PrefBlog

DBRS has announced (on 2021-3-29):

DBRS Limited (DBRS Morningstar) downgraded Brookfield Property Partners L.P.’s (BPP) Issuer Rating and Senior Unsecured Debt rating to BBB (low) from BBB. DBRS Morningstar also downgraded its ratings on Brookfield Property Finance ULC’s Senior Unsecured Notes and Brookfield Office Properties Inc.’s Senior Unsecured Notes to BBB (low) from BBB and Brookfield Office Properties Inc.’s Cumulative Redeemable Preferred Shares, Class AAA to Pfd-3 (low) from Pfd-3. All trends have been changed to Stable from Negative. DBRS Morningstar notes that the ratings are based on the credit risk profile of the consolidated entity, including BPP and its subsidiaries (collectively, BPY or the Partnership).

The rating downgrades principally reflect BPY’s weaker-than-expected key financial risk metrics, particularly total debt-to-EBITDA (18.7 times (x) on a last-12-months (LTM) basis at December 31, 2020), as a result of the significant impact the ongoing Coronavirus Disease (COVID-19) pandemic and consequent economic slowdown has had on BPY’s operations and tenants. Negative impacts include rent deferrals and abatements, increased bad debt reserves, lower short-term revenues (parking, temporary tenants, etc.), increasing vacancy because of tenant bankruptcies (concentrated in BPY’s Core Retail segment), and the impact of drastically lower travel demand on BPY’s hotel portfolio (concentrated in BPY’s LP Investments segment).

DBRS Morningstar has also modestly revised downward its overall business risk assessment of BPY because of a lower assessment of BPY’s asset quality, partially offset by improvement in market position. DBRS Morningstar is of the view that, while still of high overall quality, demand for BPY’s enclosed shopping centre assets in the U.S. will take time to recover, as evidenced by cash flow volatility through the pandemic, the discretionary nature of its tenants with elevated counterparty risk, and tempered transaction activity resulting in a lower asset quality assessment. On the other hand, DBRS Morningstar has revised upward its assessment of BPY’s market position as a top player in the global real estate industry across real estate categories, as proven by BPY’s continued ability to transact through the pandemic in multiple respects, such as leasing, capital recycling, and financing initiatives. The net impact of the revisions to asset quality and market position result in a modest deterioration in BPY’s stand-alone credit assessment.

The Stable trends consider DBRS Morningstar’s expectation for significant improvement in BPY’s total debt-to-EBITDA to below 16.0x by YE2022, with continued improvement thereafter. This expectation is supported by DBRS Morningstar’s view that the worst of the economic fallout from the pandemic has already occurred and that BPY should see a recovery in EBITDA as the economy gradually normalizes, resulting in improved cash rent collections, fewer bad debt expenses, improving occupancy driven by fewer bankruptcies and re-leasing to well-positioned tenants, increasing short-term revenue streams, and improving travel demand for its hotel accommodations, as well as stabilization of its office development projects (e.g., One Manhattan West and 100 Bishopsgate). DBRS Morningstar anticipates that the aforementioned growth drivers will be partially offset by accelerating capital recycling activity as BPY disposes of noncore assets and/or partial interests in core assets and uses the proceeds to pay down debt and fund capital expenditures. As a result of all the above, DBRS Morningstar expects BPY’s EBITDA to increase to approximately $3.1 billion and total debt to decrease to approximately $48.0 billion by YE2022 (from $2.8 billion and $52.2 billion in 2020, respectively).

The ratings continue to be supported by (1) the Partnership’s robust access to liquidity of $5.5 billion, consisting of $1.7 billion in cash and cash equivalents and $3.8 billion available on credit facilities at December 31, 2020; (2) financial flexibility afforded by nonrecourse mortgage debt and no unsecured maturities until October 2021, when the $314 million Series 2 Senior Unsecured Notes come due; (3) DBRS Morningstar’s view of implicit support from Brookfield Asset Management Inc. (BAM; rated A (low) with a Stable trend by DBRS Morningstar); (4) BPY’s market position as a pre-eminent global real estate company; and (5) high-quality assets, particularly its Core Office segment, with long-term leases in place and large, recognizable investment-grade-rated tenants. The ratings continue to be constrained by BPY’s weak financial risk assessment as reflected by both its highly leveraged balance sheet and low EBITDA interest coverage (1.25x LTM); a riskier retail leasing profile in terms of lease maturities and counterparty risk relative to BPY’s Core Office segment; a higher-risk opportunistic LP Investments segment composed primarily of hotel, office, retail, and alternative assets; and DBRS Morningstar’s assessment of the unmitigated structural subordination of the Senior Unsecured Debt at the BPP level relative to a material amount of debt at its operating subsidiaries.

