PrefBlog

The National Bank of Canada has announced:

its intention to redeem all of its remaining issued and outstanding Non-Cumulative 5-Year Rate Reset First Preferred Shares Series 24 (the “Preferred Shares Series 24”) together with all of its remaining issued and outstanding Non-Cumulative 5-Year Rate Reset First Preferred Shares Series 26 (the “Preferred Shares Series 26”) on February 15, 2014 (the “Redemption Date”).

Pursuant to the share conditions, on the Redemption Date, the Bank may, at its option, redeem the Preferred Shares Series 24 and the Preferred Shares Series 26 at a price equal to $25.00 per share together with all declared and unpaid dividends. The declared dividends payable on February 15, 2014 will be paid to shareholders of record on January 10, 2014.

Formal notice will be issued to shareholders in accordance with the share conditions. The redemption of the Preferred Shares Series 24 and the Preferred Shares Series 26 is subject to the approval of the Office of the Superintendent of Financial Institutions and is part of the Bank’s ongoing management of its regulatory capital.

The Bank recommends shareholders consult with their tax advisors to determine the appropriate treatment and impact of the redemptions.
…
This press release includes certain forward-looking statements. These forward-looking statements include the Bank’s intentions regarding the redemption of the Preferred Shares Series 24 and the Preferred Shares Series 26. These statements are inherently subject to significant risks, uncertainties and changes in circumstances, many of which are beyond the control of the Bank, including the obtaining of regulatory approval required to complete the proposed redemption. Except as required by law, the Bank does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time, by it or on its behalf.

NA.PR.O was last mentioned on PrefBlog when it was removed from TXPR following a substantial issuer bid. It was a FixedReset, 6.60%+463, announced 2009-1-5.

NA.PR.P was also a subject of the issuer bid. It was a FixedReset, 6.60%+479, announced 2009-1-22.

In June, 2013, a shareholders’ vote was scheduled:

The purpose of the meeting is to consider and vote upon a special resolution that would allow the merger of STREAMS III into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013 while still allowing any STREAMS III shareholders, should they choose, to retract their shares on the existing scheduled termination date on the same terms as originally contemplated.

A vote FOR the proposal will give you two options at the December 1, 2013 termination date:
1) Capital Yield and Equity Dividend shareholders will be able to have their shares exchanged (based on relative net asset values) for an equal dollar amount of units of Dividend 15 through the merger of STREAMS III into Dividend 15, OR
2) Capital Yield shares would receive $25 per share and Equity Dividend shares would receive the NAV less $25 (to a maximum of $15 per share) under the existing termination formula as originally contemplated.

If this proposal is approved, shareholders will not be required to make a decision on this choice until early in November, 2013 when further information will be provided.

The vote was favourable:

The Board of Directors of Income STREAMS III Corporation (“STREAMS III”) is pleased to announce that Equity Dividend Shareholders voted 97% in favour and Capital Yield Shareholders voted 89% in favour of a proposal that would allow the merger of STREAMS III into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013.

Approximate values were announced in November:

Based on the November 15, 2013 net asset value (NAV) exchange ratios (as adjusted for the DFN and DFN.PR.A November declared dividends) and the market value of a Dividend 15 unit (as at November 15, 2013) STQ shareholders would receive the equivalent of $26.17 in market value of Dividend 15 units for each STQ share exchanged. STQ.E shareholders would receive the equivalent of $8.06 in market value of Dividend 15 units for each STQ.E share exchanged.

Precise exchange ratios were announced November 29:

Income STREAMS III Corp. (“IS STREAMS”) provides the final exchange ratio and other details relating to the merger of IS STREAMS into Dividend 15 Split Corp (“Dividend 15”).

All Capital Yield (TSX symbol STQ) and Equity Dividend (TSX symbol STQ.E) shares outstanding on December 1, 2013 will automatically be exchanged into an equal dollar amount of Dividend 15 units based on the November 28 net asset value (NAV) exchange ratios. One unit of Dividend 15 is comprised of one Class A share (TSX symbol DFN) and one Preferred share (TSX symbol DFN.PR.A).

The final exchange ratios are as follows:

1 STQ share will be exchanged into 1.22352296 DFN shares and 1.22352296 DFN.PR.A shares

1 STQ.E share will be exchanged into 0.37682901 DFN shares and 0.37682901 DFN.PR.A shares

(Fractional shares will not be issued)

It is expected that STQ and STQ.E shares will be halted for trading by the TSX before the opening of trading on December 3, 2013 and delisted from the TSX on that day. Any STQ or STQ.E purchased prior to the halt of these shares will receive the applicable number of DFN and DFN.PR.A shares upon settlement. The exchange of STQ and STQ.E into DFN and DFN.PR.A shares will occur automatically and no further action is required by STQ or STQ.E shareholders. This exchange is a non taxable event.

Based on the November 28, 2013 NAV exchange ratios and the market value of a Dividend 15 unit (as at November 28, 2013), STQ shareholders will receive the equivalent of $25.69 in market value of Dividend 15 units for each STQ share exchanged. STQ.E shareholders would receive the equivalent of $7.91 in market value of Dividend 15 units for each STQ.E share exchanged.

Well, the recovery of about $7.91 on STQ.E is a far cry from the par value of $15! STQ.E was last mentioned on PrefBlog when the credit rating was discontinued in February 2008. STQ.E has been tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

In June, 2013, Quadravest sent CGQ & CGQ.E unitholders a management information circular:

The purpose of the meeting is to consider and vote upon a special resolution that would allow the merger of CG STREAMS into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013 while still allowing any CG STREAMS shareholders, should they choose, to retract their shares on the existing scheduled termination date on the same terms as originally contemplated.

A vote FOR the proposal will give you two options at the December 1, 2013 termination date:
1) Capital Yield and Equity Dividend shareholders will be able to have their shares exchanged (based on relative net asset values) for an equal dollar amount of units of Dividend 15 through the merger of CG STREAMS into Dividend 15, OR
2) Capital Yield shares would receive $25 per share and Equity Dividend shares would receive the NAV less $25 (to a maximum of $15 per share) under the existing termination formula as originally contemplated.

If this proposal is approved, shareholders will not be required to make a decision on this choice until early in November 2013
when further information will be provided.

Shareholders approved the proposal in July, 2013:

The Board of Directors of Capital Gains Income STREAMS (“CG STREAMS”) is pleased to announce that both classes of shareholders have voted over 94% in favour of a proposal that would allow the merger of CG STREAMS into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013.

On November 29, final exchange ratios were announced:

Capital Gains Income STREAMS (“CG STREAMS”) provides the final exchange ratio and other details relating to the merger of CG STREAMS into Dividend 15 Split Corp (“Dividend 15”).

All Capital Yield (TSX symbol CGQ) and Equity Dividend (TSX symbol CGQ.E) shares outstanding on December 1, 2013 will automatically be exchanged into an equal dollar amount of Dividend 15 units based on the November 28 net asset value (NAV) exchange ratios. One unit of Dividend 15 is comprised of one Class A share (TSX symbol DFN) and one Preferred share (TSX symbol DFN.PR.A).

The final exchange ratios are as follows:

1 CGQ share will be exchanged into 1.22352296 DFN shares and 1.22352296 DFN.PR.A shares

1 CGQ.E share will be exchanged into 0.19516249 DFN shares and 0.19516249 DFN.PR.A shares

(Fractional shares will not be issued)

It is expected that CGQ and CGQ.E shares will be halted for trading by the TSX before the opening of trading on December 3, 2013 and delisted from the TSX on that day. Any CGQ or CGQ.E purchased prior to the halt of these shares will receive the applicable number of DFN and DFN.PR.A shares upon settlement. The exchange of CGQ and CGQ.E into DFN and DFN.PR.A shares will occur automatically and no further action is required by CGQ or CGQ.E shareholders. This exchange is a non taxable event.

Based on the November 28, 2013 NAV exchange ratios and the market value of a Dividend 15 unit (as at November 28, 2013), CGQ shareholders will receive the equivalent of $ 25.69 in market value of Dividend 15 units for each CGQ share exchanged. CGQ.E shareholders would receive the equivalent of $4.10 in market value of Dividend 15 units for each CGQ.E share exchanged.

Well, the recovery of about $4.17 on CGQ.E is a far cry from the par value of $15! CGQ.E was last mentioned on PrefBlog when the credit rating was discontinued in February 2008. CGQ.E has been tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

As noted in the new issue report, Power Financial Corporation has announced:

The Corporation intends to redeem all of its $175 million First Preferred Shares, Series M on January 31, 2014 upon completion of the Series T offering.

Nice! PWF.PR.M is a FixedReset, 6.00%+320 (announced in November, 2008, when the market was going vertical and not in a nice way), while the new issue is 4.20%+237 … so the company is saving 180bp on the difference in initial dividend and will save 93bp on all future resets.