BCE.PR.T Dividend Reset; Conversion to and from BCE.PR.S

BCE Inc. has announced:

As of November 1, 2011, the Series T Preferred Shares will, should they remain outstanding, pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be based on a fixed rate equal to the product of: (a) the yield to maturity compounded semi-annually (the “Government of Canada Yield”), computed on October 11, 2011 by two investment dealers appointed by BCE Inc., that would be carried by non-callable Government of Canada bonds with a 5-year maturity, multiplied by (b) the “Selected Percentage Rate”. The “Selected Percentage Rate” determined by BCE Inc. is 215%. The annual dividend rate applicable to the Series T Preferred Shares will be published on October 12, 2011 in the national edition of the Globe and Mail, the Montreal Gazette and La Presse and will be posted on the BCE Inc. website at www.bce.ca.

BCE’s deadline for conversion is October 18:

Registered holders electing to convert all or part of their Series T Preferred Shares into Series S Preferred Shares must complete and sign the conversion panel on the back of their Series T Preferred Share certificate and deliver it, at the latest by 5:00 p.m. (Eastern time) on October 18, 2011, to one of the following addresses of Canadian Stock Transfer Company Inc. (“Canadian Stock Transfer”):
Delivery may be done in person, by courier, by registered mail or by mail. However, if share certificates are delivered by courier, by registered mail or by mail, shareholders must ensure that they are sent sufficiently in advance so that they are received by Canadian Stock Transfer by the above-mentioned deadline.

Holders are reminded that their brokers will almost certainly have deadlines that are a day or two prior to the BCE deadline – check well in advance if you intend to convert!

Naturally, the notice for BCE.PR.S, the RatchetRate half of this Strong Pair, specifies the same deadline for those wishing to convert the other way.

It’s too soon to make a recommendation on this – we don’t know the actual rate to which BCE.PR.T will be reset yet! However, as of today the 5-Year GOC rate is 1.45%, so the indicative rate for BCE.PR.T is 3.12%, or $0.78 on its $25 par value, which will – probably, maybe, I think – be preferable to the 3% (100% of Canadian Prime) being paid on BCE.PR.S, since the fraction of prime paid on the latter issue will be reduced if the price goes much above par. It’s a pretty close call though, so watch this space!

2 Responses to “BCE.PR.T Dividend Reset; Conversion to and from BCE.PR.S”

  1. […] about this, nor is there anything on SEDAR. A rate of 3.80% would be very generous compared with my estimate of 3.12% for BCE.PR.T (which will be finalized in […]

  2. […] it turned out higher than my September estimate of 3.12%, due to the increase in the Five-Year Canada yield in the interim. The annual dividend will be […]

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