With these rating downgrades, BPY continues to have little in the way of financial flexibility for the ratings. Indeed, DBRS Morningstar would consider a further negative rating action should BPY’s operating environment fail to improve as expected such that total debt-to-EBITDA remains above 16.0x on a sustained basis, all else equal, or if DBRS Morningstar changes its views on the level and strength of implicit support provided by BAM. DBRS Morningstar does not anticipate a positive rating action for the foreseeable future given the constraints noted above.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Affected issues are: BPO.PR.A, BPO.PR.C, BPO.PR.E, BPO.PR.G, BPO.PR.I, BPO.PR.N, BPO.PR.P, BPO.PR.S, BPO.PR.T, BPO.PR.W, BPO.PR.X and BPO.PR.Y.

Sun Life Financial Inc. has announced (on 2021-8-4):

On September 29, 2021, we intend to redeem all of the $400 million Class A Non-Cumulative Preferred Shares Series 1 and all of the $325 million Class A Non-Cumulative Preferred Shares Series 2. The redemptions are subject to regulatory approval and will be funded from existing cash and other liquid assets in SLF Inc. The redemptions will result in a reduction in SLF Inc.’s LICAT ratio and financial leverage ratio of approximately three and two percentage points, respectively. Sun Life Assurance’s LICAT ratio will not be impacted.

This follows an earlier announcement (on 2021-6-23):

that it intends to issue in Canada $1 billion principal amount of 3.60% Limited Recourse Capital Notes Series 2021-1 (Subordinated Indebtedness) (the “Notes”). The offering is expected to close on June 30, 2021. The net proceeds will be used for general corporate purposes of the Company, which may include investments in subsidiaries, repayment of indebtedness and other strategic investments.

The Notes will bear interest at a fixed rate of 3.60% annually, payable semi-annually, for the initial period ending on, but excluding, 2026. Thereafter, the interest rate on the Notes will reset every five years at a rate equal to the prevailing 5-year Government of Canada Yield plus 2.604%. The Notes mature on June 30, 2081.

In connection with the issuance of the Notes, the Company will issue 1 million Class A Non-Cumulative Rate Reset Preferred Shares Series 14 (the “Series 14 Shares”) to be held by Computershare Trust Company of Canada as trustee of a newly formed trust (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the Notes when due, the recourse of each noteholder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets, which will consist of Series 14 Shares except in limited circumstances.

Subject to prior regulatory approval, the Company may redeem the Notes, in whole or in part on not less than 15 nor more than 60 days’ prior notice by the Company, on June 30, 2026 and every five years thereafter during the period from May 31 to and including June 30, commencing in 2031, at a redemption price equal to par, together with accrued and unpaid interest up to, but excluding, the date of redemption.

Additional details of the offering will be set out in a prospectus supplement that the Company intends to issue pursuant to its short form base shelf prospectus dated March 19, 2021, both of which are or will be available on the SEDAR website for Sun Life Financial Inc. at www.sedar.com. The Notes will be sold on a best efforts agency basis by a syndicate co-led by RBC Capital Markets, BMO Capital Markets and TD Securities. The proceeds from this offering are expected to qualify for Tier 1 capital.

SLF.PR.A and SLF.PR.B were both PerpetualDiscounts, paying 4.75% and 4.80% respectively, that were issued in 2005.

Update, 2021-8-13: DBRS has finalized the LRCN rating:

DBRS Limited (DBRS Morningstar) finalized its provisional rating of A (low) with a Stable trend on Great-West Lifeco Inc.’s (Great-West or the Company) Limited Recourse Capital Notes Series 1 (Subordinated Indebtedness). DBRS Morningstar assigned the rating equal to the Company’s Issuer Rating of A (high) less two rating notches, which is consistent with DBRS Morningstar’s notching approach for debt instruments issued by insurance holding companies. This is two notches below the rating of Great-West’s Debentures.

Great-West expects to issue $1.5 billion of the Limited Recourse Capital Notes on August 16, 2021, with a maturity date of December 31, 2081. The Limited Recourse Capital Notes will have an initial five-year fixed rate of 3.60%.

RATING DRIVERS
An upgrade is unlikely in the intermediate term given the increase in financial leverage and integration risk following two large acquisitions. However, over the long term, a material improvement in financial leverage together with the successful integration of recent acquisitions, while maintaining strong earnings and regulatory capital levels, would result in an upgrade.

