Manulife Financial Corporation has announced:
a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 19 (“Series 19 Preferred Shares”). Manulife will issue 8 million Series 19 Preferred Shares priced at $25 per share to raise gross proceeds of $200 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., CIBC World Markets and RBC Capital Markets and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is December 3, 2014. Manulife intends to file a prospectus supplement to its June 23, 2014 base shelf prospectus in respect of this issue.
Holders of the Series 19 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 3.80 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending March 19, 2020. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 2.30 per cent.
Holders of Series 19 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 20 (“Series 20 Preferred Shares”), subject to certain conditions, on March 19, 2020 and on March 19 every five years thereafter. Holders of the Series 20 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.30 per cent.
Manulife intends to use the net proceeds from the offering for general corporate purposes, including future refinancing requirements.
“Our financing activities take into account future refinancing needs. We have over $2 billion in potential refinancing requirements over the next 12 months. We have taken the opportunity to issue preferred shares in favourable markets,” said Senior Executive Vice President and Chief Financial Officer Steve Roder.
Manulife’s Canadian life insurance company subsidiary, The Manufacturers Life Insurance Company, also intends to issue a minimum of $250 million principal amount of fixed/floating subordinated debentures. The debentures will be fully and unconditionally guaranteed on a subordinated basis by Manulife.
They later announced:
that as a result of strong investor demand for its previously announced Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 19 (“Series 19 Preferred Shares”), the size of the offering has been increased to 10 million shares. The gross proceeds of the offering will now be $250 million. The offering will be underwritten by a syndicate of investment dealers co-led by Scotia Capital Inc., CIBC World Markets and RBC Capital Markets and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is December 3, 2014. Manulife intends to file a prospectus supplement to its June 23, 2014 base shelf prospectus in respect of this issue.
Manulife intends to use the net proceeds from the offering for general corporate purposes, including future refinancing requirements.
They also announced an issue of sub-debt with a five-year pretend-maturity:
The Manufacturers Life Insurance Company (“MLI”), the Canadian insurance company subsidiary of Manulife Financial Corporation, announced today that it intends to issue $500 million principal amount of 2.64% fixed/floating subordinated debentures due January 15, 2025 (the “Debentures”). MLI intends to file a prospectus supplement to its December 13, 2013 base shelf prospectus in respect of this issue.
The Debentures will bear interest at a fixed rate of 2.64% until January 15, 2020 and thereafter at a rate of 0.73% over the three month CDOR. The Debentures mature on January 15, 2025.
Subject to prior regulatory approval, MLI may redeem the Debentures, in whole or in part, on or after January 15, 2020 at a redemption price equal to par, together with accrued and unpaid interest to the date fixed for redemption. The Debentures will constitute subordinated indebtedness, ranking equally and rateably with all other subordinated indebtedness of MLI from time to time issued and outstanding.
The Debentures will be fully and unconditionally guaranteed on a subordinated basis by Manulife Financial Corporation, as to payment of principal, premium, if any, interest and redemption price, if any.
The offering is being done on a best efforts agency basis by a syndicate co-led by RBC Capital Markets, BMO Capital Markets and TD Securities and consisting of CIBC World Markets, Scotiabank Global Banking and Markets, Bank of America Merrill Lynch, National Bank Financial, HSBC Securities, Desjardins Securities, Canaccord Capital, Laurentian Bank Securities and Manulife Securities Incorporated. The offering is expected to close on December 1, 2014.
MLI intends to use the net proceeds from the offering for general corporate purposes, including future refinancing requirements.
“Our financing activities take into account future refinancing needs. We have over $2 billion in potential refinancing requirements over the next 12 months. We have taken the opportunity to issue subordinated debt in favourable markets,” said Senior Executive Vice President and Chief Financial Officer Steve Roder.
Implied Volatility theory suggests that this issue is about $0.20 cheap to theory:
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