PrefBlog

Industrial Alliance has announced:

the closing of its previously announced offering of 4,000,000 6% Non-Cumulative Class A Preferred Shares Series E (the “Series E Preferred Shares”) at a price of $25.00 per Series E Preferred Share, representing aggregate gross proceeds of $100 million.

The offering was underwritten, on a bought deal basis, by a syndicate of underwriters co-led by Scotia Capital Inc. and RBC Dominion Securities Inc. and which includes National Bank Financial Inc., BMO Nesbitt Burns Inc., CIBC World Markets Inc., TD Securities Inc., Desjardins Securities Inc., Casgrain & Company Limited, Dundee Securities Corporation, HSBC Securities (Canada) Inc., Industrial Alliance Securities Inc. and Laurentian Bank Securities Inc. This offering was made under the terms of a prospectus supplement dated October 7, 2009 to the short form base shelf prospectus dated April 30, 2009. The prospectus supplement is available on the SEDAR website at www.sedar.com and on the Company’s website at www.inalco.com.

The Series E Preferred Shares yield 6.00% per annum, payable quarterly, as and when declared by the Board of Directors of the Company. The Series E Preferred Shares commence trading on the Toronto Stock Exchange today under the symbol IAG.PR.E. The net proceeds of the offering will be used for general corporate purposes.

The Series E Preferred Shares are not redeemable prior to December 31, 2014. Subject to regulatory approval, on or after December 31, 2014, Industrial Alliance may, on no less than 30 or more than 60 days’ notice, redeem the Series E Preferred Shares in whole or in part, at the Company’s option, by the payment in cash of $26.00 per Series E Preferred Share if redeemed prior to December 31, 2015, at $25.75 per Series E Preferred Share if redeemed on or after December 31, 2015 but prior to December 31, 2016, at $25.50 per Series E Preferred Share if redeemed on or after December 31, 2016 but prior to December 31, 2017, at $25.25 per Series E Preferred Share if redeemed on or after December 31, 2017 but prior to December 31, 2018 and at $25.00 per Series E Preferred Share if redeemed on or after December 31, 2018, in each case together with all declared and unpaid dividends up to but excluding the date fixed for redemption.

The issue traded 170,412 shares in a range of 24.00-69 (!) before closing at 24.26-34, 4×10.

Vital statistics are:

The issue was announced on October 6 and has been hurt by the 1.8% decline in the PerpetualDiscount subindex 10/6 – 10/15, although that does not account for the entire loss.

The issue is tracked by HIMIPref™. It has been added to the PerpetualDiscount subindex.

Middlefield has announced:

Investors may elect to receive units of COMPASS, valued as at November 30, 2009, in lieu of receiving cash in satisfaction of all or a portion of the amount they would otherwise receive from STRATA upon its termination on December 14, 2009.

COMPASS is a Toronto Stock Exchange (“TSX”) listed closed-end investment fund that invests in a diversified portfolio comprised primarily of high yielding equity securities of issuers operating in various industries and geographical regions. COMPASS’ annualized return since inception is 9.8% and its year-to-date total return to October 8, 2009 is 18.1%. COMPASS offers an annual redemption on November 30 at net asset value less costs. COMPASS trades on the TSX under the symbol CMZ.UN.

The value of COMPASS units issued to capital unitholders will be equivalent to a pro rata share of the net assets of STRATA remaining after payment or accrual of all debts and liabilities and liquidation expenses of STRATA. The capital units will be paid out in cash or in COMPASS units, or a combination thereof, at the capital unitholders’ option, on December 14, 2009.

The value of COMPASS units issued to preferred securityholders will be equivalent to the repayment price on the November 30, 2009 maturity date of the preferred securities. The repayment price will amount to $10.0994565 per preferred security on November 30, 2009 and will be paid in cash on November 30, 2009 or in COMPASS units on December 14, 2009, or a combination thereof, at the securityholders’ option.

The press release is not yet on the relevant web-page, but I am sure they would wish me to emphasize that this is not actually a regulatory requirement.

STW.PR.A was last mentioned on PrefBlog when a Normal-Course Issuer Bid was announced. STW.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on volume concerns.

I speculated last week that EPP.PR.A was at risk for a downgrade, and today DBRS downgraded EPP.PR.A to Pfd-3:

DBRS has today downgraded the rating of EPCOR Power Equity Ltd.’s (Power Equity) Cumulative Redeemable Preferred Shares, Series 1 (Series 1 Preferreds), to Pfd-3 from Pfd-3 (high). The trend remains Negative. This action follows Power Equity’s announcement that it has sold, via a bought deal arrangement, $100 million of Cumulative Rate Reset Preferred Shares, Series 2 (Series 2 Preferreds), to which DBRS has assigned a rating of Pfd-3 with a Negative trend.

Power Equity is a wholly-owned subsidiary of EPCOR Power L.P. (Power LP), with Power LP guaranteeing, on a subordinated basis, certain amounts relating to Power Equity’s Series 1 Preferreds and Series 2 Preferreds (including payment of dividends, as and when declared). As such, the preferred share ratings of Power Equity continue to be based on the credit profile of Power LP. Following the sale of the Series 2 Preferreds, Power LP’s capitalization will include an amount of preferred equity (totalling approximately $220 million) that is large compared with the amount of the Partners’ equity on the balance sheet ($564 million as of June 30, 2009). The rating on the Series 1 Preferreds has been downgraded by one notch to Pfd-3 (with the same rating assigned to the Series 2 Preferreds) to reflect the now-significant amount of preferred equity Power LP carries in relation to its level of Partners’ equity.

Not the same reasons that triggered my speculation! That’s forecasting for you! DBRS continues:

The change in Power Equity’s preferred rating has no impact on the ratings of Power LP, which stand at: Senior Unsecured Debt & Medium-Term Notes of BBB (high) with a Negative trend, and a stability rating of STA-2 (low). See the DBRS press releases dated April 29, 2009, and June 8, 2009, for additional details on recent rating actions and the Negative trends. Since the change in trend from Stable to Negative in April, there have been two developments viewed as positive for Power LP’s credit profile: 1) a reduction in unit distributions, expected to conserve approximately $40 million in cash flow per year; and 2) the proceeds from the sale of the Series 2 Preferreds will be applied to debt reduction. Both of these developments should help Power LP avoid moving closer to its 65% debt-to-capitalization covenant. However, the trends will remain Negative until DBRS views Power LP’s capitalization as stable on a sustainable basis, and expected levels of cash flow are maintained.

Power LP recently stated that it was modestly reducing its financial expectations for 2009, largely as a result of low operating margins at its two North Carolina facilities. DBRS does not view this as a material change, as a reduced level of contributions from these facilities has already been factored into our analysis.