Archive for the ‘Better Communication, Please!’ Category

FTS.PR.H To Reset At 1.835%

Friday, May 8th, 2020

Fortis Inc. has announced (although only on its share information page, not as a press release because these people really are useless):

On June 1, 2020, the quarterly dividend rate to be paid on each Series H Preference share will decrease to $0.11469 from $0.15625, translating into a decrease in the annual dividend rate per share to $0.45876 from $0.6250, due to the reset of the annual dividend on June 1, 2020, under the dividend rate reset provisions applicable to this series.

FTS.PR.H was issued a FixedReset, 4.25%+145, that commenced trading 2010-1-26 after being announced 2010-1-11. In 2015 it reset to 2.50% amid great secrecy as they prefer to maintain selective disclosure through the old boys’ club.

AZP.PR.B / AZP.PR.C : Net Conversion of 12% to FixedResets

Friday, January 3rd, 2020

AZP.PR.B used to be CZP.PR.B, which used to be EPP.PR.B, and throughout these changes was a FixedReset, 7.00%+418, which commenced trading 2009-11-2 after being announced 2009-10-13. You can’t tell your players without a programme! Notice of extension was provided in November, 2014, and it reset to 5.57% effective 2014-12-31. I recommended in favour of conversion and the conversion rate was 42%. The company announced the extension to 2024 on 2019-11-14. An erroneous announcement of a reset to 5.67% was announced 2019-12-2 but it was later announced that AZP.PR.B will reset at 5.739% effective January 1, 2020.

AZP.PR.C resulted from the partial conversion of AZP.PR.B and commenced trading 2014-12-31.

Atlantic Power can’t be bothered to issue a press release or otherwise indicate on their website just what the results of the conversion option were (just like 2014), but there is information available on TMXMoney, maybe.

According to the TMX Money page for AZP.PR.C (the FloatingReset), there are 1,077,391 shares outstanding (down from 1,661,906). There are reporting 2,504,131 AZP.PR.B outstanding (up from 2,338,094).

In its 2018 Annual Financial Statements (inconveniently available via SEDAR with a search for “Atlantic ower Corporation Feb 28 2019 18:10:49 ET Audited annual financial statements – English PDF 2381 K”, since neither the company nor the regulators want you reading this stuff – who do you think you are?) the company states:

We also purchased and cancelled 5,000 and 164,790 of the Series 2 and 3 Shares at Cdn$17.99 and Cdn$17.89 per share for Cdn$0.1 million and Cdn$2.9 million, respectively for a total cost of $8.0 million. A $7.9 million gain on the redemption was recorded as a component of income attributable to preferred shares of a subsidiary company in the year ended December 31, 2018. From December 31, 2018 through February 27, 2019, we purchased the maximum limit of 427,500 shares of Series 1 Preferred Shares, 27,777 of Series 2 Preferred Shares and the maximum limit of 148,311 Series 3 Preferred Shares at a total cost of Cdn$9.2 million

… so obviously the company knows a bargain when it sees one! If only they were more prolific with their press releases!

So the 2014-12-31 proportion of AZP.PR.B was 58% and the 2019-12-31 proportion is 70%. So call it a net conversion to FixedResets of 12%.

So that’s a conversion rate of about 42%. In my post just before the decision deadline, I recommended conversion.

Fortis Tight-Lipped Regarding Apparent FTS.PR.K Reset Rate Discrepancy

Friday, March 8th, 2019

In the post FTS.PR.K : No Conversion to FloatingReset, I noted:

My eMail of inquiry – sent on three successive days – also included the question:

The 3.925% rate for FTS.PR.K implies that the five-year Canada rate, as defined in the prospectus, was 1.875%, whereas your competitors’ calculations implied that this rate was 1.879%. For greater certainty, please confirm the exact date and time for which you obtained the relevant rate from Bloomberg.

Fortis Investor Relations tells me they’ll be getting back to me.

