BCE.PR.G / BCE.PR.H Conversion Letters Sent

BCE Inc. has mailed its Notice to Holders of BCE Inc. Series AG Preferred Shares:

Beginning on March 17, 2016 and ending on April 21, 2016, holders of Series AG Preferred Shares will have the right to choose one of the following options with regards to their shares:
1. To retain any or all of their Series AG Preferred Shares and continue to receive a fixed quarterly dividend; or
2. To convert, on a one-for-one basis, any or all of their Series AG Preferred Shares into BCE Inc. Cumulative Redeemable First Preferred Shares, Series AH (the “Series AH Preferred Shares”) and receive a floating monthly dividend.

Effective May 1, 2016, the fixed dividend rate for the Series AG Preferred Shares will be set for a five-year period as explained in more detail in paragraph 5 of the attached Notice of Conversion Privilege.

As of May 1, 2016, the Series AG Preferred Shares, should they remain outstanding, will pay, on a quarterly basis, as and when declared by the Board of Directors of BCE Inc., a fixed cash dividend for the following five years that will be determined by BCE Inc. on April 6, 2016 but which shall not be less than 80% of the five-year Government of Canada Yield (as defined in BCE Inc.’s articles) compounded semi-annually and computed on April 6, 2016 by two investment dealers appointed by BCE Inc. The annual dividend rate applicable to the Series AG Preferred Shares will be published on April 8, 2016 in the national edition of The Globe and Mail, the Montreal Gazette and Le Devoir and will be posted on BCE Inc.’s website at www.bce.ca.

A similar notice has been sent to the Holders of BCE Inc. Series AH Preferred Shares.

The new dividend rate for BCE.PR.G is not yet known, but I will pass on the information when it becomes available. The observed relationship of reset rates to market rates has been discussed in comments fairly recently.

BCE.PR.G currently pays 4.50% after having been reset in 2011. At that time, holders overwhelmingly preferred BCE.PR.G the FixedFloater, over BCE.PR.H, the Ratchet Rate preferred. As these issues are interconvertible every five years, they comprise a Strong Pair.

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