Conversely, the ratings would be downgraded if the Company experiences further sustained deterioration of its financial leverage, combined with weaker profitability and coverage ratios. Moreover, an adverse event causing regulatory capital to decline substantially or significant operational missteps with recent acquisitions, would result in a downgrade.

Bank of Montreal has announced (on 2021-7-16):

its intention to redeem all of its 9,425,607 outstanding Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 25 (“Preferred Shares Series 25”) for an aggregate total of approximately $236 million and all of its 2,174,393 outstanding Non-Cumulative Floating Rate Class B Preferred Shares, Series 26 (“Preferred Shares Series 26”) for an aggregate total of approximately $54 million on August 25, 2021. The redemption has been approved by the Office of the Superintendent of Financial Institutions.

The Preferred Shares Series 25 and the Preferred Shares Series 26 are redeemable at the Bank’s option on August 25, 2021, at a redemption price of $25.00 per share. Payment of the redemption price will be made by the Bank on August 25, 2021.

Separately from the payment of the redemption price, the final quarterly dividend of $0.112813 per share for the Preferred Shares Series 25 and $0.078704 per share for the Preferred Shares Series 26 announced by the Bank on May 26, 2021 will be paid in the usual manner on August 25, 2021, to shareholders of record on August 3, 2021.

Notice will be delivered to holders of the Preferred Shares Series 25 and the Preferred Shares Series 26 in accordance with the terms outlined in the Preferred Shares Series 25 and Preferred Shares Series 26 prospectus supplement.

BMO.PR.Q was issued as a FixedReset, 3.90%+115, which commenced trading 2011-3-11 after being announced 2011-3-2. Notice of extension was provided and the issue reset to 1.805% in 2016. There was a 19% conversion to the FloatingReset, BMO.PR.A.

BMO.PR.A arose through a partial conversion from the FixedReset, BMO.PR.Q, in 2016.

Canadian Western Bank has announced (on 2021-6-1):

that it will redeem all of its outstanding 5,600,000 Non-Cumulative 5-Year Rate Reset First Preferred Shares Series 7 (Non-Viability Contingent Capital (NVCC)) (the “Series 7 Preferred Shares”) for cash on July 31, 2021. The Series 7 Preferred Shares (TSX: CWB.PR.C) are redeemable at CWB’s option on July 31, 2021 at a redemption price per Series 7 Preferred Share equal to $25.00 for an aggregate total of $140 million. Formal notice will be delivered to holders of Series 7 Preferred Shares in accordance with the terms outlined in the share provisions for the Series 7 Preferred Shares.

Separately from the redemption price, the final quarterly dividend of $0.390625 per Series 7 Preferred Share will be paid in the usual manner on July 31, 2021 to shareholders of record on July 23, 2021. After the Series 7 Preferred Shares are redeemed, holders of Series 7 Preferred Shares will cease to be entitled to distributions of dividends and will not be entitled to exercise any rights as holders other than to receive the redemption price.

CWB.PR.C was a FixedReset, 6.25%+547, NVCC, that commenced trading 2016-3-31 after being announced 2016-3-10. It was tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

Capstone Infrastructure Corporation has announced (on 2021-7-5):

the applicable dividend rates for its Cumulative 5-Year Rate Reset Preferred Shares, Series A (the “Series A shares”) and Cumulative Floating Rate Preferred Shares, Series B (the “Series B shares”) that will take effect on July 31, 2021.

With respect to any Series A shares that remain outstanding after August 3, 2021 (when, subject to the terms of the Corporation’s articles, holders of Series A shares who elect to exchange some or all of their Series A shares for Series B shares will have such shares exchanged) (the “Conversion Date”), holders of Series A shares will be entitled to receive quarterly fixed cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Capstone. The dividend rate for the five-year period from and including July 31, 2021 to but excluding July 31, 2026 will be 3.702% per annum, being equal to the five-year Government of Canada bond yield determined as of today plus 2.71%, in accordance with the terms of the Series A shares.

With respect to any Series B shares that may be issued on the Conversion Date, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Capstone. The dividend rate for the three-month period from and including July 31, 2021 to but excluding October 31, 2021 will be 2.852% per annum, being equal to the three-month Government of Canada Treasury Bill yield per annum determined as of today plus 2.71%, with the amount of any quarterly dividend calculated based on the actual number of days in such quarterly period divided by 365, in accordance with the terms of the Series B shares.