This question was triggered by the earlier observation:

It is of interest to note that the Government of Canada 5-Year yield implied by this rate is 1.875%, whereas the rates of the resets for PPL.PR.C, ENB.PR.P and ENB.PR.J each imply a rate of 1.879%. As far as I can tell, the methodology for getting each of the four rates is identical and specified to be at the same time on the same day. Once Fortis has published the rate officially, I’ll ask them about it. I don’t think it’s just a rounding difference – from the prospectus:

“Annual Fixed Dividend Rate” means, for any Subsequent Fixed Rate Period, the rate of interest (expressed as a percentage rounded to the nearest one hundred-thousandth of one percent (with 0.000005% being rounded up)) equal to the sum of the Government of Canada Bond Yield on the applicable Fixed Rate Calculation Date plus 2.05%.

All of this followed their very unusual selective disclosure of the reset rate to their friends in the brokerage industry.

So on the afternoon of March 6, having heard nothing from them in a week, I sent the following eMail to Fortis Investor Relations:

Have you yet been able to obtain the requested information confirming the effective date and time of the Government of Canada Five Year rate information obtained from Bloomberg?


This was sent again as a possible duplicate in the afternoon of March 7.

The response received in the afternoon of March 8 is:

Thank you for following-up on your request. I will check with the Treasury department again regarding your question.

I will be back in touch when I have the information.

Further updates of this saga will provided.

FTN.PR.A Dividend Rate is 5.50% until December 1, 2019

Tuesday, February 12th, 2019

It will be recalled that FTN.PR.A increased its dividend to 5.50% in September, 1997, effective for their fiscal year beginning December 1, 2017.

I am now advised by their Investor Relations department that:

The Company may reset the Preferred share rate with each fiscal year. Any change to the current rate must be announced no later than September 30th each year.

The Preferred share rate is subject to a minimum, established with any five year termination date extensions. The current minimum rate is 5.25% annually up until the December 1, 2020 termination date

The latest Annual Information Form (AIF) states that at a meeting held on May 14, 2014, shareholders gave their approval to allow the Company to have the “right” to establish the rate of dividends to be paid on the Preferred shares annually, commencing December 1, 2015.

The AIF further states the Company “may” determine the rate each fiscal year, thus a news release is only required if a change is made.

Therefore to clarify, the annual rate of 5.5% announced on September 29, 2017 (effective December 1, 2017), remains in place unless announced otherwise by a news release.

We do apologize for any confusion.

Well, it seems a little slap-dash to me. Their announcement of the boost specified an end-date and nothing about ‘until further notice’; none of their many press releases announce the decision.

But there you have it, they’ll continue to pay 5.50% at least until 2019-12-1. After that, nobody knows, but there is a minimum rate of 5.25% effective until maturity, 2020-12-1.

FTS.PR.K Reset Rate to Remain Secret

Monday, February 4th, 2019

I sent three eMails of inquiry (on 1/31, 2/1 and 2/4) to Fortis Investor Relations regarding the reset rate for FTS.PR.K:

Will the captioned security be redeemed? Or will the dividend rate be reset, with a conversion option? Will there be a press release, similar to the press releases of your competitors for capital, Enbridge and Pembina Pipelines, with respect to their issues resetting on the same date?

I finally got a reply today well after the close of business:

Good Evening Mr. Hymas,

Thank you for contacting Fortis Inc. Fortis does not intend to exercise its right to redeem all or any part of the currently outstanding Cumulative Redeemable Fixed Rate Reset First Preference Shares, Series K of the Corporation (the “Series K Shares”) on March 1, 2019.

Subject to certain conditions set out in the prospectus supplement of the Corporation dated July 9, 2013 to the base shelf prospectus of the Corporation dated May 10, 2012 relating to the issuance of the Series K Shares, the holders of the Series K Shares have the right to convert all or part of their Series K Shares, on a one-for-one basis, into Cumulative Redeemable Floating Rate First Preference Shares, Series L of the Corporation (the “Series L Shares”) on March 1, 2019 (the “Conversion Date”). This prospectus is on the Fortis website.

You should check CDS Advisory Bulletins for ongoing corporate actions relating to the conversion and/or redemption of Series K first preference shares. Furthermore, Fortis will be announcing the new dividend rate for the Series K upon the board of directors approval and declaration, which should occur around mid-February.

If you have any further questions please let me know.

There is a lot to complain about here.

