PrefBlog

Brompton Group has announced:

Life & Banc Split Corp. (TSX:LBS) (TSX:LBS.PR.A) (the “Company”) is pleased to announce it is undertaking an overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively).

The sales period for this overnight offering will end at 9:00 a.m. (ET) on Wednesday, June 20, 2018. The offering is expected to close on or about July 4, 2018 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (“TSX”).

The Class A Shares will be offered at a price of $9.80 per Class A Share for a distribution rate of 12.2% on the issue price, and the Preferred Shares will be offered at a price of $10.00 per Preferred Share for a yield to maturity of 4.9%.(1) The closing price on the TSX for each of the Class A and Preferred Shares on June 18, 2018 was $9.99 and $10.18, respectively. The Class A and Preferred Share offering prices were determined so as to be non-dilutive to the most recently calculated net asset value per unit of the Company (calculated as at June 18, 2018), as adjusted for dividends and certain expenses to be accrued prior to or upon settlement of the offering.

The Company invests in a portfolio (the “Portfolio”) consisting of common shares of the six largest Canadian banks and the four major publicly traded Canadian life insurance companies:

The Bank of Nova Scotia	Royal Bank of Canada
National Bank of Canada	Industrial Alliance Insurance and Financial Services Inc.
The Toronto-Dominion Bank	Great-West Lifeco Inc.
Canadian Imperial Bank of Commerce	Manulife Financial Corporation
Bank of Montreal	Sun Life Financial Inc.

The investment objectives for the Class A Shares are to provide holders with regular monthly cash distributions targeted to be $0.10 per Class A Share and to provide the opportunity for growth in the net asset value per Class A Share.

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions, currently in the amount of $0.11875 per Preferred Share, and to return the original issue price plus accrued dividends (if any) to holders of Preferred Shares on November 29, 2018.

On September 25, 2017 the Company’s board of directors approved an extension of the maturity date of the Class A and Preferred Shares of the Company for an additional term to October 30, 2023. The Preferred Share dividend rate for the extended term will be announced at least 60 days prior to the original November 29, 2018 maturity date. The new dividend rate will be determined based on market yields for Preferred Shares with similar terms.

The syndicate of agents for the offering is being led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial and Scotiabank.

LBS.PR.A also had a treasury offering last September.

LBS / LBS.PR.A had an NAVPU of 19.15 on June 14, so the offering price of 19.80 per Whole Unit is a premium of 3.9% – certainly not as big as we’ve ever seen, but any kind of premium at all for a mutual fund is good business!

Update, 2018-6-20 They raised just over $50-million:

Life & Banc Split Corp. (the “Company”) is pleased to announce a successful overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively). Gross proceeds of the offering are expected to be approximately $50.1 million. The offering is expected to close on or about July 4, 2018 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (the “TSX”). The Company has granted the Agents (as defined below) an over-allotment option, exercisable for 30 days following the closing date of the offering, to purchase up to an additional 15% of the number of Class A Shares and Preferred Shares issued at the closing of the offering.

Capital Power Corporation has announced (on June 18):

that after having taken into account all Election Notices following the June 15, 2018 conversion deadline, in respect of the Cumulative Rate Reset Preference Shares, Series 5 (Series 5 Shares) tendered for conversion into Cumulative Floating Rate Preference Shares, Series 6 (Series 6 Shares), the holders of Series 5 Shares were not entitled to convert their shares. There were approximately 236,824 Series 5 Shares tendered for conversion, which was less than the required one million shares required for conversion into Series 6 Shares.

There are eight million Series 5 Shares listed on the Toronto Stock Exchange (TSX) under the symbol CPX.PR.E. Effective June 30, 2018, the Annual Fixed Dividend Rate for the next five-year period has been reset to 5.23800%.

For more information on the terms of, and risks associated with an investment in the Series 5 Shares, please see Capital Power’s prospectus supplement dated March 7, 2013 which is available on sedar.com or on Capital Power’s website at capitalpower.com.

It will be recalled that CPX.PR.E will reset to 5.238% effective 2018-6-30 and will hence be referred to as a FixedReset, 5.238%+315.

