PrefBlog

TransAlta Corporation has announced:

that 1,824,620 of its 12,000,000 Cumulative Redeemable Rate Reset Preferred Shares, Series A (the “Series A Shares”) have been converted, on a one-for-one basis, into Cumulative Redeemable Floating Rate Preferred Shares, Series B (the “Series B Shares”). As a result of the conversion, TransAlta has 10,175,380 Series A Shares and 1,824,620 Series B Shares issued and outstanding.

The Series B Shares will begin trading on the Toronto Stock Exchange (TSX) today under the symbol TA.PR.E. The Series A Shares will continue to be listed on the TSX under the symbol TA.PR.D.

The 15% conversion rate has been reported previously; Assiduous Readers will remember that I recommended against conversion. TA.PR.D now pays 2.709% (on par) until 2021-3-31, while TA.PR.E will pay 3-month bills +203bp, reset quarterly.

TA.PR.E closed with a ridiculous quote of 10.00-11.00, 1×10. I expect this to decline precipitously in short order, given the closing quote on TA.PR.D of 8.39-50, 4×24.

Vital statistics are:

BCE.PR.N was listed today without fanfare and without trading. Assiduous Readers will remember that this issue results from a 17% conversion from BCE.PR.M, which I recommended against. BCE.PR.M has reset at 2.764% while BCE.PR.N will pay 3-Month Bills +209bp, reset quarterly.

As no quote was given for this issue, I have arbitrarily assigned it a quotation of 13.65-95, equal to that of BCE.PR.M.

Vital statistics are:

First National Financial Corporation has announced:

that 1,112,853 of its 4,000,000 issued and outstanding cumulative 5-year rate reset Class A Preference Shares, Series 1 (“Series 1 Preference Shares”) were tendered for conversion, on a one-for-one basis, into cumulative floating rate Class A Preference Shares, Series 2 (“Series 2 Preference Shares”). Effective April 1, 2016, the Company will have 2,887,147 Series 1 Preference Shares and 1,112,853 Series 2 Preference Shares outstanding and issued. The Series 1 Preference Shares will continue to be listed on the Toronto Stock Exchange (“TSX”) under the symbol FN.PR.A. The Series 2 Preference Shares will be listed on the TSX under the symbol FN.PR.B.

Assiduous Readers will remember that FN.PR.A will reset to 2.79%, while the FloatingReset issue, FN.PR.B, will pay 3-Month T-Bills + 207bp, reset quarterly. I recommended against conversion.

RONA Inc. has announced:

that holders of its Cumulative 5-Year Rate Reset Series 6 Class A Preferred Shares of RONA (the “Series 6 Shares”) have elected to convert 2,222,137 of the 6,900,000 Series 6 Shares currently outstanding, on a one-for-one basis, into Cumulative Floating Rate Series 7 Class A Preferred Shares of RONA (the “Series 7 Shares”) on March 31, 2016. Consequently, on March 31, 2016, RONA will have 4,677,863 Series 6 Shares and 2,222,137 Series 7 Shares issued and outstanding. The Series 6 Shares will continue to be listed and the Series 7 Shares will be listed and start trading at market open on March 31, 2016 on the Toronto Stock Exchange under the symbols RON.PR.A and RON.PR.B, respectively.

As previously announced, on February 3, 2016, RONA entered into an arrangement agreement (the “Arrangement Agreement”) under which a subsidiary of Lowe’s Companies, Inc. (“Lowe’s”) has agreed to acquire all of the issued and outstanding common shares of RONA at a price of $24.00 per share in cash by way of a statutory plan of arrangement (the “Arrangement”). Under the terms of the Arrangement Agreement, a subsidiary of Lowe’s has also agreed to acquire all of the outstanding Series 6 Shares and any then outstanding Series 7 Shares for $20.00 per share in cash (plus any accrued but unpaid dividends thereon up to, but excluding, the date of the closing of the Arrangement), which represents a premium of approximately 59% to the closing price of the Series 6 Shares on the TSX on February 2, 2016, the day prior to the announcement of the Arrangement. RONA’s board of directors has unanimously approved the Arrangement Agreement and unanimously recommends that the holders of RONA’ common shares, Series 6 Shares and Series 7 Shares vote FOR the Arrangement at the special meeting to be held on March 31, 2016 concerning the Arrangement (the “Meeting”).

