PrefBlog

Great-West Lifeco Inc. has announced (on November 4):

that it does not intend to exercise its rights to redeem its outstanding Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series N (the “Series N Shares”) or its outstanding Non-Cumulative Floating Rate First Preferred Shares, Series O (the “Series O Shares”) on December 31, 2020. As a result and subject to certain conditions, holders of Series N Shares have the right to convert all or any of their Series N Shares into Series O Shares, and holders of Series O Shares have the right to convert all or any of their Series O Shares into Series N Shares, on a one-for-one basis on December 31, 2020.

Lifeco will send a formal notice of the foregoing conversion rights to the registered holder of the Series N Shares and the Series O Shares in accordance with the terms and conditions attached to the applicable shares. Holders of Series N Shares or Series O Shares who do not exercise their applicable conversion rights will retain their Series N Shares or Series O Shares, respectively.

The conversion rights are subject to the following conditions, in accordance with the terms and conditions attached to the applicable shares:

(i) if Lifeco determines that, after having taken into account all shares tendered for conversion, there would be less than one million Series O Shares outstanding on December 31, 2020, no Series N Shares may be converted into Series O Shares and all remaining Series O Shares will automatically be converted into Series N Shares on a one-for-one basis on December 31, 2020, and

(ii) alternatively, if Lifeco determines that, after having taken into account all shares tendered for conversion, there would be less than one million Series N Shares outstanding on December 31, 2020, no Series O Shares may be converted into Series N Shares and all remaining Series N Shares will automatically be converted into Series O Shares on a one-for-one basis on December 31, 2020.

In all cases, Lifeco will give written notice to that effect to any registered holder affected by the preceding conditions on or before Thursday, December 24, 2020.

The dividend rate applicable to the Series N Shares for the five-year period commencing on December 31, 2020 and ending on December 30, 2025, and the dividend rate applicable to the Series O Shares for the three-month period commencing on December 31, 2020 and ending on March 30, 2021, will be determined on Tuesday, December 1, 2020 and written notice thereof will be given to the registered holder of the Series N Shares and the Series O Shares on that day.

Beneficial owners of Series N Shares and Series O Shares who wish to convert their shares should communicate as soon as possible with their broker or other nominee to ensure their instructions are followed so that the registered holder of the Series N Shares or Series O Shares (as applicable) can meet the deadline to exercise such conversion right(s), which is 5:00 p.m. (ET) on Wednesday, December 16, 2020.

Lifeco may redeem the Series N Shares, in whole or in part, on December 31, 2025 and on December 31 every five years thereafter for $25.00 per share plus declared and unpaid dividends. Lifeco may redeem the Series O Shares, in whole or in part, on any date for $25.50 per share plus declared and unpaid dividends, unless such Series O Shares are redeemed on December 31, 2020 or on December 31 every five years thereafter, in which case the redemption price will be $25.00 per share plus declared and unpaid dividends.

GWO.PR.N is a 3.65%+130 FixedReset that commenced trading 2010-11-23 after beint announced 2010-11-15. Extension was announced in November, 2015 and the issue reset to 2.176% effective 2015-12-31. There was a 15% conversion to GWO.PR.O, its FloatingReset counterpart.

GWO.PR.O is a FloatingReset, Bills+130, that came into being in 2015 in a 15% conversion from GWO.PR.N.

Canadian Utilities Limited has announced (on November 23):

that after having taken into account all election notices following the conversion deadline for the Cumulative Redeemable Second Preferred Shares Series FF (“Series FF Preferred Shares”) tendered for conversion into Cumulative Redeemable Second Preferred Shares Series GG (“Series GG Preferred Shares”), the holders of Series FF Preferred Shares are not entitled to convert their Series FF Preferred Shares into Series GG Preferred Shares. There were approximately 1,000 Series FF Preferred Shares tendered for conversion, which is less than the two million shares required to give effect to conversions into Series GG Preferred Shares.

