TC Energy Corporation has announced:
that it does not intend to exercise its right to redeem its Cumulative Redeemable First Preferred Shares, Series 5 (Series 5 Shares) and Cumulative Redeemable First Preferred Shares, Series 6 (Series 6 Shares) on January 30, 2021. As a result, subject to certain conditions:
(a) the holders of Series 5 Shares have the right to choose one of the following options with regard to their shares:
to retain any or all of their Series 5 Shares and continue to receive a fixed rate quarterly dividend; or
to convert, on a one-for-one basis, any or all of their Series 5 Shares into Series 6 Shares and receive a floating rate quarterly dividend, and
(b) the holders of Series 6 Shares have the right to choose one of the following options with regard to their shares:to retain any or all of their Series 6 Shares and continue to receive a floating rate quarterly dividend; or
to convert, on a one-for-one basis, any or all of their Series 6 Shares into Series 5 Shares and receive fixed rate quarterly dividend.
Should a holder of Series 5 Shares choose to retain their shares, such shareholders will receive the new annual fixed dividend rate applicable to Series 5 Shares of 1.949% for the five-year period commencing January 30, 2021 to, but excluding, January 30, 2026. Should a holder of Series 5 Shares choose to convert their shares to Series 6 Shares, holders of Series 6 Shares will receive the floating quarterly dividend rate applicable to the Series 6 Shares of 1.655% for the three-month period commencing January 30, 2021 to, but excluding, April 30, 2021. The floating dividend rate will be reset every quarter.Should a holder of Series 6 Shares choose to retain their shares, such shareholders will receive the floating quarterly dividend rate applicable to Series 6 Shares of 1.655% for the three-month period commencing January 30, 2021 to, but excluding, April 30, 2021. The floating dividend rate will be reset every quarter. Should a holder of Series 6 Shares choose to convert their shares to Series 5 Shares, holders of Series 5 Shares will receive the new fixed quarterly dividend rate applicable to the Series 5 Shares of 1.949% for the five-year period commencing January 30, 2021 to, but excluding, January 30, 2026.
Beneficial owners of Series 5 Shares and Series 6 Shares who want to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to meet the deadline to exercise such right, which is 5 p.m. (EST) on January 15, 2021. Any notices received after this deadline will not be valid. As such, it is recommended that this be done well in advance of the deadline in order to provide the broker or other nominee with time to complete the necessary steps.
Beneficial owners of Series 5 or Series 6 Shares who do not provide notice or communicate with their broker or other nominee by the deadline will retain their respective Series 5 Shares or Series 6 Shares, as applicable, and receive the new dividend rate applicable to such shares, subject to the conditions stated below.
The foregoing conversions are subject to the conditions that: (i) if TC Energy determines that there would be less than one million Series 5 Shares outstanding after January 30, 2021, then all remaining Series 5 Shares will automatically be converted into Series 6 Shares on a one-for-one basis on January 30, 2021, and (ii) if TC Energy determines that there would be less than one million Series 6 Shares outstanding after January 30, 2021, then all of the remaining outstanding Series 6 Shares will automatically be converted into Series 5 Shares on a one-for-one basis on January 30, 2021. In either case, TC Energy will issue a news release to that effect no later than January 22, 2021.
Holders of Series 5 Shares and Series 6 Shares will have the opportunity to convert their shares again on January 30, 2021 and every five years thereafter as long as the shares remain outstanding. For more information on the terms of, and risks associated with an investment in the Series 5 Shares and the Series 6 Shares, please see the prospectus supplement dated June 17, 2010 which is available on sedar.com or on our website.
TRP.PR.C was issued as a FixedReset, 4.40%+154, that commenced trading 2010-06-29 after being announced 2010-6-17. Notice of extension was published in 2015 and the issue reset to 2.263%. There was 9% conversion to the FloatingReset TRP.PR.I.
TRP.PR.I is a FloatingReset, Bills+154, that arose from a partial conversion from the FixedReset TRP.PR.C.
Interesting toi look at the next TRP reset TRP-J Series 13. The prospextus states interchangeable into Series 14.
