PrefBlog

Only very skimpy information is available to date – the following is from TD Waterhouse:

The coupon rate (to be determined) will be fixed until March 31, 2015. Thereafter, on and after March 31, 2015, and reset each anniversary thereafter, the Dividend Rate will be XXX% above the 5-year Government of Canada benchmark bond rate.

The Preferred Shares will be convertible into Common Shares of the Company at the option of the holder at any time or, if called for redemption, on the business day immediately preceding the date fixed for redemption, at a conversion price of (to be determined) per Common Share, being at a rate of (to be determined) Common Shares per $100 Par Value of Preferred Shares The conversion right shall be subject to the standard anti-dilution provisions. In the event that the holder of Preferred Shares exercises their conversion right following the notice of redemption, such holders will be entitled to receive declared and unpaid dividends.

The Preferred Shares will not be redeemable prior to September 12, 2012. On and after September 12, 20012 and prior to September 30, 2009, the Preferred Shares will be redeemable at the option of the Company, in whole or from time to time in part, on at least 30 days’ notice at a redemption price equal to Par plus accrued and unpaid interest, provided that the volume weighted average trading price of the Common Shares on The Toronto Stock Exchange (the “TSX”) for at least 20 trading days in any consecutive 30 day period ending five trading days prior to the date on which notice of redemption is given exceeds 135% of the Conversion Price. On and after September 30, 2014, the Preferred Shares will be redeemable at the option of the Company at any time, in whole or from time to time in part, at a redemption price equal to Par plus all declared and unpaid dividends.

This issue is unrated.

This issue will not be tracked by HIMIPref™:

• Too small – it will be quite illiquid
• Convertible – it will be more equity-like than compatible with the HIMIPref™ analysis
• Not Rated

Updated, 2009-8-24: From the prospectus, dated 2009-8-20:

The Preferred Shares will be entitled to fixed cumulative preferential cash dividends, if, as and when declared by our board of directors at a rate of $9.00 per share per annum, to accrue from the date of original issue, payable in equal instalments of $4.50 per share on March 31 and September 30 of each year until (and including) March 31, 2015. Assuming an issue date of September 3, 2009, the first dividend will be payable on March 31, 2010 in the amount of $5.17808 per Preferred Share. From March 31, 2015 until March 31, 2016 and recalculated each anniversary thereafter, the rate of the annual dividend on the Preferred Shares (which will continue to be paid in equal semi-annual instalments on March 31 and September 30 of each year, the first such dividend to be payable on September 30, 2015) will be 6.28% above the five year Government of Canada benchmark bond rate as quoted on the Bloomberg page “GCAN5YR ” or comparable sources at 10:00 a.m. (Toronto time) on the tenth business day prior to March 31, 2015 and each subsequent anniversary date.

Update, 2009-9-3: Succesfully closed, trades as WES.PR.C.

Equitable Trust has announced:

it has entered into an agreement with a group of underwriters led by National Bank Financial Inc. and GMP Securities L.P. (the “Underwriters”) to issue 1,440,000 Non‐Cumulative 5‐Year Rate Reset Preferred Shares, Series 1 (the “Series 1 Preferred Shares”) at a price of $25.00 per share, on a bought deal basis for gross proceeds of $36 million (the “Prospectus Offering”). The Company also announced that it intends to issue on a private placement basis an additional 360,000 Series 1 Preferred Shares at a price of $25.00 per share for gross proceeds of $9 million (the “Private Placement Offering”). The sole subscriber for the Private Placement Offering will be Canadian Western Bank.
…
The Series 1 Preferred Shares will yield 7.25% annually, payable quarterly, as and when declared by the Board of Directors of the Company for an initial period ending September 30, 2014. Thereafter, the dividend rate will reset every five years at a level of 4.53% over the then five‐year Government of Canada bond yield. Holders of Series 1 Preferred Shares will, subject to certain conditions, have the option to convert their shares to Non‐Cumulative Floating Rate Preferred Shares, Series 2 (the “Series 2 Preferred Shares”) on September 30, 2014 and on September 30 every five years thereafter. Holders of the Series 2 Preferred Shares will be entitled to a floating quarterly dividend rate equal to the 90‐day Canadian Treasury Bill Rate plus 4.53%, as and when declared by the Board of Directors of the Company.

There is no word on whether the issue will be rated or not. It appears from the balance sheet that the company’s funding is over 90% GIC based, with a few bank term loans and a sub-debt issue (held by the owners?) thrown in. As they say:

The Guaranteed Investment Certificate (“GIC”)market continues to provide deep and liquid funding for Equitable Trust’s business. As such, the volatility in the credit markets has had less impact on Equitable than on many other mortgage lenders. As an approved seller under the CMB Program, Equitable Trust is also able to transact securitization activities with government-sponsored programs that continue to be available.

Without a rating, the issue will not be tracked by HIMIPref™, as was the case with RF.PR.A and CWB.PR.A, I’m not convinced that without a rating there will be much public pressure on the company to clean up its act, should its act ever need cleaning up.

Update, 2013-3-3: Trades as ETC.PR.A