Manulife Financial Corporation has announced:
a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 23 (“Series 23 Preferred Shares”). Manulife will issue 14 million Series 23 Preferred Shares priced at $25 per share to raise gross proceeds of $350 million. The offering will be underwritten by a syndicate of investment dealers co-led by RBC Capital Markets, BMO Capital Markets and Scotiabank and is anticipated to qualify as Tier 1 capital for Manulife. Manulife has also granted the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to closing, to purchase up to an additional 2 million Series 23 Preferred Shares at the same offering price. The gross proceeds raised under the offering will be $400 million should this option be exercised in full. The expected closing date for the offering is November 22, 2016. Manulife intends to file a prospectus supplement to its December 17, 2015 base shelf prospectus in respect of this issue.
Holders of the Series 23 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 4.85 per cent annually, as and when declared by the Board of Directors of Manulife, for the initial period ending March 19, 2022. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.83 per cent.
Holders of Series 23 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Floating Rate Class 1 Shares Series 24 (“Series 24 Preferred Shares”), subject to certain conditions, on March 19, 2022 and on March 19 every five years thereafter. Holders of the Series 24 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.83 per cent.
Manulife intends to use the net proceeds from the offering for general corporate purposes.
They later announced:
that as a result of strong investor demand for its previously announced Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 23 (“Series 23 Preferred Shares”), the size of the offering has been increased to 19 million shares. The gross proceeds of the offering will now be $475 million. The offering will be underwritten by a syndicate of investment dealers co-led by RBC Capital Markets, BMO Capital Markets and Scotiabank and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is November 22, 2016. Manulife intends to file a prospectus supplement to its December 17, 2015 base shelf prospectus in respect of this issue.
Manulife intends to use the net proceeds from the offering for general corporate purposes.
Implied Volatility analysis suggests that the issue is actually a little rich compared to its peers:
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