PrefBlog

The captioned series of Brookfield Properties Corp. Cl AAA Preferred shares will be voting on June 3 on a Plan of Arrangement. The company has published the Management Proxy Circular.

BPO.PR.U is USD denominated. We won’t worry about that.

In a nutshell:

The BPO Convertible Preferred Shares (being the BPO Preferred Shares, Series G, H, J and K) are currently convertible at the option of BPO into BPO Common Shares and redeemable for cash. In addition, starting on September 30, 2015, December 31, 2015, December 31, 2014 and December 31, 2016, respectively, each of the four series of BPO Convertible Preferred Shares will be convertible at the option of the holders into BPO Common Shares. If a holder exercises its conversion right, BPO has the overriding right to exercise its redemption right and redeem the shares for cash. In connection with the acquisition of the remaining BPO Common Shares and delisting from the TSX and NYSE, holders of outstanding BPO Convertible Preferred Shares are being given the option to elect either:

(a) to exchange their BPO Convertible Preferred Shares for BOP Split Senior Preferred Shares, subject to minimum listing requirements and a maximum of 1,000,000 BOP Split Senior Preferred Shares issued per series, pro-rated as set out in herein, or

(b) to continue holding their BPO Convertible Preferred Shares, the conditions of which will be modified in order to provide for the BPO Convertible Preferred Shares to be exchangeable into BPY Units rather than convertible into BPO Common Shares.

The BOP Split Senior Preferred Shares have been structured to provide a holder thereof with economic terms that are substantially equivalent to those of the BPO Convertible Preferred Shares. The four series of BOP Split Senior Preferred Shares will each have the same dividend and redemption rights as the corresponding series of BPO Convertible Preferred Shares. However, in lieu of being convertible into BPO Common Shares, the BOP Split Senior Preferred Shares will be retractable at any time by the holder. For further information on the BOP Split Senior Preferred Shares, see ‘‘— BOP Split Senior Preferred Shares’’.

With respect to the BPO Split Senior Preferred Shares, conversion will take place for each series only if at least 80,000 shares are converted, and only up to a limit of 1,000,000 shares. The following share numbers are now outstanding:

Clearly, therefore, most of the shares will be modified, as in option (b), above, and be convertible into BPY Units rather than convertible into BPO Common Shares.

So what’s interesting is option (a): should holders seek conversion into the Split Corp?

The interesting part of the deal is that

Each BOP Split Senior Preferred Share will be fully and unconditionally guaranteed, jointly and severally, by the Guarantors, including BPO, as to (i) the payment of dividends, as and when declared, on the BOP Split Senior Preferred Shares, (ii) the payment of amounts due on redemption of the BOP Split Senior Preferred Shares, and (iii) the payment of the amounts due on BOP Split Senior Preferred Shares on the liquidation, dissolution and winding-up of BOP Split (the ‘‘BOP Split Senior Preferred Share Guarantee’’). The BOP Split Senior Preferred Share Guarantee will be subordinated to all of the respective senior and subordinated debt of the Guarantors that is not expressly stated to be pari passu with or subordinate to the BOP Split Senior Preferred Share Guarantee and will rank senior to the equity securities of the Guarantors.

… and the Split Corp Preferred will be retractible:

Retraction

Subject to the restrictions imposed by applicable law, each series of the BOP Split Senior Preferred Shares is retractable by the holder at any time for the following amounts:

Series 1 [was BPO.PR.U]: $23.75 per share if redeemed before September 30, 2015 and $25.00 per share if redeemed thereafter;
Series 2 [was BPO.PR.H]: C$23.75 per share if redeemed before December 31, 2015 and C$25.00 per share if redeemed thereafter;
Series 3 [was BPO.PR.J]: C$23.75 per share if redeemed before December 31, 2014 and C$25.00 per share if redeemed thereafter;
Series 4 [was BPO.PR.K]: C$23.75 per share if redeemed before December 31, 2016 and C$25.00 per share if redeemed thereafter;

together with all accrued and unpaid dividends to the applicable retraction date. Retraction payments will be made on or before the last day of each month provided that the certificate(s) representing the BOP Split Senior Preferred Shares have been surrendered for retraction at least one business day before the last day of the preceding month.

What to decide? Holders of the split-shares will have the option of retraction prior to the scheduled date at 23.75, which will be a loss, but might conceivably come in useful if the company gets into extremely serious trouble in the extremely short term. This isn’t too likely, but the protection doesn’t cost any money. So that’s a plus.