CPX.PR.E is a FixedReset, 5.238%+315, that commenced trading 2013-3-14 at 4.50% after being announced 2013-3-5. It is tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

It will be further recalled that I recommended against conversion.

Brompton Group has announced (on June 7):

Global Dividend Growth Split Corp. (the “Company”) has determined the exchange ratios for the exchange option (the “Exchange Option”) with respect to its initial public offering. Under the Exchange Option, prospective purchasers could purchase Class A shares or Units (consisting of one Class A and one Preferred share) of the Company by an exchange of freely tradable equity securities (“Exchange Securities”) of the issuers listed below (the “Exchange Eligible Issuers”). The Exchange Option deadline was 5:00 p.m. on May 24, 2018.

The following table indicates the adjusted volume weighted average trading price (“Adjusted VWAP”) and exchange ratio for the Exchange Securities of each Exchange Eligible Issuer as calculated in the manner described in the Company’s prospectus dated May 23, 2018. The adjusted volume weighted average trading price and exchange ratios are rounded to four decimal places. Fractional Class A shares/Units will not be issued.

Company Name (Exchange Ticker Symbol)	CUSIP	ISIN	Adjusted VWAP (C$ Equiv.)	Exchange Ratio Per Class A Share	Exchange Ratio Per Unit
Global Equities
APPLE INCORPORATED (AAPL)	37833100	US0378331005	$249.4883	20.7734	11.3404
BCE (BCE)	05534B760	CA05534B7604	$54.4520	4.5339	2.4751
CARNIVAL CORPORATION (CCL)	143658300	PA1436583006	$79.9122	6.6538	3.6324
CISCO SYSTEMS INCORPORATED (CSCO)	17275R102	US17275R1023	$56.6722	4.7188	2.5760
ENBRIDGE (ENB)	29250N105	CA29250N1050	$40.3859	3.3627	1.8357
HSBC HOLDINGS (HSBC)	404280406	US4042804066	$63.6714	5.3015	2.8942
IBM CORPORATION (IBM)	459200101	US4592001014	$186.5488	15.5328	8.4795
INTEL CORPORATION (INTC)	458140100	US4581401001	$73.4187	6.1131	3.3372
JOHNSON & JOHNSON (JNJ)	478160104	US4781601046	$158.4643	13.1944	7.2029
JP MORGAN CHASE & CO. (JPM)	46625H100	US46625H1005	$141.7487	11.8026	6.4431
MANULIFE FINANCIAL (MFC)	56501R106	CA56501R1064	$24.6940	2.0561	1.1225
NOVARTIS AG (NVS)	66987V109	US66987V1098	$97.7830	8.1418	4.4447
PFIZER INCORPORATED (PFE)	717081103	US7170811035	$47.2153	3.9313	2.1462
PROCTER & GAMBLE CO. (PG)	742718109	US7427181091	$96.5067	8.0355	4.3867
SANOFI SA (SNY)	80105N105	US80105N1054	$50.0553	4.1678	2.2752
SUN LIFE FINANCIAL INCORPORATED (SLF)	866796105	CA8667961053	$54.4145	4.5308	2.4734
TELUS CORPORATION (T)	87971M103	CA87971M1032	$45.4713	3.7861	2.0669
TEXAS INSTRUMENTS INCORPORATED (TXN)	882508104	US8825081040	$151.1907	12.5887	6.8723
TORONTO-DOMINION BANK (TD)	891160509	CA8911605092	$75.2690	6.2672	3.4213
Other
ALIMENTATION COUCHE-TARD INCORPORATED (ATD)	01626P403	CA01626P4033	$55.1488	4.5919	2.5068
ARC RESOURCES LIMITED (ARX)	00208D408	CA00208D4084	$13.0453	1.0862	0.5930
BARRICK GOLD CORPORATION (ABX)	67901108	CA0679011084	$16.8209	1.4006	0.7646
BLACKBERRY LIMITED (BB)	09228F103	CA09228F1036	$15.6563	1.3036	0.7117
CRESCENT POINT ENERGY CORPORATION (CPG)	22576C101	CA22576C1014	$10.0508	0.8369	0.4569
EMERA INCORPORATED (EMA)	290876101	CA2908761018	$40.1965	3.3469	1.8271
ENCANA CORPORATION (ECA)	292505104	CA2925051047	$15.9743	1.3301	0.7261
FIRST QUANTUM MINERALS LIMITED (FM)	335934105	CA3359341052	$21.5054	1.7906	0.9775
FRANCO-NEVADA CORPORATION (FNV)	351858105	CA3518581051	$91.7520	7.6396	4.1705
INTER PIPELINE FUND (IPL)	45833V109	CA45833V1094	$24.4985	2.0398	1.1136
KINROSS GOLD CORPORATION (K)	496902404	CA4969024047	$4.6261	0.3852	0.2103
PEMBINA PIPELINE CORPORATION (PPL)	706327103	CA7063271034	$44.7449	3.7256	2.0339
SHAW COMMUNICATIONS INCORPORATED (SJR.B)	82028K200	CA82028K2002	$26.5114	2.2074	1.2051
TRANSCANADA CORPORATION (TRP)	89353D107	CA89353D1078	$53.9139	4.4891	2.4506
VALEANT PHARMACEUTICALS INTERNATIONAL INCORPORATED (VRX)	91911K102	CA91911K1021	$30.8004	2.5646	1.4000
Exchange-Traded Funds
ISHARES CORE S&P 500 INDEX ETF (XUS)	46434R109	CA46434R1091	$44.7166	3.7233	2.0326
ISHARES CORE S&P/TSX CAPPED COMPOSITE INDEX ETF (XIC)	46430J101	CA46430J1012	$25.7062	2.1404	1.1685
ISHARES MSCI EAFE INDEX ETF (XIN)	46428L100	CA46428L1004	$26.7373	2.2263	1.2153
ISHARES MSCI EUROPE IMI INDEX ETF (XEU)	46434W108	CA46434W1086	$24.9395	2.0766	1.1336
ISHARES MSCI WORLD INDEX ETF (XWD)	46430Y108	CA46430Y1088	$50.5080	4.2055	2.2958
ISHARES S&P/TSX 60 INDEX ETF (XIU)	46428D108	CA46428D1087	$23.9088	1.9907	1.0868
VANGUARD S&P 500 INDEX ETF (VFV)	92205Y105	CA92205Y1051	$63.4257	5.2811	2.8830

