PrefBlog

Aimia Inc. has announced:

that none of its 6,000,000 Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”) will be converted into Cumulative Floating Rate Preferred Shares, Series 4 (the “Series 4 Shares”) on April 1, 2019. During the conversion notice period, which commenced on March 4, 2019 and ended at 5:00 p.m. (Montreal time) on March 18, 2019, 65,624 Series 3 Shares were tendered for conversion into Series 4 Shares. In accordance with the rights, privileges, restrictions and conditions attaching to the Series 3 Shares and the Series 4 Shares, since there would be less than 1,000,000 Series 4 Shares outstanding on April 1, 2019, after having taken into account all Series 3 Shares tendered for conversion into Series 4 Shares, holders of Series 3 Shares who elected to tender their shares for conversion will not have their Series 3 Shares converted into Series 4 Shares on April 1, 2019. As a result, no Series 4 Shares will be issued on April 1, 2019.

It will be recalled that AIM.PR.C will reset at 6.011% effective March 31, 2019 (not 6.01%, as stated in the original press release).

AIM.PR.C is a FixedReset, 6.25%+420, that commenced trading 2014-1-15 after being announced 2014-1-6. The extension was announced 2019-2-26. I recommended against conversion. The issue is tracked by HIMIPref™ but relegated to the Scraps-FixedReset (Discount) subindex on credit concerns.

Aimia suspended preferred share dividends in June, 2017. DBRS downgraded the preferreds to Pfd-5(high) in August, 2017, and currently has them under review with developing implications. S&P declared that it considered the preferred shares to be in default in June, 2018. On February 26, 2019, Aimia announced it would be paying the accrued dividends. On March 1, S&P upgraded the credit rating to P-4(low) and discontinued the rating.

The lawyers have an old slogan – False in one thing, false in everything. My credo is ‘Sloppy in one thing, sloppy in everything’.

It will be recalled that Fortis could not be bothered to announce the FTS.PR.K reset rate and that when their figure did come to light it was discovered that there was a discrepancy between the GOC-5 rate they used and that of other companies resetting issues on the same day. The rather vital news regarding conversion – of great interest to those who value liquidity – was also considered a topic not fit for public discussion.

In the face of their continuing refusal to answer a basic question regarding the GOC-5 rate used to determine the reset rate, I finally sent the following eMail to them early on the afternoon of March 18:

Please advise when I may expect an answer to this question, as I do not wish to have to write to the Board of Directors.

Sincerely,

I have finally received an answer:

Good afternoon,

Thank you for your patience. It appears that our team used information as of 10:45 am rather than 10 am.

We plan to bring this issue to our Board on March 31, 2019 for correction. We are targeting to issue a press release with the corrected amounts in early April. Sorry for any inconvenience this may have caused.

All the best,

Sloppy in one thing, sloppy in everything.

FTS.PR.K is a FixedReset, 4.00%+205, that commenced trading 2013-7-13 after being announced 2013-7-9. It was incorrectly claimed to reset to 3.925% effective 2019-3-1, although the company would prefer you didn’t know that. I recommended against conversion. The reset rate is not yet known, over two weeks after it has become effective. The issue is tracked by HIMIPref™ but relegated to the Scraps – FixedResets (Discount) subindex on credit concerns.

Canadian Western Bank has announced (on March 11):

that it does not intend to exercise its right to redeem all or any of its currently outstanding 5,000,000 non-cumulative 5-year rate reset First Preferred Shares Series 5 (the “Series 5 Preferred Shares”) (TSX: CWB.PR.B) on April 30, 2019. As a result, subject to certain conditions described in the prospectus supplement dated February 3, 2014 relating to the issuance of the Series 5 Preferred Shares (the “Prospectus”), the holders of the Series 5 Preferred Shares have the right, at their option, to convert any or all of their Series 5 Preferred Shares into an equal number of CWB’s non-cumulative floating rate First Preferred Shares Series 6 (the “Series 6 Preferred Shares”), subject to certain conditions, on April 30, 2019. In accordance with the share conditions, a formal notice of the right to convert Series 5 Preferred Shares into Series 6 Preferred Shares will be sent to the registered holders of the Series 5 Preferred Shares. Holders of Series 5 Preferred Shares are not required to elect to convert all or any part of their Series 5 Preferred Shares into Series 6 Preferred Shares. Holders who do not exercise their right to convert their Series 5 Preferred Shares into Series 6 Preferred Shares on April 30, 2019 will retain their Series 5 Preferred Shares, unless automatically converted in accordance with the conditions below.

