Atlantic Power Corporation and Atlantic Power Preferred Equity Ltd. have announced:
the dividend rate on Preferred Equity’s outstanding Cumulative Rate Reset Preferred Shares, Series 2 (the “Series 2 Shares”) will be reset on December 31, 2014, using a reset dividend rate (the “Reset Dividend Rate”) calculated on December 1, 2014.
The Reset Dividend Rate was calculated on December 1, 2014 to be 5.57%, representing the sum of the Canadian Government five-year bond yield of 1.39% plus 4.18%.
Such 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 be reset.
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 was calculated on December 1, 2014 to be 5.09%, representing the sum of the Canadian Government 90-day Treasury Bill yield (using the three-month average result of .91%) plus 4.18%.
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.
AZP.PR.B used to be CZP.PR.B, which used to be EPP.PR.B, and throughout has been a FixedReset, 7.00%+418, which commenced trading 2009-11-2 after being announced 2009-10-13. You can’t tell your players without a programme!
The new rate of 5.57% is a sharp drop from 7.00%, just over 20% of the coupon in fact. This probably explains recent weakness in the issue’s price, although the company has not exactly been a picture of health lately.
Using similar arguments to those made with respect to TRP.PR.A, I suggest that conversion to the FloatingReset issue is currently favoured, with a projected price on the FloatingReset of 12.35 compared to 12.10 for the FixedReset … which looks better in percentage terms than absolutes! However, any decision should be made at the last possible moment – which will be earlier than the company’s last possible moment of 5pm, December 16, 2014. Check with your broker to determine what their deadline is!
This entry was posted on Tuesday, December 2nd, 2014 at 11:02 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.
AZP.PR.B To Reset To 5.57%
Atlantic Power Corporation and Atlantic Power Preferred Equity Ltd. have announced:
AZP.PR.B used to be CZP.PR.B, which used to be EPP.PR.B, and throughout has been a FixedReset, 7.00%+418, which commenced trading 2009-11-2 after being announced 2009-10-13. You can’t tell your players without a programme!
The new rate of 5.57% is a sharp drop from 7.00%, just over 20% of the coupon in fact. This probably explains recent weakness in the issue’s price, although the company has not exactly been a picture of health lately.
Using similar arguments to those made with respect to TRP.PR.A, I suggest that conversion to the FloatingReset issue is currently favoured, with a projected price on the FloatingReset of 12.35 compared to 12.10 for the FixedReset … which looks better in percentage terms than absolutes! However, any decision should be made at the last possible moment – which will be earlier than the company’s last possible moment of 5pm, December 16, 2014. Check with your broker to determine what their deadline is!
This entry was posted on Tuesday, December 2nd, 2014 at 11:02 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.