PrefBlog

Dundee Corporation has announced that it:

today completed the redemption of 458,969 first preference shares, series 5 (the “Series 5 Preferred Shares”), being all such shares tendered for redemption in accordance with the previously announced mandatory redemption provisions of the Series 5 Preferred Shares. The Series 5 Preferred Shares were redeemed at a price of $25.00 per share. Following completion of the partial redemption, a total of 3,598,203 Series 5 Preferred Shares remain issued and outstanding.

So that’s an 11% retraction compared to the theoretical maximum of 15% declared in accordance with the reorganization earlier this year. Given that it closed today at 24.50-62, the low take-up surprises me.

Brookfield Asset Management Inc. has announced:

the results of the exercise of the conversion privilege for its Class A Preference Shares, Series 24 (the “Series 24 Preferred Shares”) (TSX: BAM.PR.R) and its Class A Preference Shares, Series 25 (the “Series 25 Preferred Shares”) (TSX: BAM.PR.S).

Holders of the company’s Series 24 Preferred Shares and Series 25 Preferred Shares had the right to exchange their shares for the other series effective June 30, 2016, if they submitted an election to convert their shares on a one-for-one basis prior to June 15, 2016. Holders of 1,533,133 Series 24 Preferred Shares have elected to convert these shares into an equivalent number of Series 25 Preferred Shares.

These conversions will be effective on July 1, 2016. Following these conversions, there will be 9,436,867 Series 24 Preferred Shares and 1,533,133 Series 25 Preferred Shares issued and outstanding.

For the five years commencing July 1, 2016, the Series 24 Preferred Shares pay a fixed rate dividend, if declared, at an annual rate of 3.014% (C$0.188375 per share per quarter).

The Series 25 Preferred Shares pay quarterly floating rate dividend, if declared, calculated for each quarter, of 2.30% over the annual yield on three-month Government of Canada treasury bills. The actual quarterly dividend rate in respect of the July 1, 2016 to September 30, 2016 dividend period for the Series 25 Shares will be 0.71861% (2.851% on an annualized basis) and the dividend, if declared, for such dividend period will be C$0.1796525 per share, payable on September 30, 2016.

Holders of the company’s Series 24 and Series 25 Preferred Shares will again have the opportunity to convert their shares into the other series effective June 30, 2021 and every five years thereafter.

Assiduous Readers will remember that I recommended against conversion after reporting that BAM.PR.R will reset to 3.014% (a drop of 44%).

Shaw Communications Inc. has announced:

that 1,987,607 of its 12,000,000 Cumulative Redeemable Rate Reset Class 2 Preferred Shares, Series A (the “Series A Shares”) were tendered for conversion, on a one-for-one basis, into Cumulative Redeemable Floating Rate Class 2 Preferred Shares, Series B (the “Series B Shares”) after having taken into account all election notices following the June 15, 2016 conversion deadline. As a result of the conversion, Shaw will have 10,012,393 Series A Shares and 1,987,607 Series B Shares issued and outstanding. The Series A Shares will continue to be listed on the Toronto Stock Exchange (“TSX”) under the symbol SJR.PR.A. The Series B Shares will begin trading on the TSX on June 30, 2016 under the symbol SJR.PR.B, subject to Shaw fulfilling all the listing requirements of the TSX.

The Annual Fixed Dividend Rate for the Series A Shares, payable quarterly, was set for the five year period from and including June 30, 2016 to but excluding June 30, 2021, if, as and when declared by the Board of Directors of Shaw, based on an annual fixed dividend rate of 2.791%.

Effective June 30, 2016, the Floating Quarterly Dividend Rate for the Series B Shares was set for the first Quarterly Floating Rate Period, being the period from and including June 30, 2016 to but excluding September 30, 2016, at an annual dividend rate of 2.539%. The Floating Quarterly Dividend Rate will be reset quarterly.

For more information on the terms of, and risks associated with, an investment in, the Series A Shares and the Series B Shares, see Shaw’s prospectus supplement dated May 20, 2011 which is available on sedar.com.

Assiduous Readers will remember that I recommended against conversion after reporting that SJR.PR.A will reset to 2.791% (a drop of 38%).

Brookfield Office Properties Inc., a subsidiary of Brookfield Property Partners L.P. has announced:

that after having taken into account all election notices received by the June 15, 2016 deadline for the conversion of its Class AAA Preference Shares, Series N (the “Series N Shares”) (TSX: BPO.PR.N) into Class AAA Preference Shares, Series O (the “Series O Shares”), the holders of Series N Shares are not entitled to convert their Series N Shares into Series O Shares. There were 972,331 Series N Shares tendered for conversion, which is less than the one million shares required to give effect to conversions into Series O Shares.

The Series N Shares will pay on a quarterly basis, for the five-year period beginning on July 1, 2016, as and when declared by the board of directors of Brookfield, a fixed dividend based on an annual dividend rate of 3.782% ($0.236375 per share per quarter).

