PrefBlog

GMP Capital Inc. has announced:

that it does not intend to exercise its right to redeem all or any part of the currently outstanding Cumulative 5-Year Rate Reset Preferred Shares, Series B of the Corporation (the Series B Shares) on March 31, 2016 (the Conversion Date). There are currently 4,600,000 Series B Shares outstanding.

As a result and subject to certain conditions set out in the short form prospectus dated February 14, 2011 relating to the issuance of the Series B Shares, the holders of the Series B Shares have the right, at their option, to convert all or any of their Series B Shares, on a one-for-one basis, into Cumulative Floating Rate Preferred Shares, Series C of the Corporation (the Series C Shares) on the Conversion Date (the Conversion Privilege). A formal notice of the Conversion Privilege will be sent to the registered holder of the Series B Shares.

Holders who do not exercise their right to convert their Series B Shares into Series C Shares will continue to hold their Series B Shares and will have the opportunity to convert their shares again on March 31, 2021, and every five years thereafter as long as the shares remain outstanding.

The foregoing Conversion Privilege is subject to the following conditions: (i) if the Corporation determines that there would remain outstanding on the Conversion Date less than 1,000,000 Series C Shares, after taking into account all Series B Shares tendered for conversion into Series C Shares and all Series C Shares tendered for conversion into Series B Shares, then the holders of the Series B Shares will not be entitled to convert their shares into Series C Shares; and (ii) alternatively, if the Corporation determines that there would remain outstanding on the Conversion Date less than 1,000,000 Series B Shares, after taking into account all Series B Shares tendered for conversion into Series C Shares and all Series C Shares tendered for conversion into Series B Shares, then all, but not part, of the remaining outstanding Series B Shares will automatically be converted into Series C Shares on a one-for-one basis on the Conversion Date. In either case, the Corporation will give written notice to that effect to any registered holders affected by the preceding conditions of the Series B Shares no later than March 24, 2016.

The dividend rate applicable to the Series B Shares for the five-year period commencing on April 1, 2016 and ending on and including March 31, 2021, and the dividend rate applicable to the Series C Shares for the three-month period commencing on April 1, 2016 and ending on and including June 30, 2016, will be determined and announced by way of a press release on March 1, 2016.

Beneficial owners of Series B Shares who wish to exercise their Conversion Privilege should communicate as soon as possible with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which runs from March 1, 2016 until 5:00 p.m. (Toronto time) on March 16, 2016.

This is not a big surprise. GMP.PR.B is a FixedReset, 5.50%+289, that commenced trading 2011-2-22 after being announced 2011-2-1. The company is experiencing difficulties and is on Review-Negative by DBRS.

The issue is tracked by HIMIPref™ but relegated to the scraps index on credit concerns.

I will post information regarding the reset rate when it is available March 1 and intend to post a recommendation regarding conversion on March 11.

This entry was posted on Wednesday, February 24th, 2016 at 12:31 am 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.