The Toronto Stock Exchange has conditionally approved the listing of the Class A and Preferred shares, subject to the Company fulfilling all customary requirements. Trading under the symbols GDV and GDV.PR.A is expected to commence on the closing date, June 15, 2018.

The Company will invest in a diversified portfolio (the “Portfolio”) of equity securities of large capitalization global dividend growth companies selected by the Manager. In order to qualify for inclusion in the Portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing of the Portfolio, each global dividend growth company included in the Portfolio must (i) have a market capitalization of at least US$10 billion; and (ii) have a history of dividend growth or, in the Manager’s view, have high potential for future dividend growth.

The Manager expects that at least 20 global dividend growth companies will comprise the Portfolio. The indicative portfolio includes: Airbus SE, Apple Inc., AstraZeneca plc, BCE Inc., Carnival Corporation, Cisco Systems Inc., Deutsche Post AG, Enbridge Inc., HSBC Holdings plc, Intel Corporation, IBM Corporation, Johnson & Johnson, JP Morgan Chase & Co., Manulife Financial Corporation, Novartis AG, Pfizer Inc., Proctor & Gamble Co., Sanofi SA, Siemens AG, Sun Life Financial Inc., TELUS Corporation, Texas Instruments Inc., Toronto-Dominion Bank, UBS Group AG, and Vinci SA.

The investment objectives for the Class A shares are to provide their holders with regular monthly non-cumulative cash distributions and the opportunity for capital appreciation through exposure to the Portfolio. The monthly cash distribution is targeted to be $0.10 per Class A share representing a yield on the issue price of the Class A shares of 10.0% per annum.