The Series FF Preferred Shares will continue to pay on a quarterly basis, for the five-year period from and including December 1, 2020 to but excluding December 1, 2025, as and when declared by the Board of Directors of Canadian Utilities Limited, a fixed dividend based on an annual dividend rate of 4.50%.

For more information on the terms of, and risks associated with an investment in, the Series FF Preferred Shares, please see Canadian Utilities Limited’s prospectus supplement dated September 16, 2015, which can be found under Canadian Utilities Limited’s profile on SEDAR at www.sedar.com.

CU.PR.I is a FixedReset, 4.50%+369M450, that commenced trading 2015-9-24 after being announced 2015-9-14. The issue reset to its minimum rate of 4.50% (unchanged) effective 2020-12-1. It is tracked by HIMIPref™ and is assigned to the FixedReset-Premium subindex.

GMP Capital has announced:

that it has changed its corporate name to RF Capital Group Inc. (“RF Capital” or the “Company”) to align better with the Company’s multi-year transformation and new strategic focus in wealth management, including the recent consolidation of 100% of the ownership in Richardson Wealth under the Company. The Company’s shareholders approved the name change at a special meeting of shareholders held virtually on October 6, 2020.

The Company’s common and preferred shares will commence trading on the Toronto Stock Exchange under the new name, ticker symbols and new CUSIP/ISIN numbers, effective November 24, 2020. The Company’s new corporate website will be located at www.rfcapgroup.com.

The table below highlights the new ticker symbols, CUSIP and ISIN numbers for RF Capital’s common and preferred shares.

No action is required by existing shareholders with respect to the name and ticker symbol changes.

GMP.PR.B is a FixedReset 5.50%+289, which commenced trading 2011-2-22 after being announced 2011-2-1. The notice of extension was reported on PrefBlog. The issue reset at 3.611% in 2016; there was a 22% conversion to GMP.PR.C. It is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

GMP.PR.C is a FloatingReset, Bills+289, that came into existence via a 22% conversion from GMP.PR.B in 2016.

Quadravest has announced:

Dividend 15 Split Corp. (the “Company”) is pleased to announce it will undertake an offering of Preferred Shares of the Company.

The offering will be led by National Bank Financial Inc.

The Preferred Shares will be offered at a price of $10.10 per Preferred Share to yield 5.45%.

The closing price on the TSX of the Preferred Shares on November 20, 2020 was $10.19.

Since inception of the Company, 200 consecutive dividends have been declared for the Preferred Shares. The aggregate dividends paid on the Preferred Shares have been $8.80 per share. All distributions to date have been made in tax advantage eligible Canadian dividends.

The net proceeds of the offering will be used by the Company to invest in an actively managed, high quality portfolio consisting of 15 dividend yielding Canadian companies as follows:

Bank of Montreal	Enbridge Inc.	TC Energy
The Bank of Nova Scotia	Manulife Financial Corp.	TELUS Corporation
BCE Inc.	National Bank of Canada	Thomson Reuters Corp.
Canadian Imperial Bank of Commerce	Royal Bank of Canada	The Toronto-Dominion Bank
CI Financial Corp.	Sun Life Financial Inc.	TransAlta Corporation

The Company’s investment objectives are:

• Preferred Shares:
  • to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends in the amount of 5.50% annually; and
  • on or about the termination date, currently December 1, 2024 (subject to further 5-year extensions thereafter and it has been extended in the past), to pay the holders of the Preferred Shares $10.00 per Preferred Share.

The sales period of this overnight offering will end at 9:00 a.m. EST on November 24, 2020. The offering is expected to close on or about November 30, 2020 and is subject to certain closing conditions including approval by the TSX.

It’s very unusual to see Split Corporation preferred shares issued without attached Capital Units. Presumably this is being done to offset ATM sales of the Capital Units.

Update, 2020-11-24: They have further announced:

Dividend 15 Split Corp. (the “Company”) is pleased to announce it has completed the overnight offering of 1,000,000 Preferred Shares of the Company. Total gross proceeds of the offering were $10.1 million, bringing the Company’s net assets to approximately $894.6 million.

