PrefBlog

DBRS has announced:

that the Under Review with Developing Implications status has been maintained for GMP Capital Inc.’s (GMP or the Company) Cumulative Preferred Shares at Pfd-4 (high). The rating was put Under Review with Developing Implications on June 18, 2019, following the announcement that GMP had agreed to sell substantially all of its capital markets business to Stifel Financial Corp. (Stifel).

On June 17, 2019, GMP announced that it was selling substantially all of its capital markets business to Stifel for a cash consideration of tangible book value of the business plus $45 million, subject to adjustment and pending shareholder and regulatory approval. It was later announced that Harris Fricker, then Chief Executive Officer (CEO) of GMP, and other key personnel agreed to join Stifel. On August 6, 2019, the majority of shareholders voted to approve the sale during a special meeting.

Furthermore, under the leadership of Interim President and CEO, Kish Kapoor, the Company announced that it is in discussions to consolidate the ownership of Richardson GMP. Richardson GMP is the Company’s wealth management joint venture in Canada, which will become a wholly owned subsidiary and the cornerstone of GMP’s business upon closing this second transaction. The acquisition will only take place once the capital markets business transaction closes and is also subject to separate shareholder and regulatory approval.
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The rating could be upgraded if GMP’s franchise prospects and its pro forma financials post-transactions are deemed to be stronger as a result of shedding the capital markets businesses, which have been highly volatile and loss-making.

The rating could be downgraded if the transactions fail to be completed as proposed — including if GMP is not able to acquire majority control of Richardson GMP, which might limit its wealth management growth strategy — or if GMP’s credit fundamentals post-transaction are deemed to be weaker.

GMP.PR.B and GMP.PR.C were initially placed on Review-Developing in June, 2019.

GMP.PR.B was issued as a FixedReset, 5.50%+289, that commenced trading 2011-2-22 after being announced 2011-2-1. Notice of extension was published 2016-2-23, followed by the announcement of a reset to 3.611%. I recommended against conversion, but there was a 22% conversion into GMP.PR.C anyway.

As indicated above, GMP.PR.C is a FloatingReset, +289, that came into being in 2016 via a 22% conversion into GMP.PR.C.

TC Energy Corporation has announced:

that it does not intend to exercise its right to redeem its Cumulative Redeemable First Preferred Shares, Series 9 (Series 9 Shares) on October 30, 2019. As a result, subject to certain conditions, the holders of Series 9 Shares have the right to choose one of the following options with regard to their shares:

to retain any or all of their Series 9 Shares and continue to receive a fixed rate quarterly dividend; or

to convert, on a one-for-one basis, any or all of their Series 9 Shares into Cumulative Redeemable First Preferred Shares, Series 10 (Series 10 Shares) of TC Energy and receive a floating rate quarterly dividend.
The dividend rate applicable to the Series 9 Shares for the five-year period commencing on October 30, 2019 to, but excluding, October 30, 2024 will equal the Government of Canada five-year bond yield on October 1, 2019 plus 2.35 per cent. The dividend rate applicable to the Series 10 Shares for the three-month period commencing on October 30, 2019 to, but excluding, January 30, 2020 will equal the Government of Canada 90-day treasury bill rate on October 1, 2019 plus 2.35 per cent. Both rates will be calculated according to the terms of the prospectus supplement dated January 13, 2014 and announced by way of a news release on October 1, 2019.

Beneficial owners of Series 9 Shares who want 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 October 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 nominee with time to complete the necessary steps.

The foregoing conversions are subject to the conditions that: (i) if TC Energy determines that there would be less than one million Series 9 Shares outstanding after October 30, 2019, then all remaining Series 9 Shares will automatically be converted into Series 10 Shares on a one-for-one basis on October 30, 2019 and (ii) alternatively, if TC Energy determines that there would be less than one million Series 10 Shares outstanding after October 30, 2019, no Series 9 Shares will be converted into Series 10 Shares. In either case, TC Energy will issue a news release to that effect no later than October 23, 2019.

Beneficial owners of Series 9 Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their Series 9 Shares and receive the new annual fixed dividend rate applicable to the Series 9 Shares, subject to the conditions stated above.

Holders of the Series 9 Shares and the Series 10 Shares will have the opportunity to convert their shares again on October 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 9 Shares and the Series 10 Shares, please see the Corporation’s prospectus supplement dated January 13, 2014 which is available on sedar.com or on the Corporation’s website.

TRP.PR.E is a FixedReset, 4.25%+235, that commenced trading 2014-1-20 after being announced 2014-1-13. It is tracked by HIMIPref™ and assigned to the FixedReset-Discount subindex.

I will have more to say once the reset rate is announced October 1.

Dundee Corporation has announced:

that 651,862 of its Cumulative 5-Year Rate Reset First Preference Shares, Series 2 (“Series 2 Shares”) will be converted, on a one for one basis, into Cumulative Floating Rate First Preference Shares, Series 3 (“Series 3 Shares”) of the Company and 349,755 Series 3 Shares will be converted into Series 2 Shares, in each case effective September 30, 2019. As a result, on September 30, 2019, Dundee will have 3,177,278 Series 2 Shares and 2,022,722 Series 3 Shares issued and outstanding, less any Series 2 Shares and Series 3 Shares purchased by the Company for cancellation pursuant to the previously announced normal course issuer bids.

Holders will again have the opportunity to convert their Series 2 Shares into Series 3 or to convert their Series 3 Shares into Series 2 Shares on September 30, 2024, and every five years thereafter as long as the Series 2 Shares and Series 3 Shares remain outstanding.

