New Issue: TA FixedReset 5.00%+365

TransAlta Corporation has announced:

that it has agreed to issue to a syndicate of underwriters led by CIBC, RBC Capital Markets and Scotiabank for distribution to the public 6,000,000 Cumulative Redeemable Rate Reset First Preferred Shares, Series E (the “Series E Shares”). The Series E Shares will be issued at a price of $25.00 per Series E Share, for aggregate gross proceeds of $150 million. Holders of the Series E Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 5% annually for the initial period ending September 30, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.65%.

Holders of Series E Shares will have the right, at their option, to convert their shares into Cumulative Redeemable Floating Rate Reset First Preferred Shares, Series F (the “Series F Shares”), subject to certain conditions, on September 30, 2017 and on September 30 every five years thereafter. Holders of the Series F Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.65%.

TransAlta Corporation has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase up to an additional 3,000,000 Series E Shares at the same offering price. The Series E Shares will be offered by way of prospectus supplement under the short form base shelf prospectus of TransAlta Corporation dated November 15, 2011. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the Offering will be used to partially fund capital projects, for other general corporate purposes and to reduce short term indebtedness of the Corporation and its affiliates. The offering is expected to close on or about August 10, 2012.

TransAlta was recently downgraded to P-3 by S&P and the shelf registered preferreds were downgraded to (P)Ba2 by Moody’s. DBRS has them at Pfd-3, Review-Developing.

Update, 2012-8-3: Provisionally rated Pfd-3 by DBRS.

2 Responses to “New Issue: TA FixedReset 5.00%+365”

  1. […] is a FixedReset, 5.00%+365, announced August 2. The issue will be tracked by HIMIPref™ but assigned to the Scraps index on credit […]

  2. […] was issued as a FixedReset, 5.00%+365, that commenced trading 2012-8-10 after being announced 2012-8-2. It reset to 5.194% in 2017; I recommended against conversion; and there was no conversion. TA.PR.H […]

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