The offering was led by National Bank Financial Inc.

The sales period of the overnight offering has now ended.

The offering is expected to close on or about November 30, 2020 and is subject to certain closing conditions including approval by the TSX.

The Preferred Shares were offered at a price of $10.10 per Preferred Share to yield 5.45%.

The closing price on the TSX of the Preferred Shares on November 23, 2020 was $10.22.

Quadravest has announced:

Financial 15 Split Corp. (the “Company”) is pleased to announce a reorganization that will provide for increased asset coverage and increased dividends for its Preferred shares and anticipated monthly distributions on its Class A shares.

In connection with the extension of the termination date of the Company until December 1, 2025, the Company’s Class A shares will consolidate such that each Class A shareholder will receive 0.40 Class A shares for each Class A share held. As at November 18, 2020, the pro forma NAV per unit of the Company after giving effect to this reorganization will be $17.88 ($13.15 pre-consolidated). The payment of monthly dividends to Class A shareholders at a rate of $1.20 per year are expected post-consolidation (with NAV per unit above $15).

As at the consolidation date, the resultant increase in the net asset value per Class A share will have the impact of increasing the asset coverage ratio for the Preferred shares. Based on the NAV per unit on November 18, 2020, the asset coverage ratio would increase from 132% to 179%. In addition, as previously announced on September 23, 2020, Preferred share dividends will increase from 5.5% to 6.75% annually effective December 1, 2020.

The aggregate intrinsic value of the Class A shareholders’ holdings will remain the same and as a result, the net asset value per Class A share will increase on a proportionate basis for each post-consolidation share on the consolidation date. In the event that the share consolidation would otherwise result in the issuance of fractional shares, no fractional Class A shares will be issued and the number of Class A shares each holder shall receive will be rounded down to the nearest whole number. The consolidation will be a non-taxable event. No action is required to be taken by Class A shareholders in connection with the consolidation.

The reorganization is required in order to maintain an equal number of Class A shares and Preferred Shares outstanding at all material times. More Preferred shares were tendered for retraction than Class A shares pursuant to the special retraction right offered to shareholders in connection with the extension of the termination date of the Company. Retracting shareholders will receive a retraction price based on the November 30, 2020 net asset value per unit.

It is expected that the Class A shares will trade on a post-consolidation basis at the opening of trading on or about December 17, 2020.

The impact of the Class A share consolidation will be reflected in the reported net asset value per unit as at
December 31, 2020.

The Company invests in a high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows: Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto-Dominion Bank, National Bank of Canada, Manulife Financial Corporation, Sun Life Financial, Great-West Lifeco, CI Financial Corp, Bank of America, Citigroup Inc., Goldman Sachs Group, JP Morgan Chase & Co. and Wells Fargo & Co.

The phrase:

the Company’s Class A shares will consolidate such that each Class A shareholder will receive 0.40 Class A shares for each Class A share held.

… is fascinating. The implication is that, at a minimum, 60% of the outstanding preferred shares were tendered for the special retraction. This is an interesting variant of the prisoners’ dilemma – it was entirely rational to tender to the special retraction due to low asset coverage and the fact that the shares were trading below par … but so many holders retracted that the remaining holders are laughing all the way to the bank, with investment-grade Asset Coverage, a dividend rate that was boosted to reduce redemptions and a market price of greater than par. Investing is a difficult game!

Assiduous Readers may be interested in reading cowboylutrell‘s comments on the issue on the September 17 post. And also read his follow-up prediction:

But instead it will be 6.75% for the first year of the new 5-year term only, and a minimum of 5.50% for years 2 to 5. And because of that, there likely won’t be enough enthusiasm from speculators to move the bid closer to $10.00 in the weeks ahead, so conservative holders likely won’t be able to sell their shares of FTN.PR.A on the market at or above $10.00 in the weeks ahead, and instead will massively surrender them for retraction.