Brookfield Renewable Partners L.P. has announced:
that it has agreed to issue 8,000,000 Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 11 (the “Series 11 Preferred Units”) on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank for distribution to the public. The Series 11 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $200,000,000.
Holders of the Series 11 Preferred Units will be entitled to receive a cumulative quarterly fixed distribution yielding 5.00% annually for the initial period ending April 30, 2022. Thereafter, the distribution rate will be reset every five years at a rate equal to the greater of (i) the 5-year Government of Canada bond yield plus 3.82%, and (ii) 5.00%. The Series 11 Preferred Units are redeemable on April 30, 2022 and on each Series 11 Reclassification Date (as defined below) thereafter.
Holders of the Series 11 Preferred Units will have the right, at their option, to reclassify their Series 11 Preferred Units into Cumulative Floating Rate Reset Class A Preferred Limited Partnership Units, Series 12 (“Series 12 Preferred Units”), subject to certain conditions, on April 30, 2022 and on April 30 every 5 years thereafter (each a “Series 11 Reclassification Date”). Holders of Series 12 Preferred Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the 90-day Canadian Treasury Bill yield plus 3.82%.
Brookfield Renewable has granted the underwriters an option, exercisable until 48 hours prior to closing, to purchase up to an additional 2,000,000 Series 11 Preferred Units which, if exercised, would increase the gross offering size to $250,000,000.
They later announced:
that as a result of strong investor demand for its previously announced offering, the underwriters have exercised their option to increase the size of the offering to 10,000,000 Cumulative Minimum Rate Reset Class A Preferred Limited Partnership Units, Series 11 (the “Series 11 Preferred Units”) to be offered on a bought deal basis to a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank. The Series 11 Preferred Units will be issued at a price of $25.00 per unit, for gross proceeds of $250,000,000.
Update, 2017-2-10: Barry Critchley has written a piece about this issue titled Will that be preferred units or preferred shares — they are not quite the same:
Apart from Brookfield, real estate investment trusts have, over the years, also issued rate reset preferred units. In January 2011, Rio-Can REIT made history by becoming the first REIT to issue such a piece of paper. It raised $125 million at 5.25 per cent and redeemed it early last year.
It took at least three years for RioCan to get to the stage where it could issue such a security. Regulatory and unit holder approval as well as securing an advanced tax ruling were all required. Given the time and costs involved, the security is only an option for a few issuers. (RioCan raised $149.50 million from a similar issue in late 2011. That issue is still outstanding though RioCan can redeem next June.)
James, what, if anything, is the difference between these “Preferred Units” and the normal announcement of “Preferred Shares”?
Barry Critchley (FP) has an article out yesterday that makes an attempt to cover the subject http://business.financialpost.com/news/fp-street/will-that-be-preferred-units-or-preferred-shares-they-are-not-quite-the-same but your loyal assiduous readers would love to read your viewpoint.