the “Preliminary Prospectus”).

The Company will invest in a globally diversified and actively managed portfolio (the “Portfolio”) consisting primarily of dividend-paying securities of power and infrastructure companies, whose assets, products and services the Manager believes are facilitating the multi-decade transition toward decarbonization and environmental sustainability. The Portfolio will include investments in companies operating in the areas of renewable power, green transportation, energy efficiency, and communications, among others (“Sustainable Power and Infrastructure Companies”). In seeking to achieve its investment objectives, the Company intends to target investments in Sustainable Power and Infrastructure Companies that have positive and/or improving environmental, social and governance (“ESG”) characteristics as identified by the Manager.

The class A shares will be offered at a price of $10.00 per share. The investment objectives for the class A shares are to provide holders with regular monthly non-cumulative cash distributions and the opportunity for capital appreciation through exposure to the Portfolio. The monthly cash distribution is targeted to be $0.06667 per class A share representing a yield on the issue price of the class A shares of 8.0% per annum.

The preferred shares will be offered at a price of $10.00 per share. The investment objectives for the preferred shares are to provide holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on May 29, 2026, subject to extension for successive terms of up to five years as determined by the board of directors of the Company. The quarterly cash distribution will be $0.1250 per preferred share ($0.50 per annum, or 5.0% per annum on the issue price of $10.00 per preferred share), until May 29, 2026. The preferred shares have been provisionally rated Pfd-3 by DBRS Limited.

Prospective purchasers investing in the Company will have the option of paying for shares in cash or paying for class A shares or units by an exchange of freely-tradable listed securities of any eligible issuers listed in the Preliminary Prospectus (the “Exchange Option”). Prospective purchasers who utilize the Exchange Option are required to deposit their securities of exchange eligible issuers by no later than 5:00 p.m. (Toronto time) on April 22, 2021 through CDS. Please contact your investment advisor or refer to the Preliminary Prospectus for detailed information on how to participate in the offering by way of either cash purchase or the exchange option.

The syndicate of agents for the offering is being led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank and includes BMO Capital Markets, TD Securities Inc., Hampton Securities Limited, Canaccord Genuity Corp., Raymond James Ltd., Richardson Wealth Limited, Echelon Wealth Partners Inc., iA Private Wealth Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

The offering went well:

Brompton Funds Limited (the “Manager”) is pleased to announce that Sustainable Power & Infrastructure Split Corp. (the “Company”) has completed its initial public offering of 3,221,666 Class A Shares and 3,221,666 Preferred Shares for total gross proceeds of $64.4 million. The Class A Shares and Preferred Shares will commence trading today on the Toronto Stock Exchange under the symbols PWI and PWI.PR.A, respectively.

Important extracts from the prospectus include:

The investment objectives for the Preferred Shares are to provide their holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on May 29, 2026 (the “Maturity Date”), subject to extension for successive terms of up to five years as determined by the board of directors of the Company.

The Preferred Shares have been provisionally rated Pfd-3 by DBRS Limited. See “Description of the Securities — Rating of the Preferred Shares”

Holders of record of Preferred Shares on the last Business Day of each of March, June, September and December will be entitled to receive fixed cumulative preferential quarterly cash distributions equal to $0.1250 per Preferred Share until May 29, 2026. On an annualized basis, this would represent a yield on the Preferred Share offering price of approximately 5.0%. Such quarterly distributions are expected to be paid by the Company on or
before the tenth Business Day of the month following the period in respect of which the distribution was payable. The first distribution will be pro-rated to reflect the period from the Closing Date to June 30, 2021. Based on the expected Closing Date (defined herein), the initial distribution will be $0.05632 per Preferred Share and is expected to be payable to the holders of Preferred Shares of record on June 30, 2021.

