PrefBlog

DBRS announced on February 6 that it:

has today assigned a provisional rating of Pfd-2 (low) to the Class A Preferred Shares, Series 1 (the Preferred Shares) to be issued by Global Champions Split Corp. (the Company). The Preferred Shares will be offered at an issue price of $25.00.

Net proceeds from the initial offering will be used to invest in a portfolio of common shares (the Portfolio) of 15 international large capitalization companies with a strong global presence. The majority of the Portfolio’s investments will be denominated in U.S. dollars, and any exposure to currencies other than the U.S. dollar is expected to be hedged back to the U.S. dollar. Dividends received on the Portfolio securities denominated in currencies other than the U.S. dollar may – but are not required to – be hedged back to the U.S. dollar.

The provisional rating is primarily based on the expected level of downside protection available to holders of the Preferred Shares (49.0%), the Preferred Share distribution coverage ratio (1.27 times), the credit quality of the underlying companies in the indicative Portfolio and disclosure included in the preliminary prospectus.

The assignment of final rating is subject to receipt by DBRS of final portfolio-related information that is consistent with the information DBRS has already reviewed and the settlement of material transaction documents in a manner acceptable to DBRS commensurate with the relevant rating level and in accordance with the applicable DBRS methodologies.

According to SEDAR, Global Champions Split Corp. filed a preliminary long-form prospectus on December 7 that makes rather interesting reading. It seems that all of the Capital Units will be held by the sponsor, BAM Investments, although the only committment made is that “BAM Investments will also acquire at least a majority of the Capital Shares to be issued in connection with the Offering of the Series 1 [Preferred] Shares under this prospectus.”

The ownership chain – as is usual for Brookfield – is rather complex

Brookfield Financial Corp. is wholly-owned by Brookfield Asset Management Inc. (“Brookfield”). Partners Limited together with its related company, BAM Investments Corp. (“BAM Investments”), collectively own 56,776,184 million Class A Limited Voting Shares and 85,120 Class B Limited Voting Shares, representing approximately 9.1% and 100% respectively, of each class of shares of Brookfield. BAM Investments owns all of the voting shares of the Company. Therefore the Company may be considered a related issuer to Brookfield Financial Corp. for purposes of applicable securities laws. The terms of the Offering were negotiated at arm’s length between the Company and the Agents. Brookfield Financial Corp. will not receive any benefit in connection with the Offering other than as described herein.

The “related issuer” part is considered to be of interest only because Brookfield Financial Corp. is one of the agents of the offering. Brookfield Asset Management (BAM) owns all of Brookfield Financial Corp, and:

BAM Investments is a publicly listed investment company.

Further, from the BAM Investments 2011 Annual Report:

BAM Investments Corp., (the “company”) is a leveraged investment company whose prinicipal investment is a direct and indirect ownership interest in 56.2 million Class A Limited Voting Shares (“Class A Shares”) of Brookfield Asset Management Inc.

So on the one hand, BAM Investments will be diversifying, which is good. On the other hand, it’s diversifying on a leveraged basis, which raises the potential for contagion: a sharp decline in the value of Global Champions could force BAM Investments to raise cash, which it can do only by selling its (leveraged) position in BAM.A.

Unfortunately, I have not been able to determine the source of funding for the BAM Investments proposed position in this new Global Champions venture.

Update, 2013-3-7:DBRS rates Pfd-2(low):

DBRS has today assigned a final rating of Pfd-2 (low) to the Class A Preferred Shares, Series 1 (the Preferred Shares) issued by Global Champions Split Corp. (the Company). The Company will issue a maximum of 2,300,000 Class A Preferred Shares at an issue price of $25.00 per Class A Preferred Share and an equal number of capital shares (the Capital Shares) in order to attain a leveraged split share structure. The redemption date for the Class A Preferred Shares will be on or about July 31, 2019.

Net proceeds from the initial offering will be used to invest in a portfolio of common shares of approximately 15 international large capitalization companies (the Portfolio). The Portfolio will initially be equally weighted and may be changed from time to time.
All of the Portfolio’s investments denominated in currencies other than the U.S. dollar (USD) are expected to be hedged back to USD. Dividends received on the Portfolio securities denominated in currencies other than USD may – but are not required to – be hedged back to USD. Distributions to holders of the Class A Preferred Shares are denominated in Canadian dollars and will be hedged back to USD unless the net asset value (NAV) of the Company is less than the aggregate original issue price of the Class A Preferred Shares.