Beneficial owners of Series A shares who wish to exercise their conversion right should communicate with their broker or other nominee to ensure their instructions are followed so that the registered holder of the Series A shares can meet the deadline to exercise such conversion right, which is 5:00 p.m. (EST) on July 19, 2021.

This followed notice of conversion rights (on 2021-6-10):

it does not intend to exercise its right under the terms of its Cumulative 5-Year Rate Reset Preferred Shares, Series A (the “Series A shares”) to redeem all or part of the currently outstanding 3,000,000 Series A shares on July 31, 2021. As a result, subject to certain conditions, the holders of the Series A shares have the right to convert all or part of their Series A shares, on a one-for-one basis, into Cumulative Floating Rate Preferred Shares, Series B (the “Series B shares”) on August 3, 2021 (the “Conversion Date”) in accordance with the terms of the Series A shares.

Holders of Series A shares who do not exercise their right to convert their Series A shares into Series B shares on the Conversion Date will retain their Series A shares, subject to the conditions set out below.

The dividend rate applicable to the Series A shares for the five-year period from July 31, 2021 to but excluding July 31, 2026, and the dividend rate applicable to the Series B shares for the three-month period from July 31, 2021 to October 31, 2021, will be determined and announced by way of a news release on July 5, 2021.

Beneficial owners of Series A shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from July 5, 2021 until July 19, 2021 at 5:00 p.m. (EST).

The foregoing conversion rights are subject to the conditions, as set out in the terms of the Series A shares, that: (i) if Capstone determines that there would remain outstanding on the Conversion Date less than 1,000,000 Series B shares, after having taken into account all Series A shares tendered for conversion into Series B shares, then holders of Series A shares will not be entitled to convert their shares into Series B shares and all holders will continue to hold Series A shares, and (ii) alternatively, if Capstone determines that there would remain outstanding on the Conversion Date less than 1,000,000 Series A shares, after having taken into account all Series A shares tendered for conversion into Series B shares, then all remaining Series A shares will automatically be converted into Series B shares on a one-for-one basis on the Conversion Date and all holders will hold Series B shares. In either case, Capstone will give written notice to that effect to the registered holder of Series A shares no later than July 27, 2021.

They then announced (on 2021-7-20):

that none of its Cumulative 5-Year Rate Reset Preferred Shares, Series A (the “Series A shares”) will be converted into Cumulative Floating Rate Preferred Shares, Series B (the “Series B shares”).

On June 10, 2021, Capstone notified holders of Series A shares that they could elect to convert their Series A shares into Series B shares, subject to the terms and conditions of those shares. One such condition is that, following conversion, there be at least 1,000,000 Series B shares outstanding or else no Series A shares will be converted.

As of 5:00 p.m. (EST) on July 19, 2021, the end of the period during which holders of Series A shares could elect to convert their Series A shares into Series B shares, elections for conversion into Series B shares were received in respect of only 57,250 of the 3,000,000 outstanding Series A shares. As a result, the above condition is not satisfied and no Series A shares will be converted into Series B shares. All holders of Series A shares will continue to hold Series A shares.

As previously announced, for the five-year period from and including July 31, 2021 to but excluding July 31, 2026, the fixed annual dividend rate for the Series A shares has been set at 3.702% per share, payable in equal quarterly amounts on the last day of each of the months of January, April, July and October if, as and when dividends are declared by the Board of Directors of the Corporation.

CSE.PR.A was issued as a FixedReset, 5.00%+271, that commenced trading 2011-6-30 after being announced 2011-6-13. Notice of extension was provided and it reset to 3.271% in 2016. I recommended against conversion and there was no conversion to FloatingReset. The issue is now unrated.

The Bank of Nova Scotia has announced (on 2021-6-17):

its intention to redeem all outstanding Non-cumulative 5-Year Rate Reset Preferred Shares Series 36 (Non-Viability Contingent Capital (NVCC)) (“Series 36 Shares”) of Scotiabank on July 26, 2021 at a price equal to $25.00 per share together with declared and unpaid dividends to the Redemption Date (the “Redemption Price”). Formal notice will be issued to the 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. This redemption is part of the Bank’s ongoing management of its Tier 1 capital.

On June 1, 2021, the Board of Directors of Scotiabank declared quarterly dividends of $0.343750 per Series 36 Share. This will be the final dividend on the Series 36 Shares and will be paid on July 26, 2021, to shareholders of record at the close of business on July 6, 2021, as previously announced. Subsequent to this final dividend payment, the Series 36 Shares will cease to be entitled to dividends.

