PrefBlog

Standard & Poor’s has announced:

• •Atlantic Power Corp.’s (APC) leverage improved in 2018 and we believe the Boston-based publicly traded power generation company’s deleveraging trend is likely to continue, supported by the predictability of cash flows from power purchase agreements (PPAs) in the portfolio.
• •We expect APC to complete the acquisition of two biomass projects in South Carolina with long-term PPAs during the second half of 2019, which will help mitigate some recontracting risk.
• •S&P Global Ratings is affirming our ‘B+’ issuer credit rating, our ‘BB-‘ issue-level rating on APC’s senior term loan B, senior revolving credit facility, and medium-term notes, and our ‘CCC+’ issue-level rating on the preferred shares.
• •Our ‘2’ recovery rating on all debt tranches is unchanged, indicating our expectation for substantial recovery (70%-90%; rounded estimate: 80%) in the event of a default.
• •The positive outlook reflects a possibility that we could upgrade APC by one notch because we believe the company can achieve our adjusted debt to EBITDA of below 5x in the next 12 months.

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If APC meets our adjusted debt-to-EBITDA projection of below 5x, it would likely be supported by deleveraging through excess cash flow sweep on the term loan B in line with management’s guidance and by demonstrating its ability to continue extending expiring PPAs. The rating could also improve if the company continues to pursue growth opportunities while maintaining S&P Global Ratings’ adjusted leverage.

We could revise the outlook back to stable if our adjusted debt to EBITDA indicates an increasing trend above 5x on a sustained basis. This may be due to the inability to recontract expiring or obtain new PPAs, aggressive growth strategy through incremental debt issuances, or higher-than-expected operating costs to maintain power assets in the portfolio, creating volatility in cash flows available for debt service.

Affected issues are AZP.PR.A, AZP.PR.B and AZP.PR.C.

Brompton Group has announced:

Life & Banc Split Corp. (the “Company”) is pleased to announce it is undertaking an overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively).

The sales period for this overnight offering will end at 9:00 a.m. (ET) on Thursday, March 28, 2019. The offering is expected to close on or about April 4, 2019 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (“TSX”).

The Class A Shares will be offered at a price of $8.10 per Class A Share for a distribution rate of 14.8% on the issue price, and the Preferred Shares will be offered at a price of $10.00 per Preferred Share for a yield to maturity of 5.46%.(1) The closing price on the TSX for each of the Class A and Preferred Shares on March 26, 2019 was $8.23 and $10.17, respectively. The Class A and Preferred Share offering prices were determined so as to be non-dilutive to the most recently calculated net asset value per unit of the Company (calculated as at March 25, 2019), as adjusted for dividends and certain expenses to be accrued prior to or upon settlement of the offering.

The Company invests in a portfolio (the “Portfolio”) consisting of common shares of the six largest Canadian banks and the four major publicly traded Canadian life insurance companies:

The Bank of Nova Scotia	Royal Bank of Canada
National Bank of Canada	Industrial Alliance Insurance and Financial Services Inc.
The Toronto-Dominion Bank	Great-West Lifeco Inc.
Canadian Imperial Bank of Commerce	Manulife Financial Corporation
Bank of Montreal	Sun Life Financial Inc.

The investment objectives for the Class A Shares are to provide holders with regular monthly cash distributions targeted to be $0.10 per Class A Share and to provide the opportunity for growth in the net asset value per Class A Share.

The investment objectives for the Preferred Shares are to provide holders with fixed cumulative preferential quarterly cash distributions, currently in the amount of $0.13625 per Preferred Share ($0.545 per annum), and to return the original issue price plus accrued dividends (if any) to holders of Preferred Shares on October 30, 2023.

The syndicate of agents for the offering is being led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank.

The sum of the Capital Units NAVPS and the Preferred Share NAVPS is 17.79, while the new Whole Units are offered at 18.10, so the premium is about 1.7% – smaller than most offerings we’ve seen in the past while, but still worth doing (especially if you earn management fees on the total)!

Update, 2019-3-28: The offering went well:

Life & Banc Split Corp. (the “Company”) is pleased to announce a successful overnight treasury offering of class A and preferred shares (the “Class A Shares” and “Preferred Shares”, respectively). Gross proceeds of the offering are expected to be approximately $25.5 million. The offering is expected to close on or about April 4, 2019 and is subject to certain closing conditions including approval by the Toronto Stock Exchange (the “TSX”). The Company has granted the Agents (as defined below) an over-allotment option, exercisable for 30 days following the closing date of the offering, to purchase up to an additional 15% of the number of Class A Shares and Preferred Shares issued at the closing of the offering.

Valener Inc. has announced that it:

and Noverco Inc. (“Noverco”), the controlling partner of Energir, L.P., announced today that they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) pursuant to which Noverco will acquire indirectly all of the issued and outstanding common shares of Valener (the “Common Shares”) for $26.00 per Common Share in cash and all of the issued and outstanding Cumulative Rate Reset Preferred Shares, Series A of Valener (the “Preferred Shares”) for $25.00 per Preferred Share in cash plus accrued and unpaid dividends (the “Arrangement”).