Preferred Shares may be surrendered at any time for retraction to TSX Trust Company (the “Registrar and Transfer Agent”), the Company’s registrar and transfer agent, but will be retracted only on the second last Business Day of a month (the “Retraction Date”). Preferred Shares surrendered for retraction by 5:00 p.m. (Toronto time) on the tenth Business Day prior to the Retraction Date will be retracted on such Retraction Date and the holder will be paid on or before the tenth Business Day of the following month (the “Retraction Payment Date”). Holders of Preferred Shares whose Preferred Shares are surrendered for retraction will be entitled to receive a retraction price per Preferred Share equal to 96% of the lesser of (i) the Net Asset Value per Unit determined as of such Retraction Date, less the cost to the Company of the purchase of a Class A Share for cancellation; and (ii) $10.00.

No distributions will be paid on the Class A Shares if (i) the distributions payable on the Preferred Shares are in arrears, or (ii) following cash distributions by the Company, the NAV per Unit would be less than $15.00.

DBRS finalized the rating on 2021-5-21:

The fixed distributions of dividends on the Preferred Shares will be funded from the dividends received on the common shares in the Portfolio, which are expected to cover approximately 0.7 times the annual Preferred Share distributions.

The initial downside protection available to holders of the Preferred Shares is approximately 48% (after offering expenses).

PVS.PR.J Issued : 7-Year SplitShare 4.40%, PVS.PR.J

Monday, August 2nd, 2021

Partners Value Split Corp. announced (on 2021-3-19 although, inexplicably, not on their website):

that it has entered into an agreement to sell 4,000,000 Class AA Preferred Shares, Series 12 (the “Series 12 Preferred Shares”) to a syndicate of underwriters led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc. on a bought deal basis.

The Series 12 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $100,000,000. The Series 12 Preferred Shares will carry a fixed coupon of 4.40% and will have a final maturity of February 29, 2028. The Series 12 Preferred Shares are expected to receive a provisional rating of Pfd-2 (low) from DBRS Limited. The net proceeds of the offering will be used to partially fund the redemption of the Company’s Class AA Preferred Shares, Series 7.

The Company has granted the underwriters an over-allotment option to purchase up to an additional 600,000 Series 12 Preferred Shares at the same offering price, exercisable in whole or part at any time for a period of up to 30 days following closing of the offering, which, if exercised in full, would increase the gross offering size to $115,000,000. Closing of the offering is expected to occur on or about April 12, 2021.

The Company owns a portfolio consisting of approximately 119,611,000 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. (“BAM”) is a leading global alternative asset manager with approximately US$600 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit. BAM owns and operates long-life assets and businesses, many of which form the backbone of the global economy. Utilizing its global reach, access to large-scale capital and operational expertise, BAM offers a range of alternative investment products to investors around the world—including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. BAM is listed on the New York Stock Exchange and Toronto Stock Exchange under the symbol BAM and BAM.A respectively.

Leslie Yuen, Chief Financial Officer, will be available at (416) 956-5142 to answer any questions regarding the offering.

They later announced (on 2021-3-19):

that as a result of strong investor demand for its previously announced offering, it has agreed to increase the size of the offering and sell 6,000,000 Class AA Preferred Shares, Series 12 (the “Series 12 Preferred Shares”) to a syndicate of underwriters led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc. on a bought deal basis.

The Series 12 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $150,000,000. The Series 12 Preferred Shares will carry a fixed coupon of 4.40% and will have a final maturity of February 29, 2028. The Series 12 Preferred Shares are expected to receive a provisional rating of Pfd-2 (low) from DBRS Limited. The net proceeds of the offering will be used to fund the redemption of the Company’s Class AA Preferred Shares, Series 7.

The Company has granted the underwriters an over-allotment option to purchase up to an additional 900,000 Series 12 Preferred Shares at the same offering price, exercisable in whole or part at any time for a period of up to 30 days following closing of the offering, which, if exercised in full, would increase the gross offering size to $172,500,000. Closing of the offering is expected to occur on or about April 12, 2021.