The foregoing conversion right is subject to the conditions that: (i) if, after April 15, 2019, CWB determines that there would be less than 500,000 Series 6 Preferred Shares outstanding on April 30, 2019, then no Series 5 Preferred Shares will be converted into Series 6 Preferred Shares, and (ii) alternatively, if after, April 15, 2019, CWB determines that there would be less than 500,000 Series 5 Preferred Shares outstanding on April 30, 2019, then all remaining Series 5 Preferred Shares will automatically be converted into an equal number of Series 6 Preferred Shares on April 30, 2019. In either case, CWB will give written notice to that effect to any registered holders of Series 5 Preferred Shares affected by the preceding minimums on or before April 23, 2019.

The dividend rate applicable to the Series 5 Preferred Shares for the 5-year period commencing on May 1, 2019, and ending on and including April 30, 2024, and the dividend rate applicable to the Series 6 Preferred Shares for the 3-month period commencing on May 1, 2019, and ending on and including July 31, 2019, will be determined and announced by way of a news release on April 1, 2019. CWB will also give written notice of these dividend rates to the registered holders of Series 5 Preferred Shares.

Beneficial owners of Series 5 Preferred Shares who 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 April 15, 2019. Conversion inquiries should be directed to CWB’s Registrar and Transfer Agent, Computershare, at 1-800-564-6253.

Subject to certain conditions described in the Prospectus, CWB may redeem the Series 5 Preferred Shares, in whole or in part, on April 30, 2024 and on April 30 every five years thereafter and may redeem the Series 6 Preferred Shares, in whole or in part, after April 30, 2019.

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series 6 Preferred Shares effective upon conversion. Listing of the Series 6 Preferred Shares is subject to CWB fulfilling all the listing requirements of the TSX and, upon approval, the Series 6 Preferred Shares will be listed on the TSX under the trading symbol “CWB.PR.E”.

CWB.PR.B is a FixedReset, 4.40%+276, that commenced trading 2014-2-10 after being announced 2014-1-31. It is tracked by HIMIPref™ but relegated to the Scraps – FixedReset (Discount) index on credit concerns.

I will have more to say about the desirability of conversion when the reset rate is announced on April 1.

TransCanada Corporation has announced:

that it does not intend to exercise its right to redeem its Cumulative Redeemable First Preferred Shares, Series 7 (Series 7 Shares) on April 30, 2019. As a result, subject to certain conditions, the holders of Series 7 Shares have the right to choose one of the following options with regard to their shares:
1.to retain any or all of their Series 7 Shares and continue to receive a fixed rate quarterly dividend; or

2.to convert, on a one-for-one basis, any or all of their Series 7 Shares into Cumulative Redeemable First Preferred Shares, Series 8 (Series 8 Shares) of TransCanada and receive a floating rate quarterly dividend.

The dividend rate applicable to the Series 7 Shares for the five-year period commencing on April 30, 2019 to, but excluding, April 30, 2024 will equal the Government of Canada five-year bond yield on April 1, 2019 plus 2.38 per cent. The dividend rate applicable to the Series 8 Shares for the three-month period commencing on April 30, 2019 to, but excluding, July 30, 2019 will equal the Government of Canada 90-day treasury bill rate on April 1, 2019 plus 2.38 per cent. Both rates will be calculated according to the terms of the prospectus supplement dated November 14, 2011, and announced by way of a news release on April 1, 2019.

Beneficial owners of Series 7 Shares who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to meet the deadline to exercise such right, which is 5 p.m. (EDT) on April 15, 2019. Any notices received after this deadline will not be valid. As such, it is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary with time to complete the necessary steps.

