PrefBlog

Brompton Group has announced:

that the special meeting (the “Meeting”) of holders of Class A Shares and Preferred Shares (the “Shareholders”) of Brompton Lifeco Split Corp. (the “Fund”) scheduled to be held at 9:00 a.m. on Thursday September 26, 2019, has been cancelled. The purpose of the Meeting was to consider and vote upon an extraordinary resolution to implement amendments to update and modernize the investment objectives, investment guidelines and investment restrictions of the Fund (the “Amendments”). The Amendments, as set out in Appendix A of the management information circular dated August 23, 2019, will not be implemented.

At the voting deadline today, a majority of both the Class A Shares and the Preferred Shares were voted in favor of the Amendments. However, the Amendments required a two thirds majority by both Class A Shareholders and Preferred Shareholders, voting separately as individual classes, to approve the Amendments. Approximately 43% of the issued and outstanding Preferred Shares were voted and the two thirds approval threshold was exceeded. Approximately 32% of the issued and outstanding Class A Shares were voted, however, the two thirds approval threshold was not met.

The Fund will continue to operate as it does currently. The Fund invests, on an approximately equally weighted basis, in a portfolio consisting of common shares of Canada’s four largest publicly traded life insurance companies: Great-West Lifeco Inc., iA Financial Group, Manulife Financial Corporation and Sun Life Financial Inc. The Fund provides a low cost, efficient way to gain exposure to Canadian life insurance companies, with the added benefit of a proprietary covered call option strategy employed by the Manager which can lower portfolio volatility along with generating cash flows for distribution to Shareholders.

LCS.PR.A was added to the HIMIPref™ database in October, 2014, backdated to 2014-5-1, following its term extension and treasury offering earlier in the year. Capital Units dividends were suspended in January 2015, but reinstated in November, 2016. Only two of the scheduled monthly Capital Unit distributions has been made since the September, 2018, payment became due. The company announced the five year extension in March, 2018. A mandate change was proposed in August, 2019. The issue reset to 6.25% with an end-date of 2024-4-29 in April, 2019. The issue is tracked by HIMIPref™ but relegated to the Scraps – Splitshares subindex on credit concerns.

An eMailed inquiry to AltaGas Ltd. regarding the recently expired conversion option for ALA.PR.G resulted in the following reply (in part):

We will announce the full details of the election on September 30th, but at this time we can confirm that there were enough Series G shares tendered for conversion into floating rate Series H shares and therefore Series H shares will be issued on September 30th.

ALA.PR.G is a FixedReset, 4.75%+306, that commenced trading 2014-7-3 after being announced 2014-6-23. Notice of extension was announced 2019-8-29. The issue will reset at 4.242% effective September 30, 2019. I recommended against conversion. The issue is tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns. In December, 2018, the issue was downgraded to Pfd-3(low) by DBRS and to P-3 by S&P.

Well! This is interesting news – there hasn’t been a new FloatingReset issue since ENB.PR.B partially converted in May, 2017 although there was some minor adjustment with the DC.PR.B / DC.PR.D conversion earlier this month.

Valener Inc. has announced:

that following the regulatory approval process led by Noverco Acquisition, Inc. (the “Acquirer”) before the Vermont Public Utility Commission (“VPUC”), the VPUC has given its approval to the Acquirer, a wholly-owned subsidiary of Noverco Inc., to proceed with the acquisition of all of the issued and outstanding common shares and all of the issued and outstanding preferred shares of Valener (the “Transaction”). The parties are now authorized to complete the Transaction pursuant to the terms of the arrangement agreement publicly announced on March 27, 2019 (the “Arrangement”).

Following the evidentiary hearing that took place on July 23, 2019 and the review of the Transaction, the VPUC, in a binding decision, concluded that the “proposed acquisition by Noverco Inc. of an additional indirect ownership interest in Vermont Gas System Inc., Green Mountain Power Corporation (“GMP”) and subsidiaries of GMP will promote the public good and is approved by the Commission pursuant to 30 V.S.A. 107.”

Filing of Articles of Arrangement with the Director of Corporations Canada

Obtaining the VPUC approval for the Acquirer represented the last condition of a regulatory nature required to close the Transaction.

Therefore, pursuant to the terms of the Arrangement, Valener will file within five business days the articles of arrangement with the Director of Corporations Canada as required under Section 192 of the Canada Business Corporations Act, which means closing is scheduled to occur on or before September 27, 2019, at 12:01 a.m..The effective date of the Transaction, which is the date that will appear on the certificate of arrangement issued by the Director of Corporations Canada pursuant to applicable legislation (the “Certificate”), will be confirmed in a subsequent press release once the Certificate has been received by Valener.

