Details are available at SEDI.
| YLO MTN Buybacks Disclosed 8/22 | |||||
| Issue | Trade Date (?) |
Face | Value | Price | Yield ? |
| 5.25% Feb 15/16 | 8/16 | 38,000,000 | 31,561,861 | 83.00 | 10.05% |
| Total for Issue To Date | 59,827,000 | 49,909,708 | |||
| 7.3% Feb 2, 2015 | 8/16 | 4,650,000 | 4,386,810 | 94.00 | 9.37% |
| Total for Issue To Date | 80,264,000 | 75,816.695 | |||
| Grand Total To Date | 167,990,000 | 150,378,911 | |||
| Yields have been calculated (using MS-Excel) assuming that the “Transaction Date” reported on SEDI is the Trade Date and that all trades were executed for normal settlement | |||||
Totals to date include transactions previously reported.
Readers of the August edition of PrefLetter will understand that I am bitterly disappointed with the company’s decision to pursue buybacks by private contract; I feel that a Dutch Auction Tender, for all issues in one big pot (with conversion factors on the prices of different issues to reflect differing desirability to the company of purchasing the issues) would be a far better way to go.
YLO has the following preferred issues outstanding: YLO.PR.A, YLO.PR.B, YLO.PR.C and YLO.PR.D; the Normal Course Issuer Bid for these issues is still being pursued vigorously.
I have not read your August Prefletter, so I’m in the dark here. Is your concern for the sellers? As a holder of a YLO pref, am I not happy that they’re retiring MTNs that come ahead of me in priority well below par?
As a holder of a YLO pref, am I not happy that they’re retiring MTNs that come ahead of me in priority well below par?
Sure you’re happy. But I suggest that it is reasonable to believe that the company could buy back these notes at a lower price if they announced a Dutch Auction Tender and told the noteholders – and the prefholders! – that they were going to spend $X-million on whatever was tendered at the lowest equivalent price.
In other words, I suspect you could be happier.
They’d need to specify conversion factors so that, for instance, a tender price of $94 on the 7.3% of ’15 was deemed equivalent to a tender of $83 on the 5.15% of ’16; but it could all be done in a reasonably straightforward manner.
I’m not an expert on bond auction (or reverse-auction!) design, so I can’t state as a matter of professional opinion that this would be expected to result in cheaper prices for the company’s purchases; but I do know enough to suspect that this is probably the case and want to know why a Dutch Auction Tender is not – so far – underway.
There may be a good reason. If there is, I want to know exactly what that good reason is.