First is the question of timing:

Fortis will be announcing the new dividend rate for the Series K upon the board of directors approval and declaration, which should occur around mid-February.

I note from the prospectus:

The holders of Series K First Preference Shares will have the right, at their option, to convert any or all of their Series K First Preference Shares into an equal number of Cumulative Redeemable Floating Rate First Preference Shares, Series L of the Corporation (the “Series L First Preference Shares”), subject to certain conditions, on March 1, 2019, and on March 1 every fifth year thereafter (each, a “Series K Conversion Date”).

The conversion of the Series K First Preference Shares may be effected by delivery to the Corporation of written notice thereof not earlier than the 30th day prior to, but not later than 5:00 p.m. (Toronto time) on the 15th day preceding, a Series K Conversion Date.

So March 1, 2019, is a Series K Conversion Date and the deadline for notification of conversion is the 15th day preceding this date, which is February 14, which is “around mid-February”. So the deadline for notification of conversion and the public announcement of the new rate will occur more or less simultaneously.

However, we may also note, from the prospectus, that:

“Fixed Rate Calculation Date” means, for any Subsequent Fixed Rate Period, the 30th day prior to the first day of such Subsequent Fixed Rate Period.

“Subsequent Fixed Rate Period” means, for the initial Subsequent Fixed Rate Period, the period commencing on March 1, 2019 to, but excluding, March 1, 2024 and, for each succeeding Subsequent Fixed Rate Period, the period commencing on the first day of March immediately following the end of the immediately preceding Subsequent Fixed Rate Period to, but excluding, March 1 in the fifth year thereafter.

The Corporation will, on the Fixed Rate Calculation Date, give written notice of the Annual Fixed Dividend Rate for the ensuing Subsequent Fixed Rate Period to the registered holders of the then outstanding Series K First Preference Shares.

So we may assume that Fortis has followed the letter of the prospectus and has already notified the “registered holders” of FTS.PR.K of the reset rate.

One thing sometimes forgotten when discussing “registered holders” nowadays is that there is usually exactly one registered holder: the depositary, which maintains accounts for each of its participants (brokerages) which in turn maintain accounts for each of their customers. This is called a “book based” system and is described in the prospectus, from which the following is extracted:

Except as otherwise provided below, the Series K First Preference Shares and the Series L First Preference Shares will be issued in a “book entry only” form and must be purchased or transferred through participants (“Participants”) in the depository service of CDS Clearing and Depository Services Inc. (“CDS”) or its nominee which include securities brokers and dealers, banks and trust companies. On the Closing Date, the Corporation will cause a global certificate representing the Series K First Preference Shares to be delivered to, and registered in the name of, CDS or its nominee. Except as otherwise provided below, no purchaser of Series K First Preference Shares or Series L First Preference Shares will be entitled to a certificate or other instrument from the Corporation or CDS evidencing that purchaser’s ownership, and no purchaser will be shown on the records maintained by CDS except through a book entry account of a Participant acting on behalf of the purchaser. Each purchaser of Series K First Preference Shares or Series L First Preference Shares will receive a customer confirmation of purchase from the registered dealer from which the Series K First Preference Shares or Series L First Preference Shares are purchased in accordance with the practices and procedures of the dealer. The practices of registered dealers may vary, but generally customer confirmations are issued promptly after execution of a customer order.

So what this means is that CDS has been notified, at which point Fortis has taken no further action to disseminate the information; refusing even to answer direct questions to their Investor Relations Department.

This is ridiculous. This is selective disclosure – perhaps not in law, but for all practical purposes this means that CDS (an entity controlled by the Toronto Stock Exchange) and the brokerages (who are “participants” in CDS) are getting notification of the news and are then advising clients at some later time when they damn well choose.

As far as interested investors and advisors are concerned, I’ve looked up how to get access to the CDS Advisory Bulletins:

The Advisory Bulletins service provides issuers an additional facility to communicate extraordinary details related to pending, ongoing or completed entitlements and corporate actions.

Delivery: Web, MT564/MT568 (ISO 15022)

Depending upon the nature of the message, the details of the bulletin will also be delivered via MT564 – Entitlements Notification and MT568 – Entitlements Narrative message.

