PrefBlog

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:

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.

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.

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:

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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,

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:

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Due to total lack of communication from Enbridge, it was necessary for me to write an eMail:

Subject: ENB.PR.B

I understand that this issue will reset on June 1, 2017.

What will be the dividend reset rate? Where may I find a copy of the news release?

Sincerely,

Enbridge’s Investor Relations department replied (emphasis added):

Thank you for your email and interest in Enbridge.

We are rolling both the Series B (ENB.PR.B) and Series J (ENB.PR.U) preferred shares.

The deadline for the registered shareholder, CDS & Co., to provide notice of exercise of the right to convert Series B Preference Shares into Series C Preference Shares is 5:00 p.m. (Toronto time) on May 17, 2017.
The annual dividend rate applicable to the Series B (ENB.PR.B) Preference Shares for the five-year period from and including June 1, 2017 to but excluding June 1, 2022 will be 3.415%, being equal to the 5-year Government of Canada bond yield determined as of May 2, 2017, plus 2.40%, as determined in accordance with the terms of the Series B Preference Shares.

The dividend rate applicable to the Series C Preference Shares for the 3-month floating rate period from and including June 1, 2017 to but excluding September 1, 2017 will be 0.744% (2.950% on an annualized basis), being equal to the sum of the three month Government of Canada treasury bills, plus 2.40%, on an actual/366 day count basis, as determined in accordance with the terms of the Series C Preference Shares (the “Floating Quarterly Dividend Rate”). The Floating Quarterly Dividend Rate will be reset every quarter and registered holders will be provided with notice thereof.

The deadline for the registered shareholder, CDS & Co., to provide notice of exercise of the right to convert Series J Preference Shares into Series K Preference Shares is 5:00 p.m. (Toronto time) on May 17, 2017.

The annual dividend rate applicable to the Series J Preference Shares (ENB.PR.U) for the five-year period from and including June 1, 2017 to but excluding June 1, 2022 will be 4.887%, being equal to the 5-year United States treasury bond yield determined as of May 2, 2017, plus 3.05%, as determined in accordance with the terms of the Series J Preference Shares.

The dividend rate applicable to the Series K Preference Shares for the 3-month floating rate period from and including June 1, 2017 to but excluding September 1, 2017 will be 0.978% (3.880% on an annualized basis), being equal to the sum of the three month United States Government treasury bills, plus 3.05%, on an actual/366 day count basis, as determined in accordance with the terms of the Series K Preference Shares (the “Floating Quarterly Dividend Rate”). The Floating Quarterly Dividend Rate will be reset every quarter and registered holders will be provided with notice thereof.

On May 4th, 2017 a notification was sent out by the CDS (Clearing and Depository Services Inc.) to brokerage firms for both the Series B (ENB.PR.B) and Series J (ENB.PR.U) via email, bulletin link or swift notification which outlined the reset terms of these preferred series.

Under the terms of the prospectus, we fulfilled our obligation to notify CDS at which point the information is distributed to participants. The CDS notification included the fixed and floating reset rates.

Kind Regards,

Note that the deadline to advise the company if you wish to convert holdings of ENB.PR.B is 5:00 p.m. (Toronto time) on May 17, 2017..

I will have post a recommendation regarding such a conversion on Friday May 12.

I consider it an absolute disgrace that Enbridge holds its preferred shareholders in such disdain that it refuses to issue a press release to advise them of the rate and deadlines. Virtually every other company with FixedResets outstanding does so as a matter of course.

Fairfax could not be bothered to issue a press release to let its financers know what’s going on, but today I contacted their investor relations department and spoke to a man whose ghastly job is to speak to people like me.

Insufficient shares were tendered to allow the conversion to proceed, but the precise number tendered is some kind of Top Secret corporate intelligence. If the Russians were to be found out – or the Chinese! – the pillars of western capitalism would be imperilled.

Assiduous Readers will remember that I recommended against conversion after the reset to 4.671% for FFH.PR.K.

So FFH.PR.K is now a FixedReset, 4.671%+351. It is tracked by HIMIPref™ but is relegated to the Scraps sub-index on credit concerns.

I have complained a few times recently (for instance, here and here) about the lack of internet presence of Brookfield Office Properties Inc., a subsidiary of Brookfield Property Partners L.P.; today, I actually did something about it and contacted Matthew Cherry, their Vice President, Investor Relations and Communications, asking about the location of their press releases.

He was kind enough to refer me to the proper page on http://www.bpoinvestor.com.

Great! So now we can look up press releases for BPO, as long as we remember the name of their website! The next step is to convince Brookfield to put links to this site on Brookfield.com in some kind of logical manner and then we’ll be cooking with gas!

BPO has the following preferred share issues outstanding: BPO.PR.A, BPO.PR.C, BPO.PR.E, BPO.PR.J, BPO.PR.K, BPO.PR.N, BPO.PR.P, BPO.PR.R, BPO.PR.S, BPO.PR.T, BPO.PR.W, BPO.PR.X and BPO.PR.Y.

Fairfax Financial Holdings Limited has announced:

That’s right, nothing regarding the conversion and listing of FFH.PR.H, which is the same stunt they pulled when FFH.PR.F was listed.

