New Issue: AIM FixedReset, 6.25%+420

Aimia Inc. has announced:

that it has agreed to issue to a syndicate of underwriters led by CIBC, TD Securities Inc., RBC Capital Markets and BMO Capital Markets for distribution to the public, 5,000,000 Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Preferred Shares”). The Series 3 Preferred Shares will be issued at a price of C$25.00 per share, for aggregate gross proceeds of C$125 million.

Holders of the Series 3 Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 6.25% annually for the initial five-year period ending March 31, 2019. The dividend rate will be reset on March 31, 2019 and every five years thereafter at a rate equal to the 5-year Government of Canada bond yield plus 4.20%. The Series 3 Preferred Shares will be redeemable by Aimia on March 31, 2019, and every five years thereafter in accordance with their terms. Holders of Series 3 Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preferred Shares, Series 4 (the “Series 4 Preferred Shares”), subject to certain conditions, on March 31, 2019 and on March 31 every five years thereafter. Holders of the Series 4 Preferred 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 4.20%.

Aimia has granted the underwriters an option, exercisable in whole or in part anytime up to 48 hours prior to the closing of the offering, to purchase an additional 1,000,000 Series 3 Preferred Shares at the same offering price. Should the option be fully exercised, the total gross proceeds of the financing will be C$150 million.

The Series 3 Preferred Shares will be offered by way of a prospectus supplement to the short form base shelf prospectus dated April 12, 2013 filed with the securities regulatory authorities in all provinces and territories of Canada.

The net proceeds of the issue will be used by Aimia to supplement its financial resources and for general corporate purposes.

The offering is expected to close on or about January 15, 2014, subject to certain conditions, including conditions set forth in the underwriting agreement.

This issue looks extraordinarily cheap compared to AIM.PR.A, which commenced trading after a ticker change from AER.PR.A, which commenced trading in January, 2010 after being announced earlier that month. It is a 6.50%+375 FixedReset.

AIM.PR.A closed at 25.73-85 on January 3 to yield 4.12% at the bid price to a call on its first Exchange Date, 2015-3-31. It got whacked today after the new issue announcement, closing at 25.41-50, but this is still very, very expensive to the new issue for as long as the new issue is available at par. The new issue has a reset 45bp higher! There’s still a lot of adjustment in store for these two issues.

5 Responses to “New Issue: AIM FixedReset, 6.25%+420”

  1. adrian2 says:

    By 1 pm, the new issue was already closed at TDW.

  2. AltaRed says:

    It closed quickly at Scotia iTrade as well. I didn’t give much consideration since I didn’t think AIM would be investment grade.

  3. jiHymas says:

    Thanks for the comment – I’m sorry it has taken so long to appear, I have only just got caught up with sifting through the enormous moderation queue to approve the nuggets and delete the spam.

  4. reikreik70 says:

    As you suggested this one (series c) really made its move relative to pref a.

    I cant seem to find a rating on either – would they be Pfd – 3L (or worse then that even)???


Leave a Reply

You must be logged in to post a comment.