The foregoing conversions are subject to the conditions that: (i) if TransCanada determines that there would be less than one million Series 7 Shares outstanding after April 30, 2019, then all remaining Series 7 Shares will automatically be converted into Series 8 Shares on a one-for-one basis on April 30, 2019, and (ii) alternatively, if TransCanada determines that there would be less than one million Series 8 Shares outstanding after April 30, 2019, no Series 7 Shares will be converted into Series 8 Shares. In either case, TransCanada will issue a news release to that effect no later than April 23, 2019.

Beneficial owners of Series 7 Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their Series 7 Shares and receive the new annual fixed dividend rate applicable to the Series 7 Shares, subject to the conditions stated above.

Holders of the Series 7 Shares and the Series 8 Shares will have the opportunity to convert their shares again on April 30, 2024, and every five years thereafter as long as the shares remain outstanding.

For more information on the terms of, and risks associated with an investment in the Series 7 Shares and the Series 8 Shares, please see the Corporation’s prospectus supplement dated November 14, 2011 which is available on sedar.com or on the Corporation’s website.

TRP.PR.D is a FixedReset, 4.00%+238, that commenced trading 2013-3-4 after being announced February 25 at $300-million and quickly monster-sized to $600-million.

I will have more to say about the conversion when the rate is announced on April 1.

Pembina Pipeline Corporation has announced:

that none of Pembina’s Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 17 (“Series 17 Shares”) (TSX: PPL.PR.Q) will be converted into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 18 of Pembina (“Series 18 Shares”) on March 31, 2019.

After taking into account all conversion notices received from holders of its outstanding Series 17 Shares by the March 15, 2019 deadline for the conversion of the Series 17 Shares into Series 18 Shares, less than the 1,000,000 Series 17 Shares required to give effect to conversions into Series 18 Shares were tendered for conversion.

It will be recalled that PPL.PR.Q will reset at 4.821% effective March 31, 2019.

PPL.PR.Q was originally issued as VSN.PR.C, following a plan of arrangement between the two companies. VSN.PR.C was a FixedReset, 5.00%+301 that commenced trading 2013-10-21 after being announced October 9. I recommended against conversion. PPL.PR.Q is tracked by HIMIPref™ but is relegated to the Scraps-FixedReset (Discount) subindex on credit concerns.

Standard & Poor’s has announced:

• •Sun Life Financial Inc. has successfully implemented its “four pillar” strategy, leading to an improved business risk profile as shown by its strong and very stable operating performance.
• •The company’s financial risk profile continues to be characterized by healthy capitalization and strong financial flexibility.
• •We are raising our ratings on the group’s insurance operating subsidiaries to ‘AA’ from ‘AA-‘ and on the holding company to ‘A+’ from ‘A’.
• •The outlook is stable, reflecting our expectation that the group will maintain its status as a top three insurer in Canada and continue to grow its other global businesses.

…
In 2012, SLF announced its “four pillar” strategy that focuses on its Canadian
group and individual life, U.S. group, Asia group, and asset management businesses. Over the past seven years, SLF has grown these businesses profitably (including through acquisitions) while also divesting some of its noncore businesses, such as its U.S. variable annuity business in 2013.

The outlook on SLF is stable, reflecting our expectation that the group will continue to maintain its status as a top three insurer in Canada and continue to grow its Asia, U.S., and asset management businesses, earning consistent returns from each. We also expect the group to maintain its current level of capitalization, as well as fixed-charge coverage above 8.0x with financial leverage below 30%.

We could lower the ratings if we believe SLF’s competitive advantage is deteriorating, resulting in a longer-term decline in operating performance relative to peers; if it loses its market position or experiences meaningful damage to its reputation in Canada; or if its asset management businesses see sustained losses.

While unlikely in the next two years, we could raise our ratings if SLF’s capital redundancy at ‘AAA’ grows significantly and we believe management remains committed to ‘AAA’ levels of capital.

Affected issues are SLF.PR.A, SLF.PR.B, SLF.PR.C, SLF.PR.D, SLF.PR.E, SLF.PR.G, SLF.PR.H, SLF.PR.I, SLF.PR.J and SLF.PR.K.

The sale of the US annuities unit was reported on PrefBlog in August, 2013, as was S&P’s positive outlook in March 2017.

DBRS downgraded the SLF preferred to Pfd-2 in December 2015, and most recently confirmed them at that level in December, 2018.