The Company owns a portfolio consisting of approximately 119,611,000 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 ofthe Brookfield Shares. Brookfield Asset Management Inc. (“BAM”) is a leading global alternative asset manager with approximately US$600 billion of assets under management across real estate, infrastructure, renewablepower, private equity and credit. BAM owns and operates long-life assets and businesses, many of which form the backbone of the global economy. Utilizing its global reach, access to large-scale capital and operational expertise, BAM offers a range of alternative investment products to investors around the world—including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. BAM is listed on the New York Stock Exchange and Toronto Stock Exchange under the symbol BAM and BAM.A respectively.

New Issue: EMA FixedReset, 4.25%+328M425

Wednesday, March 24th, 2021

Emera Incorporated has announced (although not yet on their website):

that it will issue 8,000,000 Cumulative Minimum Rate Reset First Preferred Shares, Series J (the “Series J 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 and RBC Capital Markets. Emera has granted to the underwriters an option, exercisable at any time up to two business days prior to the closing of the offering, to purchase up to an additional 2,000,000 Series J Preferred Shares at a price of $25.00 per share (the “Underwriters’ Option”). If the Underwriters’ Option is exercised in full, the aggregate gross proceeds to Emera will be $250 million.

The holders of the Series J 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 May 15, 2026. The first of such dividends, if declared, shall be payable on August 15, 2021, and shall be $0.38134 per Series J Preferred Share, based on the anticipated closing of the offering on April 6, 2021. The dividend rate will be reset on May 15, 2026 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.28 per cent, provided that, in any event, such rate shall not be less than 4.25 per cent per annum. The Series J Preferred Shares are redeemable by Emera, at its option, on May 15, 2026 and on May 15 of every fifth year thereafter.

The holders of Series J Preferred Shares will have the right to convert their shares into Cumulative Floating Rate First Preferred Shares, Series K (the “Series K Preferred Shares”), subject to certain conditions, on May 15, 2026 and on May 15 of every fifth year thereafter. The holders of the Series K 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 90-day Government of Canada treasury bill rate at such time plus 3.28 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.

The Series J Preferred Shares will be offered to the public in Canada by way of prospectus supplement to Emera’s short form base shelf prospectus dated March 12, 2021.

This is the first new FixedReset since CM FixedReset, 5.15%+362, NVCC from May 2019, so that’s pretty exciting!

Standard & Poor’s rates it P-3(high):

S&P Global Ratings today assigned its ‘BB+’ on the global scale and ‘P-3 (High)’ on the Canada National Preferred Share Scale issue-level ratings to Halifax, N.S.-based utility holding company Emera Inc.’s (Emera) C$200 million series J cumulative minimum rate reset first preferred shares, with an option of up to C$250 million. Emera intends to use the net proceeds from these preferred shares for general corporate purposes.

We expect to assign intermediate equity credit (50% equity) to the shares based on the proposed terms. Our intermediate equity treatment is largely premised on the instrument’s permanence, subordination, and deferability features, as defined under our criteria for hybrid securities.

The series J first preferred stock is perpetual, with no maturity date and no incentive to redeem the issue for a long-dated period, meeting our standards for permanence. In addition, the dividend payments are deferrable, fulfilling the deferability element in our criteria. Furthermore, the instrument is subordinated to all existing and future senior debt obligations, satisfying our condition for subordination.

For these reasons and based on our review of the proposed terms of these instruments, we rate the securities two notches below our ‘BBB’ issuer credit rating on Emera at ‘BB+’ on the global scale or ‘P-3 (High)’ under the Canada National Preferred Share Scale Ratings. For our most recent issuer credit rating rationale, see the research update on Emera published on March 24, 2020.

Thanks to Assiduous Reader JD for bringing this to my attention!

Update, 2021-10-03: This issue trades as EMA.PR.J

New Issue: PVS SplitShare, 4.40%, Seven-Year

Saturday, March 20th, 2021

Partners Value Split Corp. has announced:

that it has entered into an agreement to sell 4,000,000 Class AA Preferred Shares, Series 12 (the “Series 12 Preferred Shares”) to a syndicate of underwriters led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc. on a bought deal basis.

