PrefBlog

Great-West Lifeco Inc. has announced:

that it intends to redeem all of its outstanding 5.90% Non-Cumulative First Preferred Shares, Series F (the Series F Shares) on December 31, 2021. The redemption price will be $25.00 for each Series F Share plus an amount equal to all declared and unpaid dividends, less any tax required to be deducted and withheld by the Corporation. The paid-up capital of the Series F Shares is $20.59 per share.

Lifeco will send a formal redemption notice and instructions to registered holders of the Series F Shares in accordance with the rights, privileges, restrictions and conditions attached to the shares.

Taxable investors should pay particular attention to the statement:

The paid-up capital of the Series F Shares is $20.59 per share.

In most redemptions, the tax treatment is as if you sold the shares for the redemption price, in this cas $25.00. However, in this instance it will be as if you sold the shares for 20.59 and received a dividend (deemed dividend) of 4.41. While this will be better for some sharhelders, it will be worse for other – probably most others, I would guess, since a lot of people will have no realized gains this year to offset the probable capital loss. Get professional tax advice and consider selling into the market prior to redemption.

GWO.PR.F is a Straight Perpetual, 5,90%, issued 2003-6-19. These shares were issued as part of the consideration in the takeover of Canada Life Financial Corporation (see SEDAR, search for Great-West Lifeco Inc. May 1 2003 13:28:06 ET Press release – English PDF 226 K, not allowed to link to this public press release directly as the Canadian Securities Administrators consider this information top secret):

On February 14, 2003, Lifeco entered into an agreement with Canada Life Financial Corporation (Canada Life), the parent company of The Canada Life Assurance Company, to acquire 100% of Canada Life outstanding common shares. The transaction is valued at $44.50 per Canada Life common share, representing an aggregate transaction value of $7.3 billion.

The terms of the agreement allow Canada Life common shareholders to elect to receive one of the following alternatives for each of their Canada Life common shares:
– $44.50 in cash (to an aggregate maximum of approximately $4.4 billion); or
– 1.78 Lifeco 4.80% Non-Cumulative First Preferred Shares, Series E (to an aggregate maximum of 24 million Lifeco Series E Shares); or
– 1.78 Lifeco 5.90% Non-Cumulative First Preferred Shares, Series F (to an aggregate maximum of 8 million Lifeco Series F Shares); or
– 1.1849 Lifeco common shares (to an aggregate maximum of approximately 56 million Lifeco common shares); or
– any combination of the foregoing;
in each case subject to election and proration as a result of the stated maximums.

The transaction is subject to approval by Canada Life common shareholders on May 5, 2003 and is also subject to approval by regulatory authorities. The transaction is expected to close in the third quarter of 2003.

To support the transaction, Power Financial Corporation has committed to invest $800 to purchase 21.302 million common shares of Lifeco from treasury via private placement. Investors Group Inc. has also agreed to invest $100 by purchasing 2.662 million Lifeco common shares from treasury via private placement. Lifeco also entered into a commitment with a Canadian chartered bank (the “Bank”) pursuant to which the Bank agreed to underwrite a credit facility in favour of Lifeco or one or more of its subsidiaries. The credit facility provides short-term funding alternatives, and also offers up to $600 of five year term financing.

This entry was posted on Thursday, November 4th, 2021 at 7:48 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.