So, I am left to report that FFH.PR.G is a FixedReset, currently 3.318%+256. Its Strong Pair is FFH.PR.H, a FloatingReset paying three month bills +256bp, reset quarterly. Both issues will be tracked by HIMIPref™, both relegated to the Scraps index on credit concerns.

The Toronto Stock Exchange reports that there are 2,567,048 shares of FFH.PR.H outstanding and 7,432,952 of FFH.PR.G; since there were 10-million shares of FFH.PR.G originally issued, we can say that the conversion rate was 26% after my recommendation not to convert.

Vital statistics are:

No shares of FFH.PR.H traded today (consolidated exchanges) and the closing quote was 13.70-23.00, so nothing about the pricing can be taken too seriously! However:

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The FFH.PR.G / FFH.PR.H pair implies an average three month bill rate over the next five years of +1.03%, so far above the average it is off the charts.

I have learned that ALA.PR.A will reset at 3.38%.

ALA.PR.A is a FixedReset with a spread of 266bp over five-year Canadas, which commenced trading August 19, 2010 after being announced August 10, 2010. The original coupon was 5.00%, so the reset rate of 3.38% represents a decline of 32%. Hey, by recent 40%+ standards, that looks good!

Holders have the option to convert into a FloatingReset, and this option must be exercised prior to 5pm, September 15 before vanishing until the next reset date in 2020. Recent market conditions have been highly unfavourable for FloatingResets and it is likely that I will recommend against conversion. However, conditions can change dramatically and rapidly and I will wait until September 10 to make a more formal recommendation.

Note that the September 15 notification date is for notification of the company, and brokers will generally have an internal deadline a day or two prior to this … so if you’re planning to wait until the last minute, contact your broker and find out precisely when the last minute will be!

I complained yesterday about the lack of information made available by the company and sent them an eMail. AltaGas’ Investor Relations department refused to answer my question directly and instead gave me contact information for a third party not employed by AltaGas, expressing the pious hope that he “may be able to assist.”

AltaGas’ Investor Relations department must be the most totally useless public company department on earth.

To my surprise and irritation, the reset rate on ALA.PR.A has not yet been announced.

The company’s preferred share page has a link to the Prospectus Supplement for the issue, but this link takes one to SEDAR, so I can’t provide a direct link to the document myself. The regulators are doing a fine job of making access to public documents inconvenient to the investor-scum elements of the public!

However, the relevant parts of the Supplement are:

“Initial Fixed Rate Period” means the period from and including the date of issue of the Series A Shares to, but excluding, September 30, 2015.
…
“Subsequent Fixed Rate Period” means, for the initial Subsequent Fixed Rate Period, the period from and including September 30, 2015 to, but excluding, September 30, 2020, and for each succeeding Subsequent Fixed Rate Period means the period from and including the day immediately following the last day of the immediately preceding Subsequent Fixed Rate Period to, but excluding, September 30 in the fifth year thereafter.
…
“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.
…
On each Fixed Rate Calculation Date, AltaGas shall determine the Annual Fixed Dividend Rate for the ensuing Subsequent Fixed Rate Period. Each such determination shall, in the absence of manifest error, be final and binding upon AltaGas and upon all holders of Series A Shares. AltaGas shall, on each 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 A Shares.
…
The Series A Shares and Series B Shares will be issued in “book entry only” form and must be purchased or transferred through a participant in the CDS depository service (“CDS Participant”). AltaGas will cause a global certificate or certificates representing any newly issued Series A Shares or Series B Shares to be delivered to, and registered in the name of, CDS or its nominee.

So Altagas has fulfilled the letter of their obligation by sending a billet-doux to CDS, which is:

a wholly owned subsidiary of TMX Group Limited
(TMX Group)

which in turn is substantially owned by:

Each of CIBC World Markets Inc., National Bank Financial & Co. Inc., Scotia Capital Inc., and TD Securities Inc., either directly or through an affiliate, has agreed to maintain a specified minimum ownership interest in TMX Group for a period of five years from September 14, 2012. For the year ended September 14, 2013, each of these investors were required to own at least 6.25%, and for each of the four following years, each of these investors must own at least 5.625%, of our common shares outstanding as
at September 14, 2012″

Assiduous Readers will remember the July 4, 2012 report that the regulators had agreed to permit an extension of the banking oligopoly’s hegemony over the Canadian financial system in return for something the regulators consider very important: extra payments to the regulators.

So what it all boils down to is: investors are scum. If you want to know what the reset rate on ALA.PR.A is, your best bet is to ‘phone your friendly (and probably bank-owned) broker and, after listening to a pitch for GICs while you’re on hold for half an hour, ask your friendly Customer Service Rep if they wouldn’t mind telling you the reset rate on this issue, provided it doesn’t interfere with lunch or anything.

However, hope springs eternal and I have sent the following missive to AltaGas Investor Relations:

Sirs,

It is my understanding from the prospectus supplement that the dividend rate for ALA.PR.A for the period September 30, 2015, to September 29, 2020, has been determined.

What is the new dividend rate?

Will there be any kind of announcement or notification on your website?

Sincerely,