The Series 12 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $100,000,000. The Series 12 Preferred Shares will carry a fixed coupon of 4.40% and will have a final maturity of February 29, 2028. The Series 12 Preferred Shares are expected to receive a provisional rating of Pfd-2 (low) from DBRS Limited. The net proceeds of the offering will be used to partially fund the redemption of the Company’s Class AA Preferred Shares, Series 7.

The Company has granted the underwriters an over-allotment option to purchase up to an additional 600,000 Series 12 Preferred Shares at the same offering price, exercisable in whole or part at any time for a period of up to 30 days following closing of the offering, which, if exercised in full, would increase the gross offering size to $115,000,000. Closing of the offering is expected to occur on or about April 12, 2021.

The Company owns a portfolio consisting of approximately 119,611,000 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. (“BAM”) is a leading global alternative asset manager with approximately US$600 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit. BAM owns and operates long-life assets and businesses, many of which form the backbone of the global economy. Utilizing its global reach, access to large-scale capital and operational expertise, BAM offers a range of alternative investment products to investors around the world—including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. BAM is listed on the New York Stock Exchange and Toronto Stock Exchange under the symbol BAM and BAM.A respectively.

Given that the directors and officers of PVS:

  • Frank N.C. Lochan
  • James L.R. Kelly
  • Ralph J. Zarboni
  • Brian D. Lawson
  • Leslie Yuen
  • Bryan Sinclair
  • Loretta M. Corso

continue to be a useless pack of bozos, this information is not yet available on the company website.

Update, 2021-3-22: Wonder of wonders, there is actually an update to this press release posted on their website! Partners Value Split Corp. has announced:

that as a result of strong investor demand for its previously announced offering, it has agreed to increase the size of the offering and sell 6,000,000 Class AA Preferred Shares, Series 12 (the “Series 12 Preferred Shares”) to a syndicate of underwriters led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc. on a bought deal basis.

The Series 12 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $150,000,000. The Series 12 Preferred Shares will carry a fixed coupon of 4.40% and will have a final maturity of February 29, 2028. The Series 12 Preferred Shares are expected to receive a provisional rating of Pfd-2 (low) from DBRS Limited. The net proceeds of the offering will be used to fund the redemption of the Company’s Class AA Preferred Shares, Series 7.

The Company has granted the underwriters an over-allotment option to purchase up to an additional 900,000 Series 12 Preferred Shares at the same offering price, exercisable in whole or part at any time for a period of up to 30 days following closing of the offering, which, if exercised in full, would increase the gross offering size to $172,500,000. Closing of the offering is expected to occur on or about April 12, 2021.

New Issue: Sagen MI Canada Inc. Straight Perpetual 5.40%

Monday, February 8th, 2021

Sagen MI Canada Inc. has announced:

that it has agreed to issue 4,000,000 non-cumulative Class A Preferred Shares, Series 1 (the “Series 1 Shares”) on a bought deal basis, for gross proceeds of C$100 million (the “Offering”). The Series 1 Shares will be priced at C$25.00 per share and will entitle holders thereof to fixed, non-cumulative dividends if, as and when declared by the board of directors of the Company with an annual dividend yield of 5.40%. Closing is expected to occur on or about February 18, 2021. The issue will be underwritten by a syndicate of underwriters led by BMO Capital Markets, CIBC World Markets, National Bank Financial, RBC Capital Markets, Scotia Capital and TD Securities.

The Company intends to use the net proceeds of the Offering to strengthen the Company’s capital base, for distributions to shareholders (subject to the completion of the previously announced plan of arrangement pursuant to which Brookfield Business Partners L.P., together with certain of its affiliates and institutional partners (“Brookfield”), will acquire all of the outstanding common shares of the Company not already owned by Brookfield), and/or for general corporate purposes.

So on the one hand, it’s great to see a new issuer. On the other hand, it’s yet another member of the Brookfield empire.

And it’s great to see a new Straight Perpetual. On the other hand, it’s small.

