TransCanada Corporation has announced:
that it will issue 10 million cumulative redeemable first preferred shares, series 9 (the “Series 9 Preferred Shares”) at a price of $25.00 per share for aggregate gross proceeds of $250 million on a bought deal basis to a syndicate of underwriters in Canada co-led by Scotiabank, BMO Capital Markets and RBC Capital Markets.
The holders of Series 9 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.0625 per share, payable quarterly on the 30th day of January, April, July and October, as and when declared by the board of directors of TransCanada. The Series 9 Preferred Shares will yield 4.25 per cent per annum for the initial fixed rate period ending October 30, 2019 with the first dividend payment date scheduled for April 30, 2014. The dividend rate will reset on October 30, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.35 per cent. The Series 9 Preferred Shares are redeemable by TransCanada, at its option, on October 30, 2019 and on October 30 of every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.
The holders of Series 9 Preferred Shares will have the right to convert their shares into cumulative redeemable first preferred shares, series 10 (the “Series 10 Preferred Shares”), subject to certain conditions, on October 30, 2019 and on October 30 of every fifth year thereafter. The holders of Series 10 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the board of directors of TransCanada, at an annualized rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 2.35 per cent.
TransCanada has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional two million Series 9 Preferred Shares at a price of $25.00 per share.
The anticipated closing date is January 20, 2014. The net proceeds of the offering will be used for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.
The Series 9 Preferred Shares will be offered to the public in Canada pursuant to a prospectus supplement that will be filed with securities regulatory authorities in Canada under TransCanada’s short form base shelf prospectus dated December 2, 2013. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Sales must have gone well! They later announced:
that as a result of strong investor demand for its previously announced offering of cumulative redeemable first preferred shares, series 9 (the “Series 9 Preferred Shares”), the size of the offering has been increased to 18 million shares. The offering no longer includes the previously granted underwriters’ option. The aggregate gross proceeds of the offering will now be $450 million. The syndicate of underwriters is co-led by Scotiabank, BMO Capital Markets and RBC Capital Markets.
The anticipated closing date is January 20, 2014. The net proceeds of the offering will be used for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.
Update, 2014-1-14: Rated Pfd-2(low) by DBRS