BNS.PR.G was a FixedReset, 5.50%+472, that commenced trading 2016-3-14 after being announced 2016-3-3. It was tracked by HIMIPref™ and is assigned to the FixedReset-Premium subindex.

Brookfield Renewable Partners L.P. has announced (on 2021-7-2):

that it intends to redeem all of its outstanding Class A Preferred Limited Partnership Units, Series 9 (the “Series 9 Preferred Units”) (TSX: BEP.PR.I) for cash on July 31, 2021. The redemption price for each Series 9 Preferred Unit will be C$25.00. Holders of Series 9 Preferred Units of record as of July 15, 2021 will receive the previously declared final quarterly distribution of $0.359375 per Series 9 Preferred Unit.

BEP.PR.I was a FixedReset, 5.75%+501M575, that commenced trading 2016-5-25 after being announced 2016-5-16. The issue was tracked by HIMIPref™ but was relegated to the Scraps subindex on credit concerns.

Brookfield Asset Management Inc. has announced (on 2021-6-1):

that it has determined the fixed dividend rate on its Cumulative Class A Preference Shares, Series 24 (“Series 24 Shares”) (TSX: BAM.PR.R) for the five years commencing July 1, 2021 and ending June 30, 2026, and also determined the quarterly dividend on its floating rate Cumulative Class A Preference Shares, Series 25 (“Series 25 Shares”) (TSX: BAM.PR.S).

If declared, the fixed quarterly dividends on the Series 24 Shares during the five years commencing July 1, 2021 will be paid at an annual rate of 3.237% ($0.2023125 per share per quarter).

Holders of Series 24 Shares have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on June 15, 2021, to convert all or part of their Series 24 Shares, on a one-for-one basis, into Series 25 Shares, effective June 30, 2021. The quarterly floating rate dividends on the Series 25 Shares will be paid at an annual rate, 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, 2021 to September 30, 2021 dividend period will be 0.6072% (2.409% on an annualized basis) and the dividend, if declared, for such dividend period will be $0.1518 per share, payable on September 30, 2021.

Holders of Series 25 Shares also have the right, at their option, exercisable not later than 5:00 p.m. (Toronto time) on June 15, 2021, to convert all or part of their Series 25 Shares, on a one-for-one basis, into Series 24 Shares, effective June 30, 2021. Holders of the Series 25 Shares who elect to convert their shares by the conversion deadline will receive Series 24 Shares, effective June 30, 2021 and will be entitled to receive, if declared, the fixed-rate dividend as described above.

Holders of Series 24 Shares are not required to elect to convert all or any part of their Series 24 Shares into Series 25 Shares and holders of Series 25 Shares are not required to elect to convert all or any part of their Series 25 Shares into Series 24 Shares.

As provided in the share conditions of the Series 24 Shares, (i) if Brookfield determines that there would be fewer than 1,000,000 Series 24 Shares outstanding after June 30, 2021, all remaining Series 24 Shares will be automatically converted into Series 25 Shares on a one-for-one basis effective June 30, 2021; and (ii) if Brookfield determines that there would be fewer than 1,000,000 Series 25 Shares outstanding after June 30, 2021, no Series 24 Shares will be permitted to be converted into Series 25 Shares. There are currently 9,278,894 Series 24 Shares outstanding.

Similarly, as provided in the share conditions of the Series 25 Shares, (i) if Brookfield determines that there would be fewer than 1,000,000 Series 25 Shares outstanding after June 30, 2021, all remaining Series 25 Shares will be automatically converted into Series 24 Shares on a one-for-one basis effective June 30, 2021; and (ii) if Brookfield determines that there would be fewer than 1,000,000 Series 24 Shares outstanding after June 30, 2021, no Series 25 Shares will be permitted to be converted into Series 24 Shares. There are currently 1,529,133 Series 25 Shares outstanding.

They later announced (on 2021-6-23):

that 28,961 of its Cumulative Class A Preference Shares, Series 24 (the “Series 24 Shares”) (TSX: BAM.PR.R) and 658,612 of its Cumulative Class A Preference Shares, Series 25 (the “Series 25 Shares”) (TSX: BAM.PR.S) were tendered for conversion into Series 25 Shares and Series 24 Shares, respectively.