DBRS rates the issue Pfd-2(high) Trend-Negative without discussion.

S&P rates the issue P-2(low):

S&P Global Ratings said today it assigned its ‘P-2(Low)’ Canada scale and ‘BBB-‘ global scale preferred stock ratings to Sagen MI Canada Inc.’s (BBB+/Negative/–) C$100 million 5.40% fixed-rate non-cumulative Series 1 Class A preferred shares.

The rating on the preferred shares is two notches below our long-term issuer credit rating on Sagen, reflecting subordination and the dividend deferability. The preference shares will rank in parity with all future class A preferred shares, and they will rank junior to the policyholders’ obligations, and to all existing and future indebtedness of Sagen. We assign an intermediate equity content to these preference shares.

To satisfy public float requirement under the Canadian Insurance Company Act, the preference shares will carry 35% voting rights. The voting rights will commence on the date on which Falcon Holdings L.P. becomes the holder of more than 65% of Sagen’s issued and outstanding common shares and continuing until Sagen or any of its subsidiaries are no longer subject to the public float requirement or until it is not necessary that the preference shares carry such rights in order to satisfy the public float requirement. Brookfield Business Partners L.P., together with certain of its affiliates, and institutional partners will gain full ownership of the issued and outstanding common shares of Sagen through the intermediate holding company, Falcon Holdings, once the transaction closes in the first half of 2021.

The company intends to use the net proceeds from this offering for general corporate purposes. With the new issuance, Sagen’s pro forma financial leverage as of year-end 2020 will modestly increase to 16.9% from 15.1%, while the fixed-charge coverage ratio will remain what we consider strong at more than 10x.

RS.PR.A Strong on Excellent Volume

Thursday, November 19th, 2020

Middlefield Group has announced:

Middlefield Group, on behalf of Real Estate & E-Commerce Split Corp. (the “Company”), is pleased to announce the Company has completed its initial public offering of 1,613,887 class A shares and 1,613,887 preferred shares for total gross proceeds of $40 million. The class A and preferred shares are listed on the Toronto Stock Exchange under the symbols RS and RS.PR.A, respectively.

The Company will invest in a diversified, actively managed portfolio of dividend-paying securities of issuers operating in the real estate or related sectors, including real estate investment trusts, that the Advisor (as defined below) believes are well-positioned to benefit from low interest rates, the rapid adoption of e-commerce, the growth of data infrastructure as well as attractive valuations in various areas of the real estate sector.

The Company’s investment objectives for the:

  • Class A shares are to provide holders with:
    • non-cumulative monthly cash distributions; and
    • the opportunity for capital appreciation through exposure to the portfolio
  • Preferred shares are to:
    • provide holders with fixed cumulative preferential quarterly cash distributions; and
    • return the original issue price of $10.00 to holders upon maturity

The initial target distribution yield for the class A shares is 8% per annum based on the original subscription price (or $0.10 per month or $1.20 per annum).

The initial target distribution yield for the preferred shares is 5.25% per annum based on the original subscription price (or $0.13125 per quarter or $0.525 per annum).

Middlefield Capital Corporation (the “Advisor”) will provide investment management advice to the Company.

The syndicate of agents was co-led by CIBC Capital Markets and RBC Capital Markets, and includes BMO Capital Markets, Scotiabank, TD Securities Inc., Canaccord Genuity Corp., National Bank Financial Inc., Industrial Alliance Securities, Manulife Securities Incorporated, Raymond James Ltd., Richardson GMP, Middlefield Capital Corporation, Echelon Wealth Partners Inc. and Mackie Research Capital Corporation.

For further information, please visit our website at www.middlefield.com or contact Nancy Tham or Michael Bury in our Sales and Marketing Department at 1.888.890.1868.