Completion of the Arrangement is conditional upon approval of at least 66⅔% of the votes cast by the common shareholders at the Meeting and satisfaction of other customary conditions. Preferred shareholders will vote on the Arrangement as a separate class of securities and their participation in the Arrangement will require the approval of 66⅔% of the votes cast by holders of preferred shares represented in person or by proxy at the Meeting. However, completion of the Arrangement is not conditional on approval by the preferred shareholders and, if the requisite approval of the preferred shareholders is not obtained, the Series 6 Shares and Series 7 Shares will be excluded from the Arrangement and will remain outstanding in accordance with their terms. It is expected that the Arrangement will be completed in the second half of 2016.

A copy of the Arrangement Agreement, the information circular and related documents have been filed with Canadian securities regulators and are available on RONA’s profile at www.sedar.com.

Assiduous Readers will remember that RON.PR.A will reset to 3.324%, while the FloatingReset issue, RON.PR.B, will pay 3-Month T-Bills + 265bp, reset quarterly. I recommended against conversion.

It will also be remembered that RON.PR.A is the subject of a Plan of Arrangement that is part of the proposed acquisition of RONA by Lowe’s Companies. This has been discussed several times on PrefBlog:

• RON.PR.A: Lowe’s Offers $20 As Part Of Takeover
• RON.PR.A Grumblers Get An Ally
• RON.PR.A Vote: Yes or No?
• The not-so-pleasant choices faced by RONA’s preferred shareholders [RON.PR.A]

If the acquisition of RON.PR.A by Lowe’s under the plan of arrangement succeeds, then the conversion will become moot.

BCE Inc. has mailed its Notice to Holders of BCE Inc. Series AG Preferred Shares:

Beginning on March 17, 2016 and ending on April 21, 2016, holders of Series AG Preferred Shares will have the right to choose one of the following options with regards to their shares:
1. To retain any or all of their Series AG Preferred Shares and continue to receive a fixed quarterly dividend; or
2. To convert, on a one-for-one basis, any or all of their Series AG Preferred Shares into BCE Inc. Cumulative Redeemable First Preferred Shares, Series AH (the “Series AH Preferred Shares”) and receive a floating monthly dividend.

Effective May 1, 2016, the fixed dividend rate for the Series AG Preferred Shares will be set for a five-year period as explained in more detail in paragraph 5 of the attached Notice of Conversion Privilege.
…
As of May 1, 2016, the Series AG Preferred Shares, should they remain outstanding, will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be determined by BCE Inc. on April 6, 2016 but which shall not be less than 80% of the five-year Government of Canada Yield (as defined in BCE Inc.’s articles) compounded semi-annually and computed on April 6, 2016 by two investment dealers appointed by BCE Inc. The annual dividend rate applicable to the Series AG Preferred Shares will be published on April 8, 2016 in the national edition of The Globe and Mail, the Montreal Gazette and Le Devoir and will be posted on BCE Inc.’s website at www.bce.ca.

A similar notice has been sent to the Holders of BCE Inc. Series AH Preferred Shares.

The new dividend rate for BCE.PR.G is not yet known, but I will pass on the information when it becomes available. The observed relationship of reset rates to market rates has been discussed in comments fairly recently.

BCE.PR.G currently pays 4.50% after having been reset in 2011. At that time, holders overwhelmingly preferred BCE.PR.G the FixedFloater, over BCE.PR.H, the Ratchet Rate preferred. As these issues are interconvertible every five years, they comprise a Strong Pair.

The Bank of Nova Scotia has announced:

that it intends to exercise its right to redeem all outstanding Non-cumulative Preferred Shares Series 14 of Scotiabank (the “Series 14 Shares”) on April 27, 2016, at a price equal to $25.00 per share, together with all declared and unpaid dividends. Formal notice will be issued to shareholders in accordance with the share conditions.

The redemption has been approved by the Office of the Superintendent of Financial Institutions and will be financed out of the general funds of Scotiabank.

On February 29, 2016, the Board of Directors of Scotiabank approved a quarterly dividend of $0.28125 per Series 14 Share. This will be the final dividend on the Series 14 Shares and will be paid in the usual manner on April 27, 2016, to shareholders of record at the close of business on April 5, 2016, as previously announced. After April 27, 2016, the Series 14 Shares will cease to be entitled to dividends.

BNS.PR.L is a Straight Perpetual, 4.50%, that commenced trading 2007-1-24 after being announced 2007-1-8. It has been tracked by HIMIPref™ throughout its existence; since the announcement of the NVCC Rules it has been assigned to the DeemedRetractibles subindex.