So that’s a net conversion of just under 6% from DC.PR.B, the FixedReset, to DC.PR.D, the FloatingReset, leaving DC.PR.B with about 61% of the total.

DC.PR.B is a FixedReset, 5.688%+410, that commenced trading 2009-9-15 with a 6.75% coupon after being announced 2009-8-25. It reset to 5.688% effective 2014-09-30. I made no recommendation regarding conversion. Now, DC.PR.B will reset at 5.284% effective September 30, 2019. I recommended retaining, or converting to, DC.PR.B. It is tracked by HIMIPref™ but is relegated to the Scraps – FixedReset (Discount) subindex on credit concerns.

DC.PR.D is a FloatingReset, +410, that came into existence via a partial conversion from DC.PR.B. It is tracked by HIMIPref™ but relegated to the Scraps – FloatingReset subindex on credit concerns.

Quadravest has announced:

Dividend 15 Split Corp. (the “Company”) previously announced on February 21, 2019 it will extend the termination date of the Company a further five year period from December 1, 2019 to December 1, 2024.

In connection with the extension, the Company will amend the dividend entitlement of the DFN.PR.A Preferred Shares (“Preferred Shares”) for the five year renewal period effective December 1, 2019, to pay a fixed cumulative preferential monthly dividend at an annual rate equivalent to 5.5% based on the $10 repayment value. The Preferred Share distribution rate is based on current market rates for preferred shares with similar terms. Preferred shareholders have received a total of $8.11 per share in distributions since inception. The dividend policy for the DFN Class A Shares (“Class A Shares”) will remain unchanged.

In relation to the term extension and the Preferred Share rate increase, the Company has an additional retraction right for those shareholders not wishing to continue holding their investment, allowing existing shareholders to tender one or both classes of Shares and receive a retraction price based on the November 29, 2019 net asset value per unit.

Alternatively, shareholders may sell their shares 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.

The Company invests in a high quality portfolio of leading Canadian dividend-yielding stocks as follows: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, TorontoDominion Bank, National Bank of Canada, CI Financial Corp., BCE Inc., Manulife Financial, Enbridge, Sun Life Financial, TELUS Corporation, Thomson Reuters Corporation, TransAlta Corporation, TC Energy Corporation.

DFN.PR.A was first traded 2004-3-16 as a 5.25% Split Share scheduled to mature 2009-12-1. A Special Resolution was proposed in April 2007 to extend term to 2014-12-1 with an unchanged dividend. The proposal was approved and shareholders had a wild ride during the Credit Crunch. There was another term extension approved in June 2013 with the dividend remaining unchanged. The fund then swallowed up CGQ & CGQ.E as well as STQ / STQ.E. The extension to 2024 was announced in February, 2019.

The NAVPU of the Whole Units of the fund is 17.79 as of 2019-09-13. Frequent treasury offerings of Whole Units have increased the size of the company to $864-million as of 2019-8-30.

Quadravest has announced:

Dividend 15 Split Corp. II (the “Company”) previously announced on February 21, 2019 it will extend the termination date of the Company a further five year period from December 1, 2019 to December 1, 2024.

In connection with the extension, the Company will amend the dividend entitlement of the DF.PR.A Preferred Shares (“Preferred Shares”) for the five year renewal period effective December 1, 2019, to pay a fixed cumulative preferential monthly dividend at an annual rate equivalent to 5.75% based on the $10 repayment value. The Preferred Share distribution rate is based on current market rates for preferred shares with similar terms. Preferred shareholders have received a total of $6.71 per share in distributions since inception. The dividend policy for the DF Class A Shares (“Class A Shares”) will remain unchanged.

In relation to the term extension and the Preferred Share rate increase, the Company has an additional retraction right for those shareholders not wishing to continue holding their investment, allowing existing shareholders to tender one or both classes of Shares and receive a retraction price based on the November 29, 2019 net asset value per unit. Alternatively, shareholders may sell their shares 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.

The Company invests in a high quality portfolio of leading Canadian dividend-yielding stocks as follows: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto-Dominion Bank, National Bank of Canada, CI Financial Corp., BCE Inc., Manulife Financial, Enbridge, Sun Life Financial, TELUS Corporation, Thomson Reuters Corporation, TransAlta Corporation, TC Energy Corporation.

DF.PR.A was added to the HIMIPref™ universe in May 2008, as a 5.25% Split Share maturing 2014-12-1. It was hammered in the Credit Crunch, but survived and a five year term extension with unchanged dividend was proposed in May 2013 which was approved in June 2013. Notice of extension to 2024 was given in February, 2019

The NAVPU (for Whole Units) was 15.14 as of 2019-9-13. Opportunistic treasury issuance of Whole Units over the years has increased the assets of the fund to $242-million as of 2019-8-30.

Brookfield Asset Management Inc. has announced:

that after having taken into account all election notices received by the September 16, 2019 deadline for the conversion of its Cumulative Class A Preference Shares, Series 40 (the “Series 40 Shares”) (TSX: BAM.PF.F) into Cumulative Class A Preference Shares, Series 41 (the “Series 41 Shares”), there were 116,560 Series 40 Shares tendered for conversion, which is less than the one million shares required to give effect to conversions into Series 41 Shares. Accordingly, there will be no conversion of Series 40 Shares into Series 41 Shares, and holders of Series 40 Shares will retain their Series 40 shares.

BAM.PF.F is a FixedReset, 4.50%+286, that commenced trading 2014-6-5 after being announced 2014-5-27. The issue will reset at 4.029% effective October 1, 2019. I recommended against conversion. BAM.PF.F is tracked by HIMIPref™ and is assigned to the FixedReset – Discount subindex.

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.