that it does not intend to exercise its right to redeem the currently outstanding Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 9 (“Series 9 Shares”) (TSX: PPL.PR.I) on December 1, 2020 (the “Conversion Date”).
As a result, subject to certain terms of the Series 9 Shares, the holders of the Series 9 Shares will have the right to convert all or part of their Series 9 Shares on a one-for-one basis into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 10 of Pembina (“Series 10 Shares”) on the Conversion Date. Holders who do not exercise their right to convert their Series 9 Shares into Series 10 Shares will retain their Series 9 Shares.
As provided in the terms of the Series 9 Shares: (i) if Pembina determines that there would remain outstanding immediately following the conversion less than 1,000,000 Series 9 Shares, then all remaining Series 9 Shares will be automatically converted into Series 10 Shares on a one-for-one basis effective December 1, 2020; or (ii) if Pembina determines that there would be less than 1,000,000 Series 10 Shares after December 1, 2020, no Series 9 Shares will be converted into Series 10 Shares on the Conversion Date. There are currently 9,000,000 Series 9 Shares outstanding.
With respect to any Series 9 Shares that remain outstanding after December 1, 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 9 Shares for the five-year period from and including December 1, 2020 to, but excluding, December 1, 2025 will be 4.302 percent, being equal to the five-year Government of Canada bond yield of 0.392 percent determined as of today plus 3.91 percent, in accordance with the terms of the Series 9 Shares.
With respect to any Series 10 Shares that may be issued on December 1, 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 10 Shares for the three-month floating rate period from and including December 1, 2020 to, but excluding, March 1, 2021 will be 3.996 percent, being equal to the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 0.086 percent plus 3.91 percent, in accordance with the terms of the Series 10 Shares (the “Floating Quarterly Dividend Rate”). The Floating Quarterly Dividend Rate will be reset every quarter.
Beneficial holders of Series 9 Shares who wish to exercise their right of conversion during the conversion period, which runs from November 2, 2020 until 3:00 (MT) / 5:00 pm (ET) on November 16, 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 December 1, 2020 to holders of the Series 9 Shares of record on November 2, 2020 will be $0.296875 per Series 9 Share, consistent with the dividend rate in effect since issuance of the Series 9 Shares. For more information on the terms of the Series 9 Shares and the Series 10 Shares, please see the prospectus supplement dated April 2, 2015 which can be found on SEDAR, under the profile of Pembina Pipeline Corporation, at www.sedar.com.
PPL.PR.I To Reset To 4.302%
Pembina Pipeline Corporation has announced:
PPL.PR.I is a FixedReset, 4.75%+391, that commenced trading 2015-4-10 after being announced 2015-3-31. It is tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.
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