Pricing: $1,125

Access the product sheet.

Contact us for pricing and other information

Non – CDS Participant Inquiries for CDS Innovation /TMX Datalinx

CDS Participant & Issuer Inquiries
Client Relationship Managers

I have written to the Exchange:

What is the cost to subscribe to the captioned service? May these bulletins be purchased individually?

There is nothing filed regarding this matter on SEDAR, that bastion of brokerage privilege. Fortis seems very eager to pad the profits of TMX Group Limited!

I’m sure Fortis is operating within the letter of the laws and regulations and I’m sure they’ve got large legal bills to prove it. But I consider the lack of immediate public disclosure – which is standard for its competitors, I can’t think of a single other exception to this practice off the top of my head – to be contrary to the spirit of the regulations.

Given the obsession of Fortis management with keeping this information strictly under wraps, to the extent of refusing to answer a direct question regarding the reset rate when selective disclosure has already been made, I am unable to publish a formal recommendation regarding whether FTS.PR.K security holders should convert or hold their shares.

New Issue: PVS Split Share, 4.90%, 7-year

Thursday, November 15th, 2018

It is my understanding that:

Partners Value Split Corp. has entered into an agreement to sell six million Class AA preferred shares Series 9 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 9 Preferred Shares will be issued at a price of $25.00 per share, for gross proceeds of $150,000,000 . The Series 9 Preferred Shares will carry a fixed coupon of 4.90% and will have a final maturity of February 28, 2026 . The Series 9 Preferred Shares have a provisional rating of Pfd-2 (low) from DBRS. The net proceeds of the offering will be used to redeem the Company’s outstanding Class AA preferred shares Series 3.

The Company has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase up to an additional 2,000,000 Series 9 Preferred Shares at the same offering price, which, if exercised, would increase the gross offering size to $200,000,000 . Closing of the offering is expected to occur on or about November 26, 2018.

Adil Mawani , Chief Financial Officer, will be available at (647) 503-6513 to answer any questions regarding the offering.

In line with the company’s usual contempt for the investors who provide it with capital, there is no press release published on the company’s web-page, nor is there any information available on Marketwired, where they have previously grudgingly published announcements, so it doesn’t appear that Adil Mawani has any greater desire to do a competent job than any of the other clowns at PVS. Feel free to call him and ask if the company will ever do something right.

Amazingly, there’s an actual term-sheet on SEDAR, searchable (but the regulators will get very upset if you link to it) with the description “Partners Value Split Corp. Nov 15 2018 13:29:09 ET Marketing materials – English PDF 16 K”.

There is also a provisional rating announcement from DBRS:

DBRS Limited (DBRS) assigned a provisional rating of Pfd-2 (low) to the Class AA Preferred Shares, Series 9 (the Series 9 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 3 (the Series 3 Preferred Shares); the Class AA Preferred Shares, Series 6 (the Series 6 Preferred Shares); the Class AA Preferred Shares, Series 7 (the Series 7 Preferred Shares); and the Class AA Preferred Shares, Series 8 (the Series 8 Preferred Shares; collectively, the Class AA Preferred Shares).

Proceeds from the Series 9 Preferred Share offering will be used to fund the redemption of the Series 3 Preferred Shares no later than their scheduled maturity date of January 10, 2019. The Series 9 Preferred Shares will be entitled to fixed quarterly cumulative preferential dividends on the expected issue price of $25.00. The maturity date for the Series 9 Preferred Shares is set to February 28, 2026.

The Company owns a portfolio (the Portfolio) of Class A Limited Voting Shares (the BAM Shares) of Brookfield Asset Management Inc. (BAM; rated A (low) with a Stable trend by DBRS). Dividends received from the Portfolio are used to fund the payment of interest on the Debentures to the extent that any have been issued and to fund the payment of dividends on the Class AA Preferred Shares. There were 700 Debentures issued on November 9, 2018, as a result of the retraction of 700 Series 8 Preferred Shares.