The Portfolio provides initial downside protection of approximately 48.9% to holders of the Class A Preferred Shares. The Company will make quarterly fixed cumulative distributions of $0.25 per Class A Preferred Share to yield 4.00% per annum on the issue price. Based on the dividend yields on Portfolio and foreign exchange rates as of February 27, 2013, the initial dividend coverage ratio (net of expenses) is 1.2 times. Holders of the Capital Shares are expected to receive all excess income after Company expenses and Class A Preferred Share distributions have been paid.

The Pfd-2 (low) rating on the Class A Preferred Shares is primarily based on the downside protection and dividend coverage available to holders of the Preferred Shares, the credit quality of the underlying companies in the Portfolio and disclosure included in the final prospectus.

Bell Aliant has announced:

that its subsidiary Bell Aliant Preferred Equity Inc. (the “Company”) will be issuing 8,000,000 Cumulative 5-Year Rate Reset Preferred Shares, Series E (the “Series E Preferred Shares”), at a price of $25.00 per Series E Preferred Share, for aggregate gross proceeds of $200 million on a bought-deal basis to a syndicate of underwriters led by Scotiabank, TD Securities Inc., and CIBC.

The underwriters have been granted an over-allotment option to purchase an additional 1,200,000 Series E Preferred Shares at the offering price. Should the over-allotment option be fully exercised, the total gross proceeds of the Series E Preferred Share offering will be $230 million.

The Series E Preferred Shares will pay cumulative dividends of $1.0625 per share per annum, yielding 4.25 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 June 30, 2013), for the initial five and a half year period ending September 30, 2018. The dividend rate will be reset on September 30, 2018 and every five years thereafter at a rate equal to the five-year Government of Canada bond yield plus 2.64 per cent. The Series E Preferred Shares will be redeemable by the issuer on or after September 30, 2018, in accordance with their terms.

Holders of the Series E Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preferred Shares, Series F, (the “Series F Preferred Shares”) subject to certain conditions, on September 30, 2018 and on September 30 every five years thereafter. Holders of the Series F 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 2.64 per cent, if, as and when declared by the Company’s board of directors.

The Series E 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 February 14, 2013, subject to certain conditions, including obtaining all necessary regulatory approvals.

The net proceeds of this offering will be used for repayment of short term debt and general corporate purposes.

Update, 2013-2-6: Rated Pfd-3 by DBRS.

Brookfield Renewable Energy Partners has announced:

that it has agreed to issue 4,000,000 5% perpetual Class A Preferred Shares, Series 5 (“Preferred Shares”) on a bought deal basis to a syndicate of underwriters led by RBC Capital Markets, CIBC, Scotiabank and TD Securities Inc. for distribution to the public. The Preferred Shares will be issued at a price of CDN$25.00 per share, for aggregate gross proceeds of CDN$100,000,000. The Preferred Shares are being issued through a wholly-owned subsidiary of, and are guaranteed by, Brookfield Renewable.

Brookfield Renewable has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Preferred Shares which, if exercised, would increase the gross offering size to CDN$150,000,000.

The Preferred Shares will be offered to the public in Canada pursuant to a supplement to Brookfield Renewable’s existing short form base shelf prospectus dated January 23, 2012, that will be filed with securities regulatory authorities in each of the provinces and territories of Canada. The Preferred Shares may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

The net proceeds of the issue will be used to repay outstanding indebtedness and for general corporate purposes. The offering of Preferred Shares is expected to close on or about January 29, 2013.

Provisionally rated Pfd-3(high) by DBRS.

Update, 2013-1-23: Upsized to $175-million:

Brookfield Renewable Energy Partners (“Brookfield Renewable”) today announced that as a result of strong investor demand for its previously announced offering it has agreed to increase the size of the offering to 7,000,000 5% perpetual Class A Preferred Shares, Series 5 (“Preferred Shares”). The Preferred Shares are being offered on a bought deal basis to a syndicate of underwriters led by RBC Capital Markets, CIBC, Scotiabank and TD Securities Inc. for distribution to the public. The Preferred Shares will be issued at a price of CDN$25.00 per share, for aggregate gross proceeds of CDN$175,000,000. The Preferred Shares are being issued through a wholly-owned subsidiary of, and are guaranteed by, Brookfield Renewable. There will not be an underwriters’ option as was previously granted.