The investment objectives for the Preferred shares are to provide their holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on June 30, 2021, subject to extension for successive terms of up to five years as determined by the board of directors of the Company. The quarterly cash distribution will be $0.1250 per Preferred share ($0.50 per annum, or 5.0% per annum on the issue price of $10.00 per preferred share), until June 30, 2021. The Preferred shares have been provisionally rated Pfd-3 (high) by DBRS Limited.

The syndicate of agents for the offering is being led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank and includes BMO Capital Markets, TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., Raymond James Ltd., Echelon Wealth Partners., Industrial Alliance Securities Inc., Desjardins Securities Inc., and Mackie Research Capital Corporation.

Today, Brompton announced:

Brompton Funds Limited (the “Manager”) is pleased to announce that Global Dividend Growth Split Corp. (the “Company”) has completed its initial public offering of 3,550,000 Class A shares and 3,550,000 Preferred shares for total gross proceeds of $78.1 million. The Class A and Preferred shares will commence trading today on the Toronto Stock Exchange under the symbols GDV and GDV.PR.A, respectively.

The Company will invest in a diversified portfolio (the “Portfolio”) of equity securities of large capitalization global dividend growth companies selected by the Manager. In order to qualify for inclusion in the Portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing of the Portfolio, each global dividend growth company included in the Portfolio must (i) have a market capitalization of at least US$10 billion; and (ii) have a history of dividend growth or, in the Manager’s view, have high potential for future dividend growth.
The investment objectives for the Class A shares are to provide their holders with regular monthly non-cumulative cash distributions and the opportunity for capital appreciation through exposure to the Portfolio. The monthly cash distribution is targeted to be $0.10 per Class A share representing a yield on the issue price of the Class A shares of 10.0% per annum.

The investment objectives for the Preferred shares are to provide their holders with fixed cumulative preferential quarterly cash distributions and to return the original issue price of $10.00 to holders on June 30, 2021, subject to extension for successive terms of up to five years as determined by the board of directors of the Company. The quarterly cash distribution will be $0.1250 per Preferred share ($0.50 per annum, or 5.0% per annum) on the issue price of $10.00 per Preferred share, until June 30, 2021. The Preferred shares have been provisionally rated Pfd-3 (high) by DBRS Limited.

Brompton Funds Limited acts as the manager and portfolio manager of the Company. The Manager currently manages five split share corporations with combined assets of over $1.3 billion.

The syndicate of agents for the offering was led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank and includes BMO Capital Markets, TD Securities Inc., Canaccord Genuity Corp., GMP Securities L.P., Raymond James Ltd., Echelon Wealth Partners., Industrial Alliance Securities Inc., Desjardins Securities Inc., and Mackie Research Capital Corporation.

DBRS has finalized the Pfd-3(high) rating:

DBRS Limited (DBRS) finalized the provisional rating of Pfd-3 (high) assigned to the Preferred Shares issued by Global Dividend Growth Split Corp. (the Company). The Company issued an equal number (3,550,000) of the Preferred Shares and the Class A Shares at an issue price of $10.00 per Preferred Share and $12.00 per Class A Share. From to time or during the events of issuance and redemption, the number of the Class A Shares outstanding may exceed the number of the Preferred Shares outstanding. It is expected that such excess will not be more than 10% and the excess of over 10% should not be outstanding for more than 15 days. Both classes of shares are scheduled to mature on June 30, 2021. The term of the Company may be extended beyond the maturity date for additional terms of five years each as determined by the Company’s board of directors.
…
Based on the initial asset coverage of 2.1x, the net asset value of the Company would have to fall by approximately 53% for the holders of the Preferred Shares to be in a loss position. The initial dividend coverage ratio is 0.6x.

GDV.PR.A commenced marketing in late April and issued a final prospectus on May 24. It is a 5% three-year SplitShare and will be tracked by HIMIPref™ but has been relegated to the Scraps subindex on credit concerns.

The issue traded 154,447 shares today in a range of 9.90-00 before closing at 10.00-01. Vital statistics are: