Dundee Wealth Management has announced (via CCN Matthews) that:
it has entered into a “bought deal” agreement to sell to a syndicate of underwriters led by Scotia Capital Inc. and Dundee Securities Corporation, 6,000,000 4.75% Cumulative Redeemable First Preference Shares, Series 1 (the “Series 1 Shares”) at a price of $25.00 per Series 1 Share for gross proceeds to Dundee Wealth of $150 million. The underwriters also have an over-allotment option, exercisable at any time prior to 30 days after the closing date, to acquire an additional 900,000 Series 1 Shares at the issue price of $25.00 per Series 1 Share. The offering is expected to close on or about March 13, 2007.
DBRS has rated this issue Pfd-3.
I am advised that this issue is a 10-year retractible – but I have not yet been advised in writing! This issue is of sufficient size to be added to the HIMIPref™ database. I will provide more details and analysis when it becomes available.
Update & Bump : I have received a term sheet.
Annual dividends are $1.1875 per share per annum. The first dividend is intended to be payable June 30, 2007 and be $0.35625, based on the anticipated closing date of March 13, 2007.
The redemption schedule is:
| |
| If called during the 12 months commencing March 13, |
Redemption Price |
| 2007 |
27.25 |
| 2008 |
27.00 |
| 2009 |
26.75 |
| 2010 |
26.50 |
| 2011 |
26.25 |
| 2012 |
26.00 |
| 2013 |
25.75 |
| 2014 |
25.50 |
| 2015 |
25.25 |
| Or any time after March 13, 2016 |
$25.00 |
Any redemption before March 13, 2012 is limited to circumstances where the Series 1 Shares are entitled to vote separately as a class or series by law.
The shares are retractible for cash at the option of the holder on and after March 13, 2017 at $25.00.
Another Update & Bump!
I have prepared the following table with some comparatives:
| Dundee Wealth New Issue & Comparitives |
| Data |
DW.PR.? |
BAM.PR.J |
DC.PR.A |
| Price due to base-rate |
24.63 |
26.51 |
25.17 |
| Price due to short-term |
-0.55 |
-0.57 |
-0.53 |
| Price due to long-term |
1.71 |
1.77 |
1.64 |
| Price to to Cumulative Dividends |
0.00 |
0.00 |
0.00 |
| Price due to SplitShareCorp |
0.00 |
0.00 |
0.00 |
| Price due to Retractibility |
1.26 |
1.40 |
1.16 |
| Price due to Liquidity |
0.77 |
-0.11 |
0.03 |
| Price due to Floating Rate |
0.00 |
0.00 |
0.00 |
| Price due to Credit Spread (2) |
0.00 |
-0.33 |
0.00 |
| Price due to Credit Spread (3) |
-0.94 |
0.00 |
-0.86 |
| Price due to Credit Spread (High) |
0.00 |
0.00 |
0.00 |
| Price due to Credit Spread (Low) |
0.00 |
-0.29 |
-0.24 |
| Price due to error |
0.02 |
0.04 |
0.07 |
| Curve Price (Taxable Curve) |
26.90 |
28.42 |
26.44 |
| Quote 2/22 |
25.00
Issue |
27.82-86 |
25.55-70 |
| YTW (after tax) |
3.77% |
3.34% |
3.84% |
| YTW Date |
2017-3-12 |
2014-4-30 |
2016-6-29 |
| Credit Rating (DBRS) |
Pfd-3 |
Pfd-2(low) |
Pfd-3(low) |
| YTW (Pre-Tax) |
4.75% |
4.20% |
4.83% |
| YTW Modified Duration (Pre-Tax) |
7.98 |
5.98 |
7.40 |
| YTW Pseudo-Convexity (Pre-Tax) |
0.2 |
-11.9 |
0.2 |
Note that the BAM.PR.J has a soft-maturity 2018-3-30 at $25.00 to yield 3.35% – it’s right on the bubble, which is why the pseudoConvexityWorst is both large and negative.
This new issue looks attractive when valued in strict accordance to the yield curve. But as I warned in my post about the YPG New Issue:
As credit quality decreases, so does the quality of HIMIPref™’s yield curve analysis. I do not recommend that these prefs be considered for more than 5% of a diversified preferred share portfolio.