Capital Power Corporation has announced:
that it will issue 5,000,000 Cumulative Rate Reset Preference Shares, Series 1 (the “Series 1 Shares”) at a price of $25 per Series 1 Share (the “Offering”) for aggregate gross proceeds of $125 million on a bought deal basis with a syndicate of underwriters, led by TD Securities Inc. and RBC Capital Markets.
The Series 1 Shares will pay fixed cumulative dividends of $1.15 per share per annum, yielding 4.60% per annum, payable on the last 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 five-year period ending December 31, 2015. The first quarterly dividend of $0.3308 per share is expected to be paid on March 31, 2011. The dividend rate will be reset on December 31, 2015 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 2.17%. The Series 1 Shares are redeemable by Capital Power, at its option, on December 31, 2015 and on December 31 of every fifth year thereafter.
Holders of Series 1 Shares will have the right to convert all or any part of their shares into Cumulative Floating Rate Preference Shares, Series 2 (the “Series 2 Shares”), subject to certain conditions, on December 31, 2015 and on December 31 of every fifth year thereafter. Holders of Series 2 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 2.17%, as and when declared by the board of directors of Capital Power.
The Offering is expected to close on or about December 16, 2010. 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 a portion of the outstanding balance under its credit facilities which were used to fund the acquisition of Island Generation and for general corporate purposes.
Standard & Poor’s, a division of the McGraw Hill Companies, Inc. (“S&P”) has assigned a preliminary rating of P-3 (High) for the Series 1 Shares and DBRS Limited (“DBRS”) has assigned a rating of Pfd-3 (low) for the Series 1 Shares.
The Series 1 Shares will be issued pursuant to a short form prospectus that will be filed with securities regulatory authorities in Canada. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.
Looks expensive to me.
Update: DBRS assigns Pfd-3(low) rating:
Update, 2010-12-2: Note that CPX should be considered the same name as CZP for purposes of issuer concentration calculation, due to the close relationship between the companies:
CPI Income Services Ltd., the general partner of the Partnership (the General Partner), is responsible for management of the Partnership. The General Partner is a wholly-owned subsidiary of CPI Investments Inc. (Investments). EPCOR Utilities Inc. (collectively with its subsidiaries, EPCOR) owns 51 voting, non-participating shares of Investments and Capital Power Corporation (collectively with its subsidiaries, CPC) indirectly owns 49 voting, participating shares of Investments.
…
During the nine months ended September 30, 2010, the Partnership made cash distributions to CPC in the amount proportionate to its ownership interest. At September 30, 2010, CPC owned 29.8% of the Partnership’s units (30.6% at September 30, 2009).
The Company’s power generation operations and assets are owned by Capital Power LP (CPLP), a subsidiary of the Company. At September 30, 2010, the Company held approximately 21.75 million general partnership units and one common limited partnership unit of CPLP which represented approximately 27.8% and zero %, respectively, of CPLP, and EPCOR held 56.625 million exchangeable limited partnership units of CPLP (exchangeable for common shares of Capital Power on a one-for-one basis) representing approximately 72.2% of CPLP. The general partner of CPLP is wholly-owned by Capital Power and EPCOR’s representation on the Board of Directors does not represent a controlling vote. Accordingly, Capital Power controls CPLP and the operations of CPLP have been consolidated for financial statement purposes.
The assets used in the operating business of the Company are primarily held through CPLP and its subsidiary entities. The interests held by the Company outside CPLP are not material to the Company’s consolidated operations, assets, liabilities and operating business or the Company’s consolidated financial statements and are primarily a consequence of the Company’s organizational structure.
EPCOR, the power utility owned by the city of Edmonton, Alberta, plans to sell about $200 million (US$200 million) worth of stock in Capital Power Corp, a company it created through the spinoff of its generating assets in May last year.
Capital Power Corp and EPCOR said the offering would see 8,334,000 common shares of Capital Power sold at $24.00 each. The offering was to be handled by a syndicate of underwriters led by RBC Capital Markets and TD Securities Inc.
After the offering, EPCOR will indirectly own 61.6 percent of the common shares of Capital Power.
Underwriters have an option to purchase up to an additional 1,250,000 common shares at the price for further proceeds of about $30 million.
TDS.PR.B Redeemed; Refunded by TDS.PR.C
Monday, November 15th, 2010TD Split Inc. has announced:
There is no prospectus I can find on the company’s website, so I had to go to SEDAR.
The coupon on TDS.PR.C is 4.75%, or $0.475 p.a., paid quarterly in MJSD.
The provisional DBRS rating is Pfd-2(low).
There’s a monthly retraction, but it’s pretty horrible: the formula is (95%NAV – C – 1) which means that, effectively, there’s no point contemplating monthly retraction. There’s an Annual Retraction Date every November 15, but only for Capital Unitholders (who may also submit a preferred simultaneously to get full NAV, if they wish).
The issue matures 2015-11-15 at $10.00. The company can exercise calls at $10.00 to offset Capital Unit retractions on every Annual Retraction Date, or if net assets falls below $15-million.
There’s no NAV test per se, but company will only distribute income to the extent that it receives dividends on its TD holdings.
TDS.PR.B was tracked by HIMIPref™ but was relegated to the Scraps index on volume concerns. It was last mentioned on PrefBlog when it was upgraded to Pfd-2(low) by DBRS. TDS.PR.C will be tracked by HIMIPref™ and will be initially assigned to the SplitShares index, although I suspect it will eventually get relegated as well.
Update: DBRS confirms at Pfd-2(low).
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