MFC.PR.J : No Conversion to FloatingReset

Manulife Financial Corporation has announced (on March 6):

that after having taken into account all election notices received by the March 5, 2018 deadline for conversion of its currently outstanding 8,000,000 Non-cumulative Rate Reset Class 1 Shares Series 11 (the “Series 11 Preferred Shares”) (TSX: MFC.PR.J) into Non-cumulative Floating Rate Class 1 Shares Series 12 of Manulife (the “Series 12 Preferred Shares”), the holders of Series 11 Preferred Shares are not entitled to convert their Series 11 Preferred Shares into Series 12 Preferred Shares. There were 203,586Series 11 Preferred Shares elected for conversion, which is less than the minimum one million shares required to give effect to conversions into Series 12 Preferred Shares.

As announced by Manulife on February 20, 2018, after March 19, 2018, holders of Series 11 Preferred Shares will be entitled to receive fixed rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of Manulife and subject to the provisions of the Insurance Companies Act (Canada). The dividend rate for the five-year period commencing on March 20, 2018, and ending on March 19, 2023, will be 4.73100% per annum or $0.295688 per share per quarter, being equal to the sum of the five-year Government of Canada bond yield as at February 20, 2018, plus 2.61%, as determined in accordance with the terms of the Series 11 Preferred Shares.

Subject to certain conditions described in the prospectus supplement dated November 27, 2012 relating to the issuance of the Series 11 Preferred Shares, Manulife may redeem the Series 11 Preferred Shares, in whole or in part, on March 19, 2023 and on March 19 every five years thereafter.

It will be recalled that MFC.PR.J will reset to 4.731% effective 2018-3-20 and will hence be referred to as a FixedReset, 4.731%+261.

MFC.PR.J commenced trading 2012-12-4 after being announced 2012-11-27. It is tracked by HIMIPref™ and is assigned to the FixedReset sub-index.

As this issue is not NVCC compliant and it is an insurance issue, it is analyzed as having a Deemed Retraction, effective 2025-1-31 (this date may change in the future).

It will be further recalled that I recommended against conversion.

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