Holders of the Junior Preferred Shares, Series 1 (the Junior Preferred Shares) are entitled to receive quarterly noncumulative cash distributions at an annual rate of 5% when declared by the board of directors. There is $200 million worth of Junior Preferred Shares currently outstanding. Holders of the Capital Shares of the Company will only receive excess dividend income after interest on the Debentures, Class AA Preferred Share distributions, Junior Preferred Share Distributions and other Company expenses have been paid. Any capital appreciation of the BAM Shares will benefit the holders of the Capital Shares. All series of Class AA Preferred Shares rank senior to the Capital Shares, the Class AAA Preferred Shares and the Junior Preferred Shares and on a pari passu basis with all other Class AA Preferred Shares with respect to payment of dividends and repayment of principal.

The Company has issued a limited number of Class A Voting Shares that rank senior to the Class AA Preferred Shares in respect of capital upon the dissolution, winding up or insolvency of the Company. As of June 30, 2018, there were $100 worth of such shares outstanding.

Following the redemption of the Series 3 Preferred Shares, the downside protection available to the Class AA Preferred Shares is expected to be approximately 85% (based on the closing price of BAM shares as of October 29, 2018) and the dividend coverage ratio is expected to be approximately 2.0 times (x; based on the Canadian dollar and U.S. dollar exchange rate as of October 29, 2018). BAM declares its dividends in U.S. dollars; consequently, there is the risk that an appreciating Canadian dollar will cause the dividend coverage ratio to fall below 1.0x. In the event of a shortfall, the Company may sell some of the BAM Shares, engage in security lending or write covered call options to generate sufficient income to satisfy its obligations to pay the Class AA Preferred Shares dividends. If the Company chooses to lend its holdings, the Portfolio would be exposed to the potential losses in the event that the borrower defaults on its obligations to return the borrowed securities.

The main constraints to the ratings are the following:

(1) The downside protection available to holders of the Class AA Preferred Shares depends solely on the market value of the BAM Shares held in the Portfolio, which will fluctuate over time.

(2) There is a lack of diversification, as the Portfolio is entirely made up of BAM Shares.

(3) Changes in the dividend policy of BAM may result in reductions in Class AA Preferred Shares dividend coverage.

(4) As BAM declares dividends in U.S. dollars, the Company is exposed to foreign currency risk relating to the Canadian-U.S. exchange rate, specifically the appreciation of the Canadian dollar versus the U.S. dollar. This may have a negative impact on the dividend coverage ratio of the Class AA Preferred Shares, as these dividends are paid in Canadian dollars.

(5) Downside protection available to the Class AA Preferred Shares may be negatively affected by the retraction of the Junior Preferred Shares.

PVS.PR.F Soft on Modest Volume

Monday, September 18th, 2017

Partners Value Split Corp. has announced (although not yet on their website; maybe not ever on their website, since the lazy turds haven’t even published the new issue announcement yet):

the completion of its previously announced issue of 6,000,000 Class AA Preferred Shares, Series 8 (the “Series 8 Preferred Shares”) at an offering price of $25.00 per Series 8 Preferred Share, raising gross proceeds of $150,000,000. The Series 8 Preferred Shares carry quarterly fixed cumulative preferential dividends representing a 4.80% annualized yield on the offering price and have a final maturity of September 30, 2024. The Series 8 Preferred Shares have been listed and posted for trading on the Toronto Stock Exchange under the symbol PVS.PR.F. The net proceeds of the offering will be used to redeem the Company’s outstanding Class AA Preferred Shares, Series 5 (the “Series 5 Preferred Shares”) on December 10, 2017 in accordance with the terms of the Series 5 Preferred Shares and to pay a special dividend to holders of the Company’s capital shares.

Prior to the closing of the offering, the Company subdivided the existing capital shares held by Partners Value Investments Inc. so that there are an equal number of preferred shares and capital shares outstanding.

The Company owns a portfolio consisting of 79,740,966 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. is a global alternative asset manager with over US$250 billion in assets under management. For more than 100 years Brookfield has owned and operated assets on behalf of shareholders and clients with a focus on property, renewable energy, infrastructure and private equity. Brookfield has a range of public and private investment products and services which leverage its expertise and experience. Brookfield Shares are co-listed on the New York Stock Exchange under the symbol “BAM”, the TSX under the symbol “BAM.A” and the NYSE Euronext under the symbol “BAMA”.

