Pembina Pipeline Corporation has announced:
that it has entered into an agreement with a syndicate of underwriters co-led by Scotiabank and RBC Capital Markets (together, the “Underwriters”) pursuant to which the Underwriters have agreed to purchase from Pembina 8,000,000 cumulative redeemable rate reset class A preferred shares, Series 9 (the “Series 9 Preferred Shares”) at a price of $25.00 per share for distribution to the public.
The holders of Series 9 Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.1875 per share, payable quarterly on the 1st day of March, June, September and December, as and when declared by the Board of Directors of Pembina, yielding 4.75 per cent per annum, for the initial fixed rate period to but excluding December 1, 2020. The first quarterly dividend payment date is scheduled for September 1, 2015. The dividend rate will reset on December 1, 2020 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.91 per cent. The Series 9 Preferred Shares are redeemable by Pembina, at its option, on December 1, 2020 and on December 1 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 floating rate class A preferred shares, Series 10 (the “Series 10 Preferred Shares”), subject to certain conditions, on December 1, 2020 and on December 1 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 Pembina, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 3.91 per cent.
Pembina 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 2,000,000 Series 9 Preferred Shares at a price of $25.00 per share.
Closing of the offering is expected on April 10, 2015, subject to customary closing conditions.
Proceeds from the offering will be used to reduce indebtedness under the Company’s credit facilities, which was incurred in connection with Pembina’s 2015 capital expenditure program.
The offering is being made by means of a prospectus supplement under the short form base shelf prospectus filed by the Company on March 18, 2015 in each of the provinces of Canada.
There is a whacking great first dividend on this, $0.4685, payable September 1, which will go ex around about maybe the end of July. There may be opportunities for dividend capture strategies in July!
Implied Volatility theory suggests that this issue is cheap relative to its peers – not because it is cheap to the fitted curve, but because the implied volatility is so large – ridiculously large, in fact – and the curve may therefore to be deemed likely to flatten.
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Update, 2015-4-6: Rated Pfd-3 by DBRS.
Going ex whacking great first dividend on July 29. Get your limit orders in place, ladies and gents!
Stink bids do pay off! Somebody (not me, unfortunately) picked up 200 shares @ $22.68 (almost 10% down from last day’s close).
Get your limit orders in place, ladies and gents!
There could be a gain. Although PPL.PR.I is not particularly cheap relative to the fitting of Implied Volatility, the calculated volatility is high; they should outperform their peers as the implied volatility declines to more reasonable levels.
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Somebody (not me, unfortunately) picked up 200 shares @ $22.68 (almost 10% down from last day’s close).
We should all be so lucky!