Northland Power Income Fund has announced:
that Northland Power Preferred Equity Inc. (the “Corporation”), an indirect wholly-owned subsidiary of the Fund, will issue in Canada a total of 4 million Cumulative Rate Reset Preferred Shares, Series 1 (the “Series 1 Preferred Shares”) guaranteed by the Fund, at a price of $25.00 per share, for aggregate gross proceeds of $100 million, on a bought deal basis to a syndicate of underwriters in Canada led by CIBC.
The holders of Series 1 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.3125 per share, payable quarterly, as and when declared by the Board of Directors of the Corporation. The Series 1 Preferred Shares will yield 5.25% annually at the issue price, for the initial five-year period ending September 30, 2015 with the first dividend payment date scheduled for September 30, 2010, based on an anticipated closing date of July 28, 2010. The dividend rate will reset on September 30, 2015 and every five years thereafter at a rate equal to the then five-year Government of Canada Bond yield plus 2.80%. The Series 1 Preferred Shares are redeemable on or after September 30, 2015.
The holders of Series 1 Preferred Shares will have the right to convert their shares into Cumulative Floating Rate Preferred Shares, Series 2 (the “Series 2 Preferred Shares”), subject to certain conditions, on September 30, 2015 and on September 30 of every fifth year thereafter. The holders of Series 2 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors, at a rate equal to the then three month Government of Canada Treasury Bill yield plus 2.80%.
The Corporation has granted the underwriters an over-allotment option exercisable up to 30 days after closing to purchase up to an additional 600,000 Series 1 Preferred Shares at the issue price on the same terms, for additional gross proceeds of up to $15 million.
The Corporation intends to lend the net proceeds of the offering to NPIF Holdings L.P., a subsidiary of the Fund, which will use the funds in the construction of advanced development projects of the Fund, to repay certain debt and for general corporate purposes.
The Fund’s proposed conversion to a corporation has received unitholder approval and the approval of the Ontario Superior Court of Justice and is expected to be completed on January 1, 2011. Under the terms of the conversion as approved, the Corporation will amalgamate with the successor of the Fund and the Series 1 Preferred Shares will become an equal number of preferred shares having the same attributes as the successor to the Fund, which will be called “Northland Power Inc.”. If the Corporation does not amalgamate with, or otherwise become, the successor, the successor entity will assume all the obligations of the Fund under the guarantee of the Series 1 and Series 2 Preferred Shares.
The Series 1 and Series 2 Preferred Shares will be offered to the public in Canada pursuant to a short form prospectus that will be filed with securities regulatory authorities in each of the provinces of Canada.
This issue will be tracked by HIMIPref™, but with a provisional rating of P-3 from S&P will be relegated to the Scraps index.
Update: DBRS discontinued the fund’s stability rating, presumably because the fund discontinued paying:
DBRS has today elected to discontinue the stability rating of Northland Power Income Fund (the Fund).
DBRS notes this action is unrelated to the Fund’s stability profile.
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