EFN.PR.G To Be Redeemed

Element Fleet Management Corp. has announced:

  • The Company will redeem Series G shares in full on September 30, 2020, further maturing its capital structure by eliminating its most expensive preferred series
  • The redemption is enabled by the Company’s strategic plan to deliver a consistent, superior client experience by improving operating performance and profitability, which has materially enhanced free cash flow over the last two years
  • With the redemption, the Company will have cumulatively eliminated or replaced over $1 billion of high-cost hybrid instruments from its capital structure in the last 18 months, simplifying and strengthening its investment-grade balance sheet

…its intention to redeem – in accordance with the terms of the Cumulative 5-Year Rate Reset Preferred Shares, Series G (the “Series G Shares”) as set out in the Company’s articles – all of its 6,900,000 issued and outstanding Series G Shares on September 30, 2020 (the “Redemption Date”) for a redemption price equal to $25.00 per Series G Share, together with all accrued and unpaid dividends up to but excluding the Redemption Date (the “Redemption Price”), less any tax required to be deducted and withheld by the Company.

“The ongoing success of our strategic plan to transform Element’s business by delivering a consistent, superior client experience and improving profitability enables us to take advantage of this opportunity to further mature our capital structure by eliminating the most expensive series of our preferred shares,” said Jay Forbes, President and Chief Executive Officer of Element. “This redemption advances our strategic priority of simplifying and strengthening Element’s investment-grade balance sheet.”

With this redemption, the Company will have cumulatively eliminated or replaced over $1 billion of high-cost hybrid instruments from its capital structure in the last 18 months.

The Company remains on track to achieve sub-6.0x tangible leverage by the end of this year.

“We expect that achieving our tangible leverage target – combined with Element’s focus on organic profitable revenue growth – will result in our business generating excess free cash flow in the near future,” Mr. Forbes added. “We are evaluating the timing and scope of further potential capital allocation measures and look forward to sharing our Board’s capital allocation strategy along with our Q3 2020 results at the end of October.”

As previously announced, the Company’s Board of Directors has declared a dividend of $0.406250 per Series G Share for the third quarter of 2020 payable on the Redemption Date to holders of record as of the close of business on September 14, 2020. This will be the final quarterly dividend on the Series G Shares, although holders will receive on redemption of the Series G Shares all accrued and unpaid dividends up to but excluding the Redemption Date.

The Company has provided notice today of the Redemption Price and the Redemption Date to the sole registered holder of the Series G Shares in accordance with the terms of the Series G Shares as set out in the Company’s articles. Non-registered holders of Series G Shares should contact their broker or other intermediary for information regarding the redemption process for the Series G Shares in which they hold a beneficial interest. The Company’s transfer agent for the Series G Shares is Computershare Investor Services Inc. Questions regarding the redemption process may be directed to Computershare Investor Services Inc. at 1-800-564-6253 or by email to corporateactions@computershare.com.

EFN.PR.G is a FixedReset, 6.50%+534, that was announced 2015-5-20, but not added to HIMIPref™ at the time due to the lack of a credit rating. It, together with EFN’s other three preferred share issues, were added to HIMIPref™ in September, 2015, after the company was rated Pfd-3 by DBRS.

As a matter of interest, EFN.PR.G was quoted at 22.70-30 today to yield 6.39%-6.19% to perpetuity. The closing price was 23.20 on volume of 200 shares. The redemption may be considered another piece of evidence that the Canadian preferred share market is still really cheap!

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