Capital Power Corporation has announced:

that it will issue 6,000,000 Cumulative Rate Reset Preference Shares, Series 3 (the “Series 3 Shares”) at a price of $25 per Series 3 Share (the “Offering”) for aggregate gross proceeds of $150 million on a bought deal basis with a syndicate of underwriters, led by TD Securities Inc. and BMO Capital Markets. In addition, Capital Power has granted the underwriters an option, exercisable in whole or in part anytime up to two business days prior to closing, to purchase up to an additional 2,000,000 Series 3 Shares on the same terms, for additional gross proceeds of up to $50 million. Any additional Series 3 Shares will also be issued on the closing date.

The Series 3 Shares will pay fixed cumulative dividends of $1.15 per share per annum, yielding 4.60% per annum, payable on the last business day of March, June, September and December of each year, as and when declared by the board of directors of Capital Power, for the initial period ending December 31, 2018. The first quarterly dividend of $0.3151 per share is expected to be paid on March 28, 2013. The dividend rate will be reset on December 31, 2018 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 3.23%. The Series 3 Shares are redeemable by Capital Power, at its option, on December 31, 2018 and on December 31 of every fifth year thereafter.

Holders of Series 3 Shares will have the right to convert all or any part of their shares into Cumulative Floating Rate Preference Shares, Series 4 (the “Series 4 Shares”), subject to certain conditions, on December 31, 2018 and on December 31 of every fifth year thereafter. Holders of Series 4 Shares will be entitled to receive a cumulative quarterly floating dividend at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 3.23%, as and when declared by the board of directors of Capital Power.

The Offering is expected to close on or about December 18, 2012. Net proceeds will be lent to Capital Power L.P. pursuant to a subordinated debt agreement. Capital Power L.P. will use the funds to repay the outstanding balance under its credit facilities which were used to fund the development of the Quality Wind and Halkirk Wind projects, to finance development projects including the Port Dover and Nanticoke and Shepard Energy Centre projects, and for general corporate purposes.

Standard & Poor’s, a division of the McGraw Hill Companies, Inc. has assigned a rating of P-3 for the Series 3 Shares and DBRS Limited has assigned a preliminary rating of Pfd-3 (low) for the Series 3 Shares.

The Series 3 Shares will be issued pursuant to a prospectus supplement to Capital Power’s short form base shelf prospectus dated February 16, 2012. This prospectus supplement will be filed with securities regulatory authorities in Canada. An application will be made when the prospectus supplement is filed to list the Series 3 Shares and the Series 4 Shares on the Toronto Stock Exchange as of the closing date. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.

Update: DBRS says Shepard Centre project credit neutral, but sounds a warning:

In its review, DBRS’s analysis will focus on (1) the business risk profile of Capital Power and (2) the financial impact of the proposed transaction on the Company’s credit profile. Overall, DBRS views this transaction as credit neutral.
…
(2) Financial Risk Profile – Neutral to Negative
Based on its preliminary review of the proposed partnership and Capital Power’s funding strategy, DBRS views the impact on Capital Power’s financial risk profile as neutral to negative. DBRS expects the Company to fund the partnership with a mix of equity (including preferred shares and dividend re-investment proceeds), debt and asset divestitures. If Capital Power funds the capital costs as planned, the impact on its key credit ratios is expected to be neutral. However, if equity issuances or asset divestitures are delayed, this could add pressure on Capital Power’s current rating. In addition, the rating assumes that significant unforeseen costs or cash shortfalls will be funded by equity (including preferred shares and dividend re-investment proceeds) in a timely manner to maintain its current leverage level. Any significant increase in leverage could cause Capital Power’s credit risk profile to deteriorate to a level that is no longer commensurate with the current BBB rating.

Manulife Financial Corporation has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 11 (“Series 11 Preferred Shares”). Manulife will issue 8 million Series 11 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 co-led by Scotiabank, RBC Capital Markets and TD Securities Inc. and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is December 4, 2012. Manulife intends to file a prospectus supplement to its July 18, 2012 base shelf prospectus in respect of this issue.

Holders of the Series 11 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 4.00 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending March 19, 2018. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.61 per cent.

Holders of Series 11 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 12 (“Series 12 Preferred Shares”), subject to certain conditions, on March 19, 2018 and on March 19 every five years thereafter. Holders of the Series 12 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 2.61 per cent.

The net proceeds from the offering will be utilized for general corporate purposes, including refinancing of maturing debt and investment in subsidiaries.

“Our financing activities take into account future refinancing needs. We have taken the opportunity to issue preferred shares in favourable markets,” said Senior Executive Vice President and Chief Financial Officer, Steve Roder.