The proposed acquisition at par was announced in March and approved by holders in June. The previous progress report was reported in early August.

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.

Brompton Group has announced:

As previously announced, the board of directors of Dividend Growth Split Corp. (the “Fund”) extended the maturity date of the class A and preferred shares of the Company for a period of up to five years beyond the current maturity date of November 28, 2019. The board of directors is pleased to announce that the new term of the Fund will be to September 27, 2024. In addition, the Fund announces that the distribution rate for the preferred shares (the “Preferred Shares”) for the new term from November 29, 2019 to September 27, 2024 has been increased to $0.55 per Preferred Share per annum (5.5% on the original issue price of $10) payable quarterly. The Preferred Share distribution rate is based on current market rates for preferred shares with similar terms.

The term extension offers preferred shareholders the opportunity to enjoy preferential cash dividends until September 27, 2024. Since inception in December 2007 to August 31, 2019, the Preferred Share has delivered a 5.4%(1) per annum return. In addition, the Fund intends to maintain the targeted monthly Class A Share distribution rate of at least $0.10 per Class A Share when the net asset value per unit (consisting of one Class A Share and one Preferred Share) is greater than $15.00, after taking into consideration the payment of the Class A Share distribution.

Since inception in December 2007 to August 31, 2019, the Class A share has delivered a 7.4%(1) per annum return, which outperformed the S&P/TSX Composite Index by 2.8% per annum. Since inception to August 31, 2019, Class A shareholders have received cash distributions of $12.89. Class A shareholders also have the option to reinvest their cash distributions in a dividend reinvestment plan which is commission free to participants. Class A shareholders can enroll in the DRIP program by contacting their investment advisor.

The Fund invests, on an approximately equally-weighted basis, in a portfolio consisting primarily of equity securities of Canadian dividend growth companies. In addition, DGS may hold up to 20% of the total assets of the portfolio in global dividend growth companies for diversification and enhanced return potential.

In connection with the extension, shareholders who do not wish to continue their investment in the Fund, may retract their Preferred Shares and Class A Shares on November 28, 2019 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 November 28, 2019. Pursuant to this option, the retraction price may be less than the market price if the security is trading at a premium to net asset value. Notice must be provided to your investment dealer by October 31, 2019 at 5:00 p.m. (Toronto time) in order to exercise this right; however, investment dealers may have earlier deadlines. Alternatively, shareholders may sell their 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.

DGS.PR.A approved a term extension in 2011 which became official in 2013 and took effect in 2014 (these guys like to plan ahead!) with the dividend rate unchanged at 5.25%. The current extension was announced in September, 2018. The manager’s mandate expanded slightly in August, 2018.

DGS.PR.A is tracked by HIMIPref™ but relegated to the Scraps – SplitShare index on credit concerns.

Element Fleet Management Corp. has announced:

that none of its outstanding Cumulative 5-Year Rate Reset Preferred Shares, Series E (the “Series E shares”) will be converted into Cumulative Floating Rate Preferred Shares, Series F (the “Series F shares”) on September 30, 2019.

During the conversion notice period, which commenced on September 3, 2019 and ended at 5:00 p.m. (Toronto time) on September 16, 2019, 90,430 Series E shares were tendered for conversion into Series F shares. In accordance with Section 8.03(a)(iii) of the rights, privileges, restrictions and conditions attaching to the Series E shares, as provided in the Corporation’s restated articles of incorporation dated October 4, 2016, since there would be outstanding on September 30, 2019 less than 500,000 Series F shares, after having taken into account all Series E shares tendered for conversion into Series F shares,

holders of Series E shares who elected to tender their shares for conversion will not have their Series E shares converted into Series F shares on September 30, 2019.

As a result, no Series F shares will be issued in connection with the current conversion privilege.

EFN.PR.E is a FixedReset, 6.40%+472, that was announced 2014-6-2 but not immediately tracked by HIMIPref™ as it was unrated. Coverage commenced in September, 2015 after the company’s preferreds were rated Pfd-3 by DBRS. The extension was announced 2019-8-27. The issue will reset at 5.903% effective September 30, 2019. I recommended against conversion. The issue is tracked by HIMIPref™ and is assigned to the Scraps – FixedReset – Discount subindex.