Highlights from the prospectus are:

Real Estate & E-Commerce Split Corp. (the “Company”) is a mutual fund established as a corporation under the laws of the Province of Ontario. The Company proposes to offer preferred shares (“Preferred Shares”) and class A shares (“Class A Shares”) at a price of $10.00 per Preferred Share and $15.00 per Class A Share (the “Offering”). Preferred Shares and Class A Shares are issued only on the basis that an equal number of Preferred Shares and Class A Shares will be outstanding at all material times.

The Company will invest in a diversified, actively managed portfolio (the “Portfolio”) of dividend-paying securities of issuers operating in the real estate or related sectors, including real estate investment trusts, that the Advisor (as defined below) believes are well-positioned to benefit from low interest rates, the rapid adoption of e-commerce, the growth of data infrastructure as well as attractive valuations in various areas of the real estate sector (“Real Estate & E-Commerce Issuers”). See “Investment Strategy.”

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on December 31, 2025 (the “Maturity Date”), subject to extension for successive terms of up to five years as determined by the Company’s board of directors. See “Investment Objectives”. The quarterly cash distribution will be $0.13125 per Preferred Share ($0.525 per annum), representing a yield of 5.25% per annum on the issue price of $10.00 per Preferred Share until December 31, 2025. See “Distribution Policy”

The first distribution will be pro-rated to reflect the period from the Closing Date to December 31, 2020.

No distributions will be paid on the Class A Shares if (i) the distributions payable on the Preferred Shares are in arrears, or (ii) in respect of a cash distribution by the Company, the net asset value (“NAV” or “Net Asset Value”) per “Unit”, comprised of one Preferred Share and one Class A Share, would be less than $15.00 following the payment of such distributions.

The Preferred Shares have been provisionally rated Pfd-2 (low) by DBRS Limited.

The Preferred Shares will be redeemed by the Company on the Maturity Date, subject to extension for successive terms of up to five years as determined by the Board of Directors. The redemption price payable by the Company for a Preferred Share on that date will be equal to the lesser of (i) $10.00 plus any accrued and unpaid distributions thereon and (ii) the NAV of the Company on that date divided by the total number of Preferred Shares then outstanding.

Monthly: Preferred Shares may be surrendered at any time for retraction to Middlefield Capital Corporation (in such capacity, the “Registrar and Transfer Agent”), the Company’s registrar and transfer agent, but will be retracted only on the second last business day of a month (the “Retraction Date”). Preferred Shares surrendered for retraction by 5:00 p.m. (Toronto time) on or before the twentieth business day prior to the Retraction Date will be retracted on such Retraction Date and the holder will be paid on or before the last business day of the following month (the “Retraction Payment Date”).

Holders of Preferred Shares whose Preferred Shares are surrendered for retraction will be entitled to receive a retraction price per Preferred Share equal to 96% of the lesser of (i) the NAV per Unit determined as of such Retraction Date, less the cost to the Company of the purchase of a Class A Share for cancellation; and (ii) $10.00. For this purpose, the cost of the purchase of a Class A Share will include the purchase price of the Class A Share, and commission and such other costs, if any, related to the liquidation of any portion of the Portfolio to fund the purchase of the Class A Share.

On the Maturity Date and upon any subsequent maturity date as determined by the Board of Directors, a holder of Preferred Shares may retract such Preferred Shares. The Company will provide at least 60 days’ notice to holders of Preferred Shares of such right. The retraction price payable by the Company for a Preferred Share pursuant to the non-concurrent retraction right will be equal to the lesser of (i) $10.00 plus any accrued and unpaid distributions thereon and (ii) the NAV of the Company on that date divided by the total number of Preferred Shares then outstanding.

DBRS rates the shares Pfd-2(low):

DBRS Limited (DBRS Morningstar) finalized its provisional rating of Pfd-2 (low) assigned to the Preferred Shares issued by Real Estate & E-Commerce Split Corp. (the Company), managed by Middlefield Limited (the Manager). Middlefield Capital Corporation (the Investment Advisor) will provide investment advice to the Company.

