HSE.PR.G Soft On Good Volume

Husky Energy has announced that it:

has completed its recently announced public offering of 6,000,000 Cumulative Redeemable Preferred Shares, Series 7 (the “Series 7 Shares”) with a syndicate of underwriters led by RBC Capital Markets, BMO Capital Markets and Scotia Capital Inc.

The aggregate gross proceeds to Husky from the completed offering are $150 million.

The net proceeds of the offering will be used for general corporate purposes which may include, among other things, the partial repayment of bank debt incurred by the Company to further advance its near-term heavy oil thermal projects.

The Series 7 Shares were offered by way of prospectus supplement to the short form base shelf prospectus of Husky Energy dated February 23, 2015.

Holders of the Series 7 Shares are entitled to receive a cumulative quarterly fixed dividend yielding 4.60 percent annually for the initial period ending June 30, 2020. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 3.52 percent.

Holders of Series 7 Shares will have the right, at their option, to convert their shares into Cumulative Redeemable Preferred Shares, Series 8 (the “Series 8 Shares”), subject to certain conditions, on June 30, 2020 and on June 30 every five years thereafter. Holders of the Series 8 Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 90-day Government of Canada Treasury Bill rate plus 3.52 percent.

The Series 7 Shares are listed on the Toronto Stock Exchange under the symbol HSE.PR.G.

HSE.PR.G is a FixedReset, 4.60%+352, announced June 9. It will be tracked by HIMIPref™ and has been assigned to the FixedReset subindex.

The issue traded 1,051,829 shares today (consolidated exchanges) in a range of 24.50-73 before closing at 24.59-60. Since announcement date the FixedReset subindex is down just a hair over 1%, so the weakness in this issue is not fully explained by market movement. Vital statistics are:

Maturity Type : Limit Maturity
Maturity Date : 2045-06-17
Maturity Price : 23.01
Evaluated at bid price : 24.59
Bid-YTW : 4.54 %

Similarly to the analysis of announcement day, the chart of Implied Volatility for the series of HSE FixedResets indicates that the new issue can be thought of as being a little cheap because the Implied Volatility seems a little high, indicating that there is, perhaps, a little bit more downside protection with the higher-spread issues than with the lower-spread issues.

Click for Big

Update, 2015-6-18: Rated Pfd-2(low) by DBRS.

Leave a Reply

You must be logged in to post a comment.