PrefBlog

Dividend 15 Split Corp. has announced:

it will undertake an offering of Preferred Shares of the Company.

The offering will be co-led by National Bank Financial Inc. and CIBC World Markets Inc

The Preferred Shares will be offered at a price of $10.00 per Preferred Share to yield 5.50%.

The closing price on the TSX of the Preferred Shares on August 24, 2020 was $10.01.

Since inception of the Company, 197 consecutive dividends have been declared for the Preferred Shares. The aggregate dividends paid on the Preferred Shares have been $8.66 per share. All distributions to date have been made in tax advantage eligible Canadian dividends.

The net proceeds of the offering will be used by the Company to invest in an actively managed, high quality portfolio consisting of 15 dividend yielding Canadian companies as follows:

Bank of Montreal	Enbridge Inc.	TC Energy
The Bank of Nova Scotia	Manulife Financial Corp.	TELUS Corporation
BCE Inc.	National Bank of Canada	Thomson-Reuters Corporation
Canadian Imperial Bank of Commerce	Royal Bank of Canada	The Toronto-Dominion Bank
CI Financial Corp.	Sun Life Financial Inc.	TransAlta Corporation

The Company’s investment objectives are:

Preferred Shares:

• to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends in the amount of 5.50% annually; and
• on or about the termination date, currently December 1, 2024 (subject to further 5 year extensions thereafter and it has been extended in the past), to pay the holders of the Preferred Shares $10.00 per Preferred Share.

The sales period of this overnight offering will end at 9:00 a.m. EST on August 26, 2020. The offering is expected to close on or about September 2, 2020 and is subject to certain closing conditions including approval by the TSX.

A prospectus supplement to the Company’s short form base shelf prospectus dated June 18, 2020 containing important detailed information about the Preferred Shares and the Class A Shares being offered will be filed with securities commissions or similar authorities in all provinces of Canada. Copies of the prospectus supplement and the short form base shelf prospectus may be obtained from your registered financial advisor using the contact information for such advisor, or from representatives of the agents listed above. There will not be any sale or any acceptance of an offer to buy the securities being offered until the prospectus supplement has been filed with the Securities Commissions or similar authorities in each of the provinces of Canada.

There are a couple of unusual things about this announcement:

• There is no mention of a maximum size, and
• No Capital Units are on offer

I believe that this is due to the new rules regarding “At-the-Market Offerings”. DFN announced in November 2019 that they would be taking advantage of this distribution technique; in other words, I believe that the Capital Units have already been sold to investors through the market and that this offering is simply an effort to square the books. However, this is hard to reconcile with the 20H1 Semi-Annual Report, which discloses ATM distributions for the preferreds, but not for the Capital Units. Life is getting more complicated!

This entry was posted on Wednesday, August 26th, 2020 at 12:19 am and is filed under Issue Comments. 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.