PrefBlog

Canadian Utilities Limited has announced (slightly edited to reflect error in the release):

that it has notified the registered shareholder of its Cumulative Redeemable Second Preferred Shares Series Y (“Series Y Preferred Shares”) of a conversion privilege and applicable dividend rates. As a result, subject to certain conditions, the holders of Series Y Preferred Shares will have the right to choose one of the following options with regard to their shares:

To retain any or all of their Series Y Preferred 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 Y Preferred Shares into Cumulative Redeemable Second Preferred Shares Series Z (“Series Z Preferred Shares”) of Canadian Utilities Limited and receive a floating rate quarterly dividend.

Effective June 1, 2022, the annual dividend rate for the Series Y Preferred Shares is set at 5.20% 5.196% [see this post for discussion] for the five-year period from and including June 1, 2022 to but excluding June 1, 2027 and the dividend rate for the Series Z Preferred Shares is set at an annual rate of 3.78% for the three-month period commencing June 1, 2022 to but excluding September 1, 2022. The dividend rate for the Series Z Preferred Shares will be reset each quarter. Both rates were calculated according to the terms described in the prospectus supplement of Canadian Utilities Limited dated September 15, 2011.

Beneficial owners of Series Y Preferred 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 meet the deadline to exercise such right, which is 3 p.m. (Calgary time) / 5 p.m. (Toronto time) on May 17, 2022. 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 intermediary with time to complete the necessary steps.

The foregoing conversions are subject to the conditions that: (i) if Canadian Utilities Limited determines that there would be less than 2,000,000 Series Y Preferred Shares outstanding on June 1, 2022, then all remaining Series Y Preferred Shares will automatically be converted into Series Z Preferred Shares on June 1, 2022, and (ii) alternatively, if Canadian Utilities Limited determines that there would be less than 2,000,000 Series Z Preferred Shares outstanding on June 1, 2022 after giving effect to conversion notices received, no Series Y Preferred Shares will be converted into Series Z Preferred Shares. If either of these scenarios occurs, Canadian Utilities Limited will issue a news release to that effect on or before May 24, 2022.

Holders of the Series Y Preferred Shares and the Series Z Preferred Shares, as applicable, will have the opportunity to convert their shares again on June 1, 2027, 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 Y Preferred Shares and the Series Z Preferred Shares, please see Canadian Utilities Limited’s prospectus supplement dated September 15, 2011, which can be found under Canadian Utilities Limited’s profile on SEDAR at www.sedar.com.

CU.PR.C was issued as a FixedReset, 4.00%+240, that commenced trading 2011-9-21 after being announced 2011-9-13. It reset to 3.40% in 2017; I recommended against conversion; and there was no conversion.

Thanks to Assiduous Reader skeptical for ensuring I was aware of this!

This entry was posted on Monday, May 2nd, 2022 at 6:43 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.