Atlantic Power Corporation and Atlantic Power Preferred Equity Ltd. have announced:
that, in accordance with Preferred Equity’s Articles of Incorporation, as amended, the dividend rate on Preferred Equity’s outstanding Cumulative Rate Reset Preferred Shares, Series 2 (the “Series 2 Shares”) will reset on December 31, 2014.
Such reset dividend rate (the “Reset Dividend Rate”) will commence with the March 31, 2015 dividend payment to the holders of the Series 2 Shares and continue through the December 31, 2019 dividend payment to the holders of the Series 2 Shares, at which time such Reset Dividend Rate will again reset. The Reset Dividend Rate will be calculated on December 1, 2014, and the Reset Dividend Rate will equal the sum of the Canadian Government 5-year bond yield as of that date plus 4.18%.
On December 31, 2014 and again on December 31 of every fifth year thereafter, the holders of Series 2 Shares have the right to convert their Series 2 Shares, on a one-for-one basis, into Cumulative Floating Rate Preferred Shares (the “Series 3 Shares”).
The Series 3 Shares dividend rate will be calculated on December 1, 2014 and will equal the sum of the Canadian Government 90-day Treasury Bill yield (using the three-month average results) plus 4.18%. The Series 3 Shares dividend rate is reset each quarter.
Holders of Series 2 Shares who wish to convert such securities to Series 3 Shares should contact the financial institution, broker or other intermediary through which they hold the Series 2 Shares to exercise this conversion privilege. Notice of the exercise of the conversion privilege must be received by Preferred Equity not earlier than December 1, 2014 and not later than 5:00 p.m. (Toronto time) on December 16, 2014.
If after giving effect to all Election Notices, there would remain outstanding less than 1 million Series 2 Shares, then all remaining outstanding Series 2 Shares will automatically convert into Series 3 Shares, on a one-for-one basis on December 31, 2014. Holders of the Series 2 Shares will not be permitted to convert their Series 2 Shares into Series 3 Shares if, after giving effect to all Election Notices, there would be outstanding less than 1 million Series 3 Shares.
Inquiries should be directed to Preferred Equity’s registrar and transfer agent, Computershare Trust Company of Canada, at (800) 564-6253.
No real surprise here, since AZP.PR.B is unrated by DBRS and P-5 by S&P and closed today with a bid of 12.33 … but doubtless there is at least one smart guy wondering why he hasn’t made a 100% profit!
One thing that is surprising, however, is the huge yield spread between AZP.PR.B and AZP.PR.A, a Straight Perpetual with a 4.85% coupon, which closed today bid at 12.32 – one penny less than the bid on AZP.PR.B. Given that the Issue Reset Spread on AZP.PR.B, this implies that the market is expecting the yield on five-year Canadas will be about 67bp on December 1 (a rather dramatic move) and at the same time is assigning zero value to future resets.
Assuming a constant GOC-5 yield of 1.53%, the yield to perpetuity on AZP.PR.A is 10.09%, while the yield to perpetuity on AZP.PR.B is 12.01%.
This entry was posted on Friday, November 14th, 2014 at 7:08 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
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AZP.PR.B To Be Extended
Atlantic Power Corporation and Atlantic Power Preferred Equity Ltd. have announced:
No real surprise here, since AZP.PR.B is unrated by DBRS and P-5 by S&P and closed today with a bid of 12.33 … but doubtless there is at least one smart guy wondering why he hasn’t made a 100% profit!
One thing that is surprising, however, is the huge yield spread between AZP.PR.B and AZP.PR.A, a Straight Perpetual with a 4.85% coupon, which closed today bid at 12.32 – one penny less than the bid on AZP.PR.B. Given that the Issue Reset Spread on AZP.PR.B, this implies that the market is expecting the yield on five-year Canadas will be about 67bp on December 1 (a rather dramatic move) and at the same time is assigning zero value to future resets.
Assuming a constant GOC-5 yield of 1.53%, the yield to perpetuity on AZP.PR.A is 10.09%, while the yield to perpetuity on AZP.PR.B is 12.01%.
This entry was posted on Friday, November 14th, 2014 at 7:08 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.