that it does not intend to exercise its right to redeem the currently outstanding Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 19 (“Series 19 Shares”) (TSX: PPL.PR.S) on June 30, 2020 (the “Conversion Date”).
As a result, subject to certain terms of the Series 19 Shares, the holders of the Series 19 Shares will have the right to convert all or part of their Series 19 Shares on a one-for-one basis into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 20 of Pembina (“Series 20 Shares”) on the Conversion Date. Holders who do not exercise their right to convert their Series 19 Shares into Series 20 Shares will retain their Series 19 Shares.
As provided in the terms of the Series 19 Shares: (i) if Pembina determines that there would remain outstanding immediately following the conversion less than 1,000,000 Series 19 Shares, then all remaining Series 19 Shares will be automatically converted into Series 20 Shares on a one-for-one basis effective June 30, 2020; or (ii) if Pembina determines that there would be less than 1,000,000 Series 20 Shares after June 30, 2020, no Series 19 Shares will be converted into Series 20 Shares on the Conversion Date. There are currently 8,000,000 Series 19 Shares outstanding.
With respect to any Series 19 Shares that remain outstanding after June 30, 2020, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Pembina. The annual dividend rate for the Series 19 Shares for the five-year period from and including June 30, 2020 to, but excluding, June 30, 2025 will be 4.684 percent, being equal to the five-year Government of Canada bond yield of 0.414 percent determined as of today plus 4.27 percent, in accordance with the terms of the Series 19 Shares.
With respect to any Series 20 Shares that may be issued on June 30, 2020, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, if, as and when declared by the Board of Directors of Pembina. The annual dividend rate applicable to Series 20 Shares for the three-month floating rate period from and including June 30, 2020 to, but excluding, September 1, 2020 will be 4.525 percent, being equal to the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 0.255 percent plus 4.27 percent, in accordance with the terms of the Series 20 Shares (the “Floating Quarterly Dividend Rate”). The Floating Quarterly Dividend Rate will be reset every quarter.
Beneficial holders of Series 19 Shares who wish to exercise their right of conversion during the conversion period, which runs from June 1, 2020 until 3:00 (MT) / 5:00 pm (ET) on June 15, 2020, should communicate as soon as possible with their broker or other intermediary for more information. It is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary with the time to complete the necessary steps. Any notices received after this deadline will not be valid.
As previously announced, the dividend payable on June 30, 2020 to holders of the Series 19 Shares of record on June 15, 2020 will be $0.312500 per Series 19 Share, consistent with the dividend rate in effect since issuance of the Series 19 Shares. For more information on the terms of the Series 19 Shares and the Series 20 Shares, please see the prospectus supplement dated March 25, 2015 which can be found on SEDAR, under the profile of Veresen Inc., at www.sedar.com.
PPL.PR.S To Reset To 4.684%
Pembina Pipeline Corporation has announced:
PPL.PR.S is a FixedReset, 5.00%+427, that commenced trading 2015-4-1 as VSN.PR.E after being announced 2015-03-23. The ticker change became effective 2017-10-5 after the closing of a merger between the companies. The issue is tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.
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