It will likely cost liquidity, though, since a maximum of 1-million shares of each series will be outstanding – these things are going to trade by appointment only; therefore, those to whom liquidity is important should retain their BPO Convertible Preferred Shares. Additionally, those with small holdings and high transaction costs should also retain their BPO Convertible Preferred Shares, since there is a good chance they will be left holding some of each issue if the maximum conversion amount is reached. So these are minuses.

I make no recommendation. The decision will depend on each holders desire for a (miniscule) extra amount of credit protection (with the early retraction privilege) vs. what could potentially be a very severe loss of liquidity.

Enbridge Inc. has announced:

it has closed its previously announced public offering of Cumulative Redeemable Preference shares, Series 5 (Series 5 Preferred Shares) by a syndicate of underwriters led by CIBC, RBC Capital Markets, Scotiabank, and TD Securities Inc. Enbridge issued 8 million Series 5 Preferred Shares for gross proceeds of USD $200 million. The Series 5 Preferred Shares will begin trading on the TSX today under the symbol ENB.PF.V. Proceeds will be used to partially fund capital projects, reduce existing indebtedness and for other general corporate purposes of the Corporation and its affiliates.

ENB.PF.V is a US-Pay FixedReset, 4.40%+282, announced September 19.

The issue traded 694,445 shares today in a wide range of 24.00-80, closing at 24.26-44, 4×12. It appears that the market agrees with my announcement-day assessment that the new issue was grossly overpriced!

ENB.PF.V will not be tracked by HIMIPref™, as it is US-Pay. There are insufficient USD denominated issues to make it possible to construct a continually optimized portfolio from a stable universe.

FirstService Corporation has announced:

plans to simplify its capital structure by eliminating all of its 7% Cumulative Preference Shares, Series 1 (the “Preferred Shares”) and to pay a dividend on its Subordinate Voting Shares and Multiple Voting Shares (together, the “Common Shares”). All amounts are in US dollars.

Currently, there are 5,230,634 Preferred Shares outstanding. The Preferred Shares will be eliminated on May 3, 2013 (the “Redemption Date”) in a two-step process. First, there will be a partial redemption for cash of 1,569,190 Preferred Shares (representing 30% of the outstanding Preferred Shares) on a pro rata basis for $25.00 per share plus accrued and unpaid dividends of $0.1582 per share, net of any tax required to be deducted or withheld by FirstService. Second, immediately following the partial redemption, the balance of 3,661,444 Preferred Shares (representing 70% of the initially outstanding Preferred Shares) will be converted by FirstService into Subordinate Voting Shares. A Notice of Redemption and Conversion has been mailed to holders of Preferred Shares in accordance with the terms of Preferred Shares.
…
Partial Redemption of Preferred Shares

On May 3, 2013, 1,569,190 Preferred Shares will be redeemed by FirstService for $25.00 per share plus accrued and unpaid dividends of $0.1582 per share, net of any tax required to be deducted or withheld by FirstService (the “Redemption Price”), for expected total redemption consideration of $39.5 million. The accrued and unpaid dividends reflect the period of March 31, 2013 to the day prior to the redemption date. The Preferred Shares to be redeemed will be selected on a pro rata basis (disregarding fractions).

Conversion of Preferred Shares Remaining after Partial Redemption

On May 3, 2013, immediately after the partial redemption of the Preferred Shares, the remaining 3,661,444 Preferred Shares will be converted into fully paid, non-assessable and freely tradable Subordinate Voting Shares of FirstService. The number of Subordinate Voting Shares to be received for each Preferred Share converted is determined in accordance with a formula set out in the terms of the Preferred Shares, wherein the Redemption Price of each Preferred Share is divided by 95% of the weighted average trading price of the Subordinate Voting Shares traded on NASDAQ for the twenty consecutive trading days ending on the fourth day prior to the conversion date. No fractional Subordinate Voting Shares will be issued. FirstService will satisfy any such fractional interest with a payment based on the market price of such fractional interest. FirstService expects that, based on current trading prices, approximately 3.0 million Subordinate Voting Shares will be issued on the conversion, resulting in a total of approximately 31.8 million Subordinate Voting Shares outstanding following the conversion. The Preferred Shares will be de-listed from trading on the TSX at the close of trading on the Redemption Date.

The formal notice of redemption and conversion is also available on FirstService’s website.

FSV.PR.U was last mentioned on PrefBlog when DBRS put the rating on Review-Developing in 2008. DBRS discontinued the rating in 2010.

