PrefBlog

Canadian Western Bank has announced:

its intent to issue $100 million non-cumulative 5-year rate reset First Preferred Shares Series 9 (Non-Viability Contingent Capital (NVCC)) (the “Series 9 Preferred Shares”). The offering will be underwritten on a bought deal basis by a syndicate led by National Bank Financial Inc. and BMO Capital Markets. The expected closing date is on or about January 29, 2019.

Under the terms of the offering, CWB will issue 4,000,000 Series 9 Preferred Shares at a price of $25.00 per share. CWB has granted the underwriters an option to purchase, on the same terms, up to an additional 1,000,000 Series 9 Preferred Shares. This option is exercisable in whole or in part by the underwriters at any time up to two business days prior to closing. The gross proceeds raised under the offering will be $125 million should this option be exercised in full.

Holders of the Series 9 Preferred Shares will be entitled to receive a non-cumulative fixed dividend in the amount of $1.50 annually, payable quarterly, as and when declared by the board of directors of CWB, for the initial period ending April 30, 2024. The quarterly dividend represents an annual yield of 6.00% based on the stated issue price per share. Thereafter, the dividend rate will reset every five years at a level of 404 basis points over the then 5-year Government of Canada bond yield. The first of such dividends, if declared, will be payable on April 30, 2019 and will be $0.3832 per Series 9 Preferred Share, based on the anticipated closing date of the offering of January 29, 2019. CWB maintains the right to redeem, subject to the approval of the Superintendent of Financial Institutions (Canada), up to all of the then outstanding Series 9 Preferred Shares on April 30, 2024, and on April 30 every five years thereafter at a price of $25.00 per share.

Should CWB choose not to exercise its right to redeem the Series 9 Preferred Shares, holders of these shares will have the right to convert their shares into an equal number of non-cumulative floating rate First Preferred Shares Series 10 (Non-Viability Contingent Capital (NVCC)) (the “Series 10 Preferred Shares”), subject to certain conditions, on April 30, 2024, and on April 30 every five years thereafter. Holders of the Series 10 Preferred Shares will be entitled to receive quarterly floating dividends, as and when declared by the board of directors of CWB, equal to the 90-day Government of Canada Treasury Bill rate plus 404 basis points.

Net proceeds from the offering will be added to CWB’s general funds and utilized for general banking purposes. CWB intends to file a prospectus supplement to its January 4, 2019 base shelf prospectus in all provinces and territories of Canada in respect of this issue.

They later announced:

that as a result of strong investor demand for its previously announced domestic public offering of non-cumulative 5-year rate reset First Preferred Shares Series 9 (Non-Viability Contingent Capital (NVCC)) (the “Series 9 Preferred Shares”), the underwriters have exercised their option to purchase an additional 1,000,000 Series 9 Preferred Shares. The size of the offering has been increased to 5,000,000 shares. The gross proceeds of the offering will now be $125 million. The offering will be underwritten on a bought deal basis by a syndicate led by National Bank Financial Inc. and BMO Capital Markets. The expected closing date is on or about January 29, 2019.

Net proceeds from the offering will be added to CWB’s general funds and utilized for general banking purposes. CWB intends to file a prospectus supplement to its January 4, 2019 base shelf prospectus in all provinces and territories of Canada in respect of this issue.

There are only three CWB issues, including the new issue, so we can’t do a meaningful Implied Volatility analysis, but we can look at the comparators:

Well, no wonder it sold out so quickly! This was a very rare cheap new issue!

This entry was posted on Monday, January 21st, 2019 at 7:45 pm and is filed under New Issues. 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.