Transaction Highlights

• Cash consideration of $26.00 per Common Share represents a premium of approximately 30% to the closing price per Common Share on December 12, 2018 (the day prior to Noverco’s initial approach to Valener regarding a potential transaction) and approximately 10% to the all-time high closing price per Common Share of $23.67 observed on March 22, 2019.
• Cash consideration of $25.00 per Preferred Share represents a premium of approximately 18% to the closing price per Preferred Share on December 12, 2018.
• The acquisition of all of the outstanding Common Shares and Preferred Shares implies a total enterprise value for Valener of approximately $1.2 billion, including the assumption of existing indebtedness.
• 100% cash consideration provides immediate liquidity and certainty of value for holders of Common Shares and holders of Preferred Shares.
• BMO Capital Markets and TD Securities provided opinions that, subject to the assumptions, limitations and qualifications contained therein, the cash consideration to be received is fair from a financial point of view to the holders of Common Shares and the holders of Preferred Shares; further, cash consideration to be received by holders of Common Shares falls within the fair market value range of $24.00 to $28.50 per Common Share established by TD Securities as independent valuator.

…
Under the Arrangement, it is proposed that the Preferred Shares will also be acquired by Noverco. Pursuant to the Arrangement Agreement, holders of Preferred Shares will be asked to vote on the Arrangement as a separate class. However, completion of the Arrangement is not conditional on receipt of such approval. If the requisite approval from holders of Preferred Shares is not obtained, such Preferred Shares will be excluded from the Arrangement and remain outstanding in accordance with their terms. For the Preferred Shares to be included in the Arrangement, the resolution approving the Arrangement must be approved by holders of not less than 66 2/3% of Preferred Shares present in person or by proxy at the Special Meeting.

That’s a nice little windfall for holders of VNR.PR.A, which closed at 21.31-73 today, after trading 310 shares!

The issue commenced trading 2012-6-6 as a FixedReset, 4.35%+281, after being announced 2012-5-15. It reset to 4.62% effective 2017-10-15. I recommended against conversion and there was no conversion to FloatingResets. The issue is tracked by HIMIPref™ and has been assigned to the FixedReset subindex.

Quadravest has announced (on February 21):

North American Financial 15 Split Corp. (the “Company”) is pleased to announce it will extend the termination date of the Company a further five year period from December 1, 2019 to December 1, 2024.

The term extension allows holders of FFN Class A Shares (“Class A Shares”) to continue to receive ongoing leveraged exposure to a portfolio consisting of high-quality financial services companies made up of Canadian and U.S. issuers, as well as receiving targeted monthly distributions. Since inception of the Company Class A shareholders have received monthly distributions totaling $12.65 per share.

Holders of the FFN.PR.A Preferred Shares (“Preferred Shares”) are expected to continue to benefit from cumulative preferential monthly distributions. The Preferred shareholders have received a total of $7.53 per share since inception.

The extension of the term of the Company is not expected to be a taxable event and should enable shareholders to defer potential capital gains tax liability that would have otherwise been realized on the redemption of the Class A Shares or Preferred Shares at the end of the term, until such time as such shares are disposed of by shareholders.

In connection with the extension, the Company will have the right to amend the minimum rate of cumulative preferential monthly dividends to be paid to the Preferred Shares for the five year renewal period, commencing December 1, 2019. Any change to the Preferred Share minimum dividend rate for the extended term will be based on market yields for preferred shares with similar terms at such time and will be announced no later than September 30, 2019. The Company has the right to establish the rate of cumulative preferential monthly dividends to be paid to the Preferred Shares on an annual basis.

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.

It is worth noting that the dividend rate on FFN.PR.A remains unchanged at 5.50%, where it was reset in 2017. Quadravest does not announce rates originally set explicitly for a single fiscal year if they do not change in the following fiscal year.

I seem to have a problem with comments.

PrefBlog uses a plug-in called WP-SpamShield to deflect the hundreds (literally!) of spam comments that flood in daily; regrettably, it appears to have gone berserk.

An Assiduous Reader notified me that his attempt to comment was frustrated due to the system thinking his comment was spam and telling him:

ERROR: Your comment appears to be spam.

Please go back and check all parts of your comment submission (including name, email, website, and comment content).

If you are a logged in user, and you are seeing this message repeatedly, then you may need to check your registered user information for spam data.

I couldn’t see any problems, so after a bit of back-and-forth I captured a comment attempt by him on the ‘blocked log’. Yes, it was rejected – with a code. I have attempted to look up the code on the maker’s website … and it seems my Access to the website has been forbidden, due to:

unusual traffic from your web browser, device, or network, resulting in firewall security measures limiting your access to this website.

So it seems that either their Unusual Traffic detector has gone berserk and is now blocking networks on a wholesale basis or that somebody in Canada has been Very Naughty Indeed.

If the problem doesn’t resolve itself in the next few days, I’ll uninstall the spam blocker and try another solution. In the meantime, I would appreciate Assiduous Readers attempting to comment on this post and notifying me if blocked.