Enbridge Inc. has announced:

that it has entered into an agreement with a group of underwriters to sell 8 million cumulative redeemable preference shares, series R (the “Series R Preferred Shares”) at a price of $25.00 per share for distribution to the public. The aggregate gross proceeds will be $200 million. Closing of the offering is expected on December 5, 2012.

The holders of Series R 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 to but excluding June 1, 2019. The first quarterly dividend payment date is scheduled for March 1, 2013. The dividend rate will reset on June 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.50 per cent. The Series R Preferred Shares are redeemable by Enbridge, at its option, on June 1, 2019 and on June 1 of every fifth year thereafter.

The holders of Series R Preferred Shares will have the right to convert their shares into cumulative redeemable preference shares, series S (the “Series S Preferred Shares”), subject to certain conditions, on June 1, 2019 and on June 1 of every fifth year thereafter. The holders of Series S 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 2.50 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 R 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 Scotiabank, RBC Capital Markets, and TD Securities Inc.

Update: Upsized to $400-million:

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 R (the “Series R Preferred Shares”), the size of the offering has been increased to 16 million shares. The aggregate gross proceeds will be CAD$400 million. Closing of the offering is expected on December 5, 2012.

The holders of Series R 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 to but excluding June 1, 2019. The first quarterly dividend payment date is scheduled for March 1, 2013. The dividend rate will reset on June 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Canadian Government bond yield plus 2.50 per cent. The Series R Preferred Shares are redeemable by Enbridge, at its option, on June 1, 2019 and on June 1 of every fifth year thereafter.

The holders of Series R Preferred Shares will have the right to convert their shares into cumulative redeemable preference shares, series S (the “Series S Preferred Shares”), subject to certain conditions, on June 1, 2019 and on June 1 of every fifth year thereafter. The holders of Series S 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 2.50 per cent.

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 Scotiabank, RBC Capital Markets, and TD Securities Inc.

Update, 2012-11-27: Rated Pfd-2(low) by DBRS.

Innergex Renewable Energy has announced:

that it has entered into an agreement to issue, on a bought deal basis, to a syndicate of underwriters co-led by TD Securities Inc., National Bank Financial Inc. and BMO Capital Markets for distribution to the public, 2,000,000 Cumulative Redeemable Fixed-Rate 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 $50,000,000. The underwriters will have an option to purchase up to an additional 300,000 Series C Shares from Innergex at a price of $25.00 per Series C Share, exercisable in whole or in 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 $57,500,000.

These funds will be used to repay a portion of the Corporation’s revolving term credit facility and for general corporate purposes.

Holders of the Series C Shares will be entitled to receive, as and when declared by the Board of Directors of Innergex, a cumulative quarterly fixed dividend yielding 5.75% annually. The Series C Shares will not be redeemable prior to January 15, 2018. On and after January 15, 2018 on not more than 60 nor less than 30 days’ notice, Innergex may, at its option, redeem all or from time to time any of the then outstanding Series C Shares upon payment in cash for each share so redeemed of an amount equal to $26.00 per share if redeemed on or prior to January 15, 2019; at $25.75 if redeemed thereafter and on or prior to January 15, 2020; at $25.50 if redeemed thereafter and on or prior to January 15, 2021; at $25.25 if redeemed thereafter and on or prior to January 15, 2022; and at $25.00 per share if redeemed thereafter; together, in each case, with all accrued and unpaid dividends to the date fixed for redemption. The Series C Shares will rank pari passu with all other series of preferred shares and in priority to common shares as to the payment of dividends and the distribution of assets on dissolution, liquidation, or wind-up.

The Series C Shares will be offered for sale to the public in each of the provinces of Canada pursuant to a short form prospectus to be filed with Canadian securities regulatory authorities. The offering of Series C Shares is expected to close on December 11, 2012, subject to regulatory approvals and other customary closing conditions.

Interestingly, the headline on the Innergex media page refers to an issue size of $75-million. Random mistake or last minute downsizing?

Update: DBRS calls it Pfd-3(low), Negative Trend.

Brookfield Asset Management has announced:

that it has agreed to issue 6,000,000 4.85% perpetual Class A Preferred Shares, Series 36 (“Preferred Shares”) on a bought deal basis to a syndicate of underwriters led by Scotiabank, CIBC, RBC Capital Markets and TD Securities Inc. for distribution to the public. The Preferred Shares will be issued at a price of CDN$25.00 per share, for aggregate gross proceeds of CDN$150,000,000.

