PrefBlog

First National Financial Corporation has announced (although not yet on their website):

that it does not intend to exercise its right to redeem the currently outstanding 2,887,147 cumulative 5-year rate reset Class A Preference Shares, Series 1 of First National (“Series 1 Preference Shares”) or 1,112,853 cumulative floating rate reset Class A Preference Shares, Series 2 of First National (“Series 2 Preference Shares”) on March 31, 2021.

As a result, subject to certain conditions, the holders of Series 1 Preference Shares have the right to convert all or part of their Series 1 Preference Shares on a one-for-one basis into Series 2 Preference Shares on March 31, 2021. As well, subject to certain conditions, the holders of Series 2 Preference Shares have the right to convert all or part of their Series 2 Preference Shares on a one-for-one basis into Series 1 Preference Shares on March 31, 2021. Holders who do not exercise their right to convert their Series 1 Preference Shares into Series 2 Preference Shares will retain their Series 1 Preference Shares. Holders who do not exercise their right to convert their Series 2 Preference Shares into Series 1 Preference Shares will retain their Series 2 Preference Shares.

The foregoing conversions are subject to the conditions that: (i) if First National determines that there would be less than 1,000,000 Series 1 Preference Shares outstanding on March 31, 2021, then all remaining Series 1 Preference Shares will automatically be converted into Series 2 Preference Shares on a one-for-one basis on March 31, 2021, and (ii) alternatively, if First National determines that there would be less than 1,000,000 Series 2 Preference Shares outstanding on March 31, 2021, then all remaining Series 2 Preference Shares will automatically be converted into Series 1 Preference Shares on a one-for-one basis on March 31, 2021. In either case, First National shall give a written notice to that effect to holders of both Series 1 and Series 2 Preference Shares no later than March 24, 2021.

Deadline to Exercise Right

Beneficial owners of Series 1 Preference Shares and Series 2 Preference Shares who wish 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 ensure that they meet the deadline to exercise such right, which is 5:00 p.m. (Toronto time) on March 16, 2021.

Dividend Rate

On March 2, 2021, the Company will announce by way of a news release:

i) The dividend rate applicable to the Series 1 Preference Shares for the five-year period commencing on April 1, 2021, and ending on March 31, 2026,

ii) The dividend rate applicable to the Series 2 Preference Shares for the three-month period commencing on April 1, 2021, and ending on June 30, 2021.

The dividend rates will be determined in accordance with the terms of the respective classes of preference shares.

FN.PR.A was issued as a FixedReset, 4.65%+207, that commenced trading 2011-1-25 after being announced 2011-1-17. Notice of extension was given in February, 2016 and the issue reset to 2.79%. I recommended against conversion, but there was a 28% conversion to FloatingReset anyway.

FN.PR.B is a FloatingReset, Bills+207, that arose via a 28% conversion from FN.PR.A in 2016.

This entry was posted on Monday, February 22nd, 2021 at 10:33 pm 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.