I CAN NOT find any Series 14 even on TRP’s website.
Conundrum in need of your expertise. JA
“The holders of Series 13 Preferred Shares will have the right to convert their shares into cumulative redeemable first preferred shares, series 14 (the “Series 14 Preferred Shares”), subject to certain conditions, on May 31, 2021 and on the last business day of May in every fifth year thereafter. The holders of Series 14 Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the board of directors of TransCanada, at an annualized rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 4.69 per cent.”
I copied the above from the post in Prefblog about the issuance of TRP.PR.J, the series 13 shares in April of 2016. The series 14 shares will only come into existance after they are offered as a conversion option if TRP decides not to redeen TRP.PR.J on May 31, 2021. Series 14 would be a floating rate reset sister issue to fixed rate reset issue TRP.PR.J if they are ever issued.
I am curious whether TRP will call TRP.PR.J or keep paying me a nice dividend.
RAV4guy,
I got that too, but what is the description of the Series 14 GOING to be?
The current conversion of Series 5 and 6 are a differing reset rates, of course the GoC instrument is what it is at the reset time.
That is what I see above here and reported on the current description of the Series 5 and 6.
Somewhat perplexing, probably something simple that I do not see.
what is the description of the Series 14 GOING to be?
The description of the Series 14 shares is given in the prospectus for the issuance of the Series 13 shares (accessed via the TC Energy Preferred Share Information Page), commencing the details on page 22 of the PDF.
Joel A., if you are looking for how the Series 14 dividend would be calculated, the passage quoted below is from page S-18 of the prospectus that James linked above.
” ‘‘Floating Quarterly Dividend Rate’’ means, for any Quarterly Floating Rate Period, the annual rate of interest (expressed as a percentage rounded to the nearest one hundred-thousandth of one percent (with 0.000005% being rounded up)) equal to the sum of the T-Bill Rate on the applicable Floating Rate Calculation Date and 4.69%.
‘‘Floating Rate Calculation Date’’ means, for any Quarterly Floating Rate Period, the 30th day prior to the first day of such Quarterly Floating Rate Period.”
I read this to mean there is no floor to the the Series 14 floating rate dividend, compared to the fixed rate dividend for Series 13 which has a 5.5% floor.
I should have done more work. I think I was looking for some more complexity. In this case the premium remains the same. I see now that the premium for Series 5 and 6 is the same too at 1.54. The only decision in this case is the perspective on interest rates for five years at the time of reset.
I have spent more time studying.
It looks like many of the conversions features between Resets and Floats every five years is a one way door. At that time, there is not a conversion for Floats to convert into Resets?
Again, the Resets can opt to go into Floats, but Floats can not opt for Reset conversion. Example would be: SLF-Series 8 & 9.
“ … the Resets can opt to go into Floats, but Floats can not opt for Reset conversion. Example would be: SLF-Series 8 & 9.”
Joel, fixed-rate resets are always [ subject to the usual minimum number of shareholders indicating a desire to do so ] convertible into floaters, and vice versa. That includes SLF series 8 & 9.
Again, the Resets can opt to go into Floats, but Floats can not opt for Reset conversion. Example would be: SLF-Series 8 & 9.
The prospectus for SLF.PR.G (Series 8R) can be found on SEDAR through a search for
“Sun Life Financial Inc. May 13 2010 21:57:09 ET
Prospectus supplement – English PDF 233 K”
On page 26 of the PDF there is a section titled “Conversion of Series 9QR Shares into Series 8R Shares”
In the post SLF.PR.G / SLF.PR.J : 9% Net Conversion to FixedReset, I reported that
How is the tax treatment in the conversion of fixed to floating or vice versa? Is it treated as a deemed sale? Or just a tax-free exchange? Or some other wierd forms of taxation?
How is the tax treatment in the conversion of fixed to floating or vice versa?
The prospectus for TRP.PR.C is available on the TC Energy stock information page. It states, in part:
There will be similar language in prospectuses for other issues. I am not aware of any situation in which exchanging shares would give rise to a capital gain or loss.
Thank you Mr. Hymas!