Brookfield has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Preferred Shares which, if exercised, would increase the gross offering size to CDN$200,000,000. The Preferred Shares will be offered in all provinces of Canada by way of a supplement to Brookfield Asset Management’s existing short form base shelf prospectus dated June 7, 2011 as amended on June 13, 2012. The Preferred Shares may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

The net proceeds of the issue will be used for general corporate purposes. The offering of Preferred Shares is expected to close on or about November 27, 2012.

It’s nice to see another Straight Perpetual coming out – too bad it’s from BAM! They’ve got so many issues outstanding already … and their investment grade credit rating has been the subject of nervous announcements from DBRS and S&P.

Fortis Inc. has announced that it:

has today entered into an agreement with a syndicate of underwriters led by BMO Capital Markets and RBC Capital Markets under which the underwriters have agreed to purchase, on a bought deal basis, 6,000,000 Cumulative Redeemable First Preference Shares, Series J (the “Preference Shares”) for sale to the public at a price of $25.00 per Preference Share, representing aggregate gross proceeds of $150 million.

Fortis has granted the underwriters an underwriters’ option to purchase an additional 2,000,000 Preference Shares at the same offering price. Should the underwriters’ option be fully exercised, the total gross proceeds of the Preference Share offering will be $200 million.

Holders of Preference Shares will be entitled to receive a cumulative quarterly fixed dividend of 4.75% per annum, if, as and when declared by the Board of Directors of the Corporation payable (other than the first dividend payment) in equal quarterly instalments on the first day of March, June, September and December of each year. Assuming a closing date of November 13, 2012, the first dividend will be payable on March 1, 2013 in the amount of $0.35137 per Preference Share.

The Preference Shares are not redeemable prior to December 1, 2017. On or after December 1, 2017, the Corporation may, on not less than 30 nor more than 60 days’ notice, redeem the Preference Shares in whole or in part, at the Corporation’s option, by the payment in cash of $26.00 per Preference Share if redeemed prior to December 1, 2018, at $25.75 per Preference Share if redeemed on or after December 1, 2018 but prior to December 1, 2019, at $25.50 if redeemed on or after December 1, 2019 but prior to December 1, 2020, at $25.25 if redeemed on or after December 1, 2020 but prior to December 1, 2021 and at $25.00 per Preference Share if redeemed on or after December 1, 2021, in each case together with all declared and unpaid dividends up to but excluding the date fixed for redemption.

The Preference Share offering is expected to close on November 13, 2012. The Offering is subject to the receipt of all necessary regulatory and stock exchange approvals. The net proceeds from the issue will be used towards repaying borrowings under the Corporation’s $1 billion committed corporate credit facility, which borrowings were primarily incurred to support the construction of the non-regulated Waneta Expansion hydroelectric generating facility and for other general corporate purposes.

National Bank of Canada has announced:

that it has entered into an agreement with a group of underwriters led by National Bank Financial Inc. for an issue on a bought deal basis of 7 million non-cumulative 5-year rate reset first preferred shares series 28 (the “Series 28 Preferred Shares”), at a price of $25.00 per share, to raise gross proceeds of $175 million.

National Bank has also granted the underwriters an option to purchase, on the same terms, up to an additional 1 million Series 28 Preferred Shares. This option is exercisable in whole or in part by the underwriters at any time up to one business day prior to closing. The maximum gross proceeds raised under the offering will be $200 million should this option be exercised in full.

The Series 28 Preferred Shares will yield 3.80% annually, payable quarterly, as and when declared by the Board of Directors of National Bank, for the initial period ending November 15, 2017. The first of such dividends, if declared, shall be payable on February 15, 2013. Thereafter, the dividend rate will reset every five years at a level of 243 basis points over the then 5-year Government of Canada bond yield.

Holders of the Series 28 Preferred Shares will have the right to convert their shares into an equal number of non-cumulative floating rate first preferred shares Series 29 (the “Series 29 Preferred Shares”), subject to certain conditions, on November 15, 2017, and on November 15th every five years thereafter. Holders of the Series 29 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the Board of Directors of National Bank, equal to the 90-day Government of Canada Treasury Bill rate plus 243 basis points.

The net proceeds of the offering will be used for general corporate purposes and are expected to qualify as Tier 1 capital for National Bank. The expected closing date is on or about November 7, 2012. National Bank intends to file in Canada a prospectus supplement to its October 5, 2012 base shelf prospectus in respect of this issue.

There is nothing in the base prospectus (SEDAR, “National Bank”, October 5, Final short form prospectus – English) that speaks to the existence of a Non Viability Contingent Capital (NVCC) clause, so we shall just have to wait for the supplement.