David Clare, Vice President, will be available at (647) 503-6516 to answer any questions regarding the offering.

PVS.PR.F is a SplitShare, 4.80%, maturing 2024-9-30, announced 2017-09-07. It will be tracked by HIMIPref™ and has been assigned to the SplitShare subindex.

The issue traded 234,295 shares today in a range of 24.79-98 before closing at 24.93-94. Vital statistics are:

Maturity Type : Hard Maturity
Maturity Date : 2024-09-30
Maturity Price : 25.00
Evaluated at bid price : 24.93
Bid-YTW : 4.86 %

The issue’s rating has been finalized at Pfd-2(low) by DBRS:

DBRS Limited (DBRS) assigned a new rating of Pfd-2 (low) to the Class AA Preferred Shares, Series 8 (the Series 8 Preferred Shares) to be issued by Partners Value Split Corp. (the Company) and confirmed the ratings of the previously issued Class AA Preferred Shares, Series 3 (the Series 3 Preferred Shares); Class AA Preferred Shares, Series 5 (the Series 5 Preferred Shares); Class AA Preferred Shares, Series 6 (the Series 6 Preferred Shares); Class AA Preferred Shares, Series 7 (the Series 7 Preferred Shares; collectively, the Class AA Preferred Shares) at Pfd-2 (low).

Proceeds from the Series 8 Preferred Share offering will be used to fund the redemptions of the previously issued Series 5 Preferred Shares no later than their scheduled maturity date of December 10, 2017. To the extent that net proceeds from the offering exceed funding requirements associated with the redemptions, the Company will distribute such net proceeds to holders of the Capital Shares as a special dividend.

BBD.PR.B / BBD.PR.D : 32% Net Conversion to FixedFloater

Sunday, August 13th, 2017

Bombardier has made no explicit announcement regarding the results of the interconversion privilege between BBD.PR.B AND BBD.PR.D, possibly because doing so would require a fat government subsidy. However, we can determine what happened by comparing the figures disclosed in their 17Q2 report (or the 2016 Annual Report) with the “Shares Out” field published on the TMX website for BBD.PR.B and BBD.PR.D.

Calculation of Net Conversion
Shares Out Prior
(per 17Q2 report)
9,692,521 2,307,479
Shares Out Now
(per TMX)
5,811,736 6,188,264

Thus we see that there has been a net conversion of 3,880,785 shares from BBD.PR.B (the RatchetRate issue) to BBD.PR.D (the FixedFloater issue), which represents 32% of the total float.

It is also of interest to note that there is nothing on the Bombardier website or on SEDAR regarding the numbers of shares currently outstanding, or regarding the results of the conversion privilege, but the bank-dominated Toronto Stock Exchange knows all about it! This is similar to the selective disclosure noted with respect to the IAG.PR.G conversion results that the regulators are supposed to be so concerned about; but as long as their very important buddies and future employers at the banks are advised, it seems they feel actual investors can go to hell.

Assiduous Readers will recall that in my terminology, BBD.PR.B is a Ratchet Rate preferred, currently paying 100% of Prime, reset quarterly. BBD.PR.D is a FixedFloater which will now pay $0.99575 p.a., or 3.983% of its $25 par value. The latter rate resets every Exchange Date; the next exchange date will be 2022-8-1. Both issues have been relegated to the Scraps subindex since inception on credit concerns.

I previously made no recommendation regarding conversion, on the grounds that the issues were expected to trade at approximately the same price and that investors should choose the alternative best suited for their individual circumstances. The market has decided to make me look like an idiot, with BBD.PR.B being quoted at 10.21-42 and BBD.PR.D at 11.10-28 as of August 11, resulting in a break-even prime rate of 2.95% over the next five years; but we’ll see how long that lasts. It’s the lowest of all the FixedFloater / RatchetRate pairs at the moment:

Click for Big

IAG.PR.G : No Conversion to FloatingReset

Thursday, June 29th, 2017

Industrial Alliance Insurance and Financial Services Inc. has disclosed in an eMail response to my nine (count ’em, nine) inquiries:

Per our May 31 press release, since there were less than 1,000,000 shares to be converted into Series H, no Series H shares will be issued and all shares will remain in Series G, returning a 3.777% dividend rate.