Brookfield currently has 9,278,894 Series 24 Shares and 1,529,133 Series 25 Shares outstanding. After taking into account all shares tendered for conversion, there would be less than one million Series 25 Shares outstanding on June 30, 2021, the conversion date. Accordingly, as provided in the share conditions of the Series 25 Shares, all remaining Series 25 Shares will be automatically converted into Series 24 Shares on a one-for-one basis effective June 30, 2021 (“automatic conversion”). There will be no conversion of Series 24 Shares tendered for conversion into Series 25 Shares, and holders of Series 24 Shares will retain their Series 24 Shares.

Following the automatic conversion, there will be 10,808,027 Series 24 Shares and no Series 25 Shares issued and outstanding. Holders of Series 25 Shares will receive a dividend of $0.147905 per share payable on June 30, 2021 in respect of the April 1, 2021 to June 30, 2021 floating rate period. If declared, the fixed quarterly dividends on the Series 24 Shares during the five years commencing July 1, 2021 will be paid at an annual rate of 3.237% ($0.2023125 per share per quarter). The Series 25 Shares will be de-listed from the Toronto Stock Exchange effective as of close of trading on June 30, 2021.

BAM.PR.R was issued as a FixedReset, 5.40%+230, that commenced trading 2010-1-14 after being announced 2010-1-5. It reset to 3.014% in 2016; I recommended against conversion but there was a 14% conversion to the FloatingReset BAM.PR.S anyway.

BAM.PR.S was a FloatingReset, Bills+230, that arose via a partial conversion from the FixedReset BAM.PR.R.

Brompton Funds announced (on 2021-3-10):

) Global Dividend Growth 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 11, 2021. The offering is expected to close on or about March 18, 2021 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 $11.15 per Class A Share for a distribution rate of 10.8% on the issue price, and the Preferred Shares will be offered at a price of $10.20 per Preferred Share for a yield to maturity of 4.8%. The closing price on the TSX for each of the Class A Shares and Preferred Shares on March 9, 2021 was $11.32 and $10.44, respectively. The Class A Share 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 (“Unit”) (calculated as at March 9, 2021), as adjusted for dividends and certain expenses to be accrued prior to or upon settlement of the offering. The offering is being led by RBC Capital Markets.

The Company invests in a diversified portfolio (the “Portfolio”) of equity securities of large capitalization global dividend growth companies selected by the Brompton Funds Limited (the “Manager”). In order to qualify for inclusion in the Portfolio, at the time of investment and at the time of each periodic reconstitution and/or rebalancing of the Portfolio, each global dividend growth company included in the Portfolio must (i) have a market capitalization of at least $10 billion; and (ii) have a history of dividend growth or, in the Manager’s view, have high potential for future dividend growth.

The investment objectives for the Class A Shares are to provide holders with regular monthly cash distributions 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 $0.125 per Preferred Share, and to return the original issue price to holders of Preferred Shares on June 30, 2026.

The Company also announces that the distribution rate for the Preferred Shares of the Company for the 5 year term from July 1, 2021 to June 30, 2026 will remain unchanged at $0.50 per annum (5% on the original issue price of $10.00) payable quarterly. The Preferred Share distribution rate is based on current market rates for preferred shares with similar terms. In addition, the Company intends to maintain the targeted monthly Class A Share distribution rate at $0.10 per Class A Share. The Company previously announced the extension of the maturity date in respect of the Class A Shares and the Preferred Shares from June 30, 2021 to June 30, 2026. The term extension offers preferred shareholders the opportunity to enjoy preferential cash dividends until June 30, 2026.

Since inception to February 28, 2021, the Preferred Share has delivered a 5.1% per annum return.

Since inception to February 28, 2021, Class A shareholders have also received cash distributions of $3.25 per Class A Share. Class A shareholders have the option to benefit by reinvesting their cash distributions in a distribution reinvestment plan (“DRIP”) which is commission free to participants. Class A shareholders can enroll in this program by contacting their investment advisor.

In connection with the extension, shareholders who do not wish to continue their investment in the Fund, will be able to retract their Preferred Shares or Class A Shares on June 30, 2021 pursuant to a special retraction right and receive a retraction price that is calculated in the same way that such price would be calculated if the Fund were to terminate on June 30, 2021. Pursuant to this option, the retraction price may be less than the market price if the share is trading at a premium to net asset value. To exercise this retraction right shareholders must provide notice to their investment dealer by their dealer’s deadline which in any event cannot be later than May 31, 2021 at 5:00 p.m. (Toronto time). Alternatively, shareholders may sell their Preferred Shares and/or Class A
Shares through their securities dealer for the market price at any time, potentially at a higher price than would be achieved through retraction, or shareholders may take no action and continue to hold their shares.