Assiduous Readers will remember that I recommended against conversion after reporting that BPO.PR.N will reset to 3.782% (a drop of 39%).

Bank of Montreal has announced:

that it does not intend to exercise its right to redeem the currently outstanding Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 25 of the Bank (the “Preferred Shares Series 25”) on August 25, 2016, and as a result, subject to certain conditions, the holders of Preferred Shares Series 25 have the right, at their option, to convert all or part of their Preferred Shares Series 25 on a one-for-one basis into Non-Cumulative Floating Rate Class B Preferred Shares, Series 26 of the Bank (the “Preferred Shares Series 26”) on August 25, 2016. Holders who do not exercise their right to convert their Preferred Shares Series 25 into Preferred Shares Series 26 on such date will retain their Preferred Shares Series 25, unless automatically converted in accordance with the conditions below.

The foregoing conversions are subject to the conditions that: (i) if, after August 10, 2016, the Bank determines that there would be less than 1,000,000 Preferred Shares Series 25 outstanding on August 25, 2016, then all remaining Preferred Shares Series 25 will automatically be converted into an equal number of Preferred Shares Series 26 on August 25, 2016; and (ii) alternatively, if the Bank determines that there would be less than 1,000,000 Preferred Shares Series 26 outstanding on August 25, 2016, no Preferred Shares Series 25 will be converted into Preferred Shares Series 26. In either case, the Bank will give written notice to that effect to any registered holders of Preferred Shares Series 25 affected by the preceding minimums on or before August 18, 2016.

The dividend rate applicable to the Preferred Shares Series 25 for the 5-year period commencing on August 25, 2016, and ending on August 24, 2021, and the dividend rate applicable to the Preferred Shares Series 26 for the 3-month period commencing on August 25, 2016, and ending on November 24, 2016, will be determined and announced by way of a news release on July 26, 2016. The Bank will also give written notice of these dividend rates to the registered holders of Preferred Shares Series 25.

Beneficial owners of Preferred Shares Series 25 who, on or after July 26, 2016, wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5:00 p.m. (EDT) on August 10, 2016.

BMO.PR.Q is a FixedReset, 3.90%+115, which commenced trading 2011-3-11 after being announced 2011-3-2. It will be noted that the prospectus does not mention the NVCC rules except as follows:

The Basel Committee on Banking Supervision has announced new international bank capital adequacy rules (commonly called Basel III) which will amend the existing Basel II capital management framework. The Office of the Superintendent of Financial Institutions of Canada (‘‘OSFI’’) has announced that it plans to adopt the new Basel III rules for purposes of Canadian bank capital guidelines. Under the new Basel III rules, effective January 1, 2013, all non-common Tier 1 and Tier 2 capital instruments issued by a bank must have, either in their contractual terms and conditions or by way of statute in the issuer’s home country, a clause requiring a full and permanent conversion into common shares of such bank upon certain trigger events at the point where such bank is determined to be no longer viable. The Preferred Shares Series 25 and, if and when issued, the Preferred Shares Series 26 as a result may not fully qualify as non-common Tier 1 capital under the new capital rules as no such conversion mechanism exists. For purposes of being included in the Bank’s regulatory capital under the new capital rules, the Preferred Shares Series 25 and the Preferred Shares Series 26 would be phased out beginning January 31, 2013 (their recognition will be capped at 90% of total Tier 1 capital from January 1, 2013, with the cap reducing by 10% in each subsequent year). As a result, the Bank may, with the prior approval of the Superintendent, redeem the Preferred Shares Series 25 and the Preferred Shares Series 26, if any, in accordance with their respective terms.

Accordingly, I treat these shares as having a DeemedRetraction for analytical purposes.

I will relay information regarding the reset rate when it is announced July 26 and make a recommendation regarding conversion shortly before the conversion deadline of August 10, 2016.

The Bank of Nova Scotia has announced:

Scotiabank (TSX: BNS) (NYSE: BNS) today announced that it intends to exercise its right to redeem all outstanding Non-cumulative Preferred Shares Series 15 of Scotiabank (the “Series 15 Shares”) on July 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 May 31, 2016, the Board of Directors of Scotiabank announced a quarterly dividend of $0.28125 per Series 15 Share. This will be the final dividend on the Series 15 Shares and will be paid in the usual manner on July 27, 2016, to shareholders of record at the close of business on July 5, 2016, as previously announced. After July 27, 2016, the Series 15 Shares will cease to be entitled to dividends.

BNS.PR.M is a StraightPerpetual, 4.50%, that commenced trading 2007-4-5 after being announced 2007-3-21. The greenshoe was exercised in its entirety, resulting in 13.8-million shares ($345-million) trading. The issue had no NVCC clause, so since February 2011 it has been considered a DeemedRetractible.