The common stock, FSV, is now trading in the range of $34.00, implying that preferred shareholders will receive approximately 0.75 subordinate voting shares per preferred – not bad, since the preferreds were distributed as a stock dividend on the basis of one preferred for every five SVS in 2007.

FSV.PR.U has not been tracked by HIMIPref™.

Nexen Inc. has announced:

that CNOOC Limited has completed its acquisition of the Company. Pursuant to the plan of arrangement (the “Arrangement”) holders of Nexen common shares will receive cash proceeds of US $27.50, without interest, and holders of Nexen preferred shares will receive cash proceeds of CAD $26.00, plus accrued and unpaid dividends up to, but excluding, the closing date of the Arrangement, without interest.

Kevin Reinhart will continue as CEO of Nexen and will maintain responsibility for all of Nexen’s operations. The Company’s Calgary headquarters will continue to be responsible for managing all of Nexen’s existing assets as well as CNOOC Limited’s North and Central American assets.

Nexen’s common and preferred shares are expected to be delisted from the Toronto Stock Exchange (the “TSX”) in a few trading days. Nexen’s common shares are expected to cease being traded on the NYSE prior to the market opening on February 26, 2013, and will subsequently be delisted.

With respect to NXY.PR.U, they have also announced:

that, in accordance with the terms of the indenture (the “Trust Indenture”) governing Nexen’s outstanding US$460 million aggregate principal amount of 7.35% Subordinated Notes due 2043 (the “Subordinated Notes”), Nexen has exercised its right to redeem all of the outstanding Subordinated Notes for a cash amount equal to $1,000 per $1,000 principal amount of Subordinated Notes, plus accrued and unpaid interest up to, but excluding, the redemption date. Nexen will complete the redemption of such Subordinated Notes on March 28, 2013 (the “Redemption Date”). Following the Redemption Date, holders of Subordinated Notes will have no further rights or entitlements under the Subordinated Notes or the Trust Indenture other than to receive the redemption price described above. Prior to the Redemption Date, Nexen will deposit with Deutsche Bank Trust Company Americas (the “Trustee”), the trustee under the Trust Indenture, funds sufficient to pay the total redemption amount payable to holders of redeemed Subordinated Notes.

A redemption notice will be sent to the registered holder of the Subordinated Notes today by the Trustee.

The Subordinated Notes are listed and traded on the TSX and NYSE under the symbols NXY.PR.U and NXY.PRB, respectively. Nexen intends to delist the Subordinated Notes from the TSX and NYSE as soon as possible following the Redemption Date.

The Plan of Arrangement with respect to NXY.PR.A has been reported on PrefBlog.

The particulars of NXY.PR.U were also discussed on PrefBlog.

Artis Real Estate Investment Trust has announced:

that it has closed its previously announced marketed public offering (the “Financing”) of Cumulative Rate Reset Preferred Trust Units, Series C, (“the Series C Units”). Pursuant to the Financing, Artis issued 3.0 million Series C Units at a price of US$25 per Series C Unit for gross proceeds to Artis of US$75,000,000.

The Financing was underwritten by a syndicate led by RBC Capital Markets, CIBC and Macquarie Capital Markets Canada Ltd.

Artis intends to use the net proceeds from the Financing to repay indebtedness, fund future acquisitions, and for general trust purposes.

AX.PR.U is a FixedReset, 5.25%+446, announced September 11. The issue will not be tracked by HIMIPref™.

The issue traded 286,270 shares today in a range of 24.90-01 before closing at 25.00-01, 5×50.

AltaGas has announced:

it has closed its previously announced public offering of 8,000,000 Cumulative Redeemable Five-Year Fixed Rate Reset Preferred Shares, Series C (the “Series C Preferred Shares”) at a price of US$25.00 per Series C Preferred Share (“the Offering”) for aggregate gross proceeds of US$200 million. The previously announced underwriters’ option to purchase an additional 2,000,000 Series C Preferred Shares at a price of US$25.00 per share was exercised in full.

The Offering was first announced on May 29, 2012 when AltaGas entered into an agreement with a syndicate of underwriters, co-led by RBC Capital Markets, CIBC and Scotiabank.

Net proceeds will be used to reduce outstanding indebtedness and for general corporate purposes.

The Series C Preferred Shares will commence trading today on the Toronto Stock Exchange under the symbol ALA.PR.U.

ALA.PR.U is a FixedReset, US-Pay, 4.40%+358, announced May 29. The issue traded 402,860 shares today in a range of 24.35-60 before closing at 24.45-49, 20×1.

ALA.PR.U will not be tracked by HIMIPref™ as there are insufficient USD issues available to form a coherent universe.