The initial downside protection available to holders of the Preferred Shares is approximately 58% (after offering expenses). Downside protection available to the Preferred Shares consists of the net asset value (NAV) of the Class A Shares. The fixed distributions of dividends on the Preferred Shares will be funded from the dividends received on the securities in the Portfolio, which are expected to cover approximately 1.8 times the annual Preferred Shares distributions.

It’s very nice to see another issue qualifying for the SplitShares index! Vital statistics are:

RS.PR.A SplitShare YTW SCENARIO
Maturity Type : Hard Maturity
Maturity Date : 2025-12-31
Maturity Price : 10.00
Evaluated at bid price : 10.10
Bid-YTW : 5.03 %

New Issue: PVS 5-Year SplitShare, 4.75%

Saturday, September 26th, 2020

Partners Value Split Corp. has announced:

that it has entered into an agreement to sell 4,000,000 Class AA Preferred Shares, Series 11 (the “Series 11 Preferred Shares”) to a syndicate of underwriters led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc. on a bought deal basis.

The Series 11 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $100,000,000. The Series 11 Preferred Shares will carry a fixed coupon of 4.75% and will have a final maturity of October 31, 2025. The Series 11 Preferred Shares have a provisional rating of Pfd-2 (low) from DBRS Limited. The net proceeds of the offering will be used to partially fund the redemption of the Company’s Class AA Preferred Shares, Series 6.

The Company has granted the underwriters an option, exercisable in whole or part prior to closing, to purchase up to an additional 2,000,000 Series 11 Preferred Shares at the same offering price, which, if exercised, would increase the gross offering size to $150,000,000. Closing of the offering is expected to occur on or about October 6, 2020.

The Company owns a portfolio consisting of 119,611,449 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. (“BAM”) is a leading global alternative asset manager with approximately US$550 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit. BAM owns and operates long-life assets and businesses, many of which form the backbone of the global economy. Utilizing its global reach, access to large-scale capital and operational expertise, BAM offers a range of alternative investment products to investors around the world — including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors. BAM is listed on the New York Stock Exchange and Toronto Stock Exchange under the symbol BAM and BAM.A respectively.

They later announced:

that as a result of strong investor demand for its previously announced offering, the underwriters have exercised their option to increase the size of the offering to 6,000,000 Class AA Preferred Shares, Series 11 (the “Series 11 Preferred Shares”). The Series 11 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $150,000,000. The Series 11 Preferred Shares are being issued on a bought deal basis to a syndicate of underwriters led by Scotiabank, BMO Capital Markets, CIBC Capital Markets, RBC Capital Markets and TD Securities Inc.

The Series 11 Preferred Shares will carry a fixed coupon of 4.75% and will have a final maturity of October 31, 2025. The Series 11 Preferred Shares have a provisional rating of Pfd-2 (low) from DBRS Limited. The net proceeds of the offering will be used to partially fund the redemption of the Company’s Class AA Preferred Shares, Series 6. Closing of the offering is expected to occur on or about October 6, 2020.

The new issue has been provisionally rated Pfd-2(low) by DBRS:

DBRS Limited (DBRS Morningstar) assigned a provisional rating of Pfd-2 (low) to the Class AA Preferred Shares, Series 11 (the Series 11 Preferred Shares) to be issued by Partners Value Split Corp. (the Company) that will rank pari passu with the existing Class AA Preferred Shares, Series 6; the Class AA Preferred Shares, Series 7; the Class AA Preferred Shares, Series 8; the Class AA Preferred Shares, Series 9; the Class AA Preferred Shares, Series 10 (collectively, the Class AA Preferred Shares).

Nice to see a new issue of an investment-grade SplitShare! The Series 6 Preferreds that are going to be redeemed are PVS.PR.D, currently redeemable at 25.50, redeemable commencing 2020-10-8 at 25.25 and maturing 2021-10-8 at 25.00. It only pays 4.50%, so it’s a bit surprising that they’re going to call it at a premium – although that is not yet 100% certain. PVS.PR.D was originally issued as BNA.PR.F, which commenced trading 2014-7-4 after being announced 2014-6-16.