We decided not to issue a press release. We informed CDS last week and the result should have been communicated through CDS. We certainly take note of your comment regarding peers issuing press release in that situation.

Please let me know if you have any questions.

Best regards,

This is pretty second-rate shareholder communication, although I have no doubt that it is legal. CDS? The company is relying on CDS, a bank-owned monopoly with basically no mandate or incentive to communicate with shareholders and entrusting it with the responsibility to promulgate corporate information? The idea is ridiculous.

We can look, for instance, at the SEC’s 2013 announcement regarding disclosures via Twitter (emphasis added):

The Securities and Exchange Commission today issued a report that makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information.

The SEC’s report of investigation confirms that Regulation FD applies to social media and other emerging means of communication used by public companies the same way it applies to company websites. The SEC issued guidance in 2008 clarifying that websites can serve as an effective means for disseminating information to investors if they’ve been made aware that’s where to look for it. Today’s report clarifies that company communications made through social media channels could constitute selective disclosures and, therefore, require careful Regulation FD analysis.

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” said George Canellos, Acting Director of the SEC’s Division of Enforcement. “Most social media are perfectly suitable methods for communicating with investors, but not if the access is restricted or if investors don’t know that’s where they need to turn to get the latest news.”

The fact that material disclosures of this nature can be made selectively to broker-members of CDS is a disgrace and is particularly obnoxious in that CDS’s immediate controller, the bank-owned Toronto Stock Exchange, has not publicized this information on their website listing for IAG.PR.G or, indeed, for IAG common. However, given that this selective disclosure favours the Big Banks, I’m not holding my breath while waiting for regulatory action.

Assiduous Readers will recall that IAG.PR.G will reset at 3.777% and should now be referred to as a FixedReset, 3.777%+285. I recommended against conversion.

IAG.PR.G commenced trading 2012-6-1 (and was, unusually, re-opened on 2012-6-19) after being announced 2012-5-24. It has been a member of the FixedReset subindex since inception.

As this issue is not NVCC compliant, it is analyzed as having a Deemed Retraction.

Update, 2017-6-30 : The eMail quoted above was from the company and received 2017-06-28. The following was received from the always efficient Computershare on 2017-06-30 (they got the same inquiries I sent to the company itself):

Thank you for your inquiry.

We confirm that Industrial Alliance announced on June 1st, 2017 the conversion of the Class A preferred shares series G (CUSIP 455871806) for preferred series H shares (CUSIP 455871889). However, since less than 1,000,000 series G shares were deposited no shares will be converted. Shareholders will continue to hold their series G shares. Industrial Alliance gave written notice to this effect to holders of series G shares on or around June 22nd, 2017.

If you have any questions, please do not hesitate to contact our National Customer Contact Centre at 888-838-1405 (outside North America at 514-982-7555) between 8:30am and 8:00pm EST from Monday to Friday and one of our agents will be pleased to assist you with your inquiry.

Note that the phrase “gave written notice to this effect to holders” is a very, very clever phrase that some people consider ethical: since IAG.PR.G is book-based, there is (in a very, very clever, lawyerly sense) exactly one holder – CDS. So hats off to the very, very clever people at Computershare!

Yours Sincerely,

ENB.PR.B : 8% Conversion To FloatingResets

Thursday, May 25th, 2017

In keeping with its policy of contempt for the preferred shareholders who provide a chunk of its financing, Enbridge has again decided not to publicize events related to its ENB.PR.B issue, its extension, reset and conversion privilege.

Assiduous Readers will recall that ENB.PR.B will reset to 3.415% effective 2017-6-1. It was issued as a 4.00%+240 FixedReset which commenced trading 2011-9-30 after being announced 2011-9-21.

An inquiry to Enbridge Investor Relations elicited the response:

Approximately 1.7 million Series B will be converted into Cs and those Cs will start to trade on the TSX on June 1.

It will be remembered that I recommended against conversion.

Market conditions with respect to FixedReset / FloatingReset equivalency have not changed significantly since my recommendation:

Click for Big