Northland Power Inc. has announced:
that it intends to redeem all of its 4,800,000 issued and outstanding Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Preferred Shares”) on January 3, 2023 (the “Redemption Date”) at a price of $25.00 per Series 3 Preferred Share together with all accrued and unpaid dividends thereon up to, but excluding, December 31, 2022 (less any tax required to be deducted or withheld by the Company) (the “Redemption Price”) for an aggregate total of $121.5 million.
The final quarterly dividend of $0.3175 per Series 3 Preferred Share payable on December 30, 2022 will be the final quarterly dividend on the Series 3 Preferred Shares and shall be considered to be an accrued and unpaid dividend and included in the Redemption Price.
The Company has provided notice today of the Redemption Price and the Redemption Date to the sole registered holder of the Series 3 Preferred Shares in accordance with their terms. Non-registered holders of Series 3 Preferred Shares should contact their broker or other intermediary for information regarding the redemption process for the Series 3 Preferred Shares in which they hold a beneficial interest.
After the Series 3 Preferred Shares are redeemed, holders of Series 3 Preferred shares will cease to be entitled to distributions of dividends and will not be entitled to exercise any rights as holders other than to receive the Redemption Price.
NPI.PR.C was issued as a FixedReset, 5.00%+346, that commenced trading 2012-5-24 after being announced 2012-5-14. It reset to 5.08% effective 2018-1-1 and I recommended against conversion. It has been tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.
Thanks to Assiduous Reader niagara for bringing this to my attention!
I own NPI.PR.C in an account I have with an advisor. It is a nice $10,000+ capital gain for me on the 1,600 shares I own. We had focussed on tax loss selling recently in the attempt to recover the tax paid on my 2021 capital gains. I thought I was done that job.
My adivisor is checking with people in his firm whether this will be considered a 2022 transaction or a 2023 transaction. I can read where I will be paid for my shares on Jan. 3 ,2023. The last dividend will also be paid then, but will earned on Dec. 30, 2022. The date where the sale of the shares will become taxable is not definitely stated.
Would anyone here offer an opinion on what they think NPI means by their announcement. Will NPI have the 4.8M shares of NPI.PR.C as part of their balance sheet on Dec. 31, 2022?
Over the years, I have experienced many instances of pref and common dividends being payable on 31 Dec. but which were paid on the first business day in January (first business day is 03 Jan in 2023) cuz 31 Dec. fell on a weekend. Without exception, the taxable event (i.e., the dividend payment) was recorded for the “old year” not the “new year”. So it is highly likely that the redemption will follow the same pattern.
I too have a sizable amount of NPI.PR.C but for now I’m treating it as a taxable disposition in tax year 2023.
The prospectus says that “On December 31,2017 and on December 31 every five years thereafter (or, if such date is not a Business Day, the immediately
following Business Day)” the shares can be redeemed.
I read this as defining not only the right to a redemption but also the operative redemption date.
A redemption being included in the definition of “disposition” in sec. 248(1) of the ITA, I don’t see how I could be said to have “disposed” of the shares for cpital gains purposes prior to January 3.
Maybe Northland will issue another press release. 🙂
Thank you for the two replies. They are not in agreement with each other and that is fine.
Following peet’s lead, I easily found the prospectus using the NPI website and its link to its filings on SEDAR. The prospectus is as he quotes above and in this particular case Dec. 31, 2022 is a Saturday and the next business day is Tuesday, January 3, 2023. So the date of the redemption, per the prospectus, is January 3, 2023.
The firm I deal with or the CRA may wrongly say the date is Dec. 31, 2022. I have grounds for saying arguing against this. I will consider my tax loss selling for 2022 complete and move on to other matters.
Here is an opinion on this matter that I received today from the back room operations of RBC Dominion Securities, and I quote:
“This transaction will be processed on January 3rd, 2023 and will NOT be included in the 2022 tax package. The redemption will be included in the 2023 tax year.”
So the 2022 tax package that I get from RBCDS will agree with how I plan to report my 2022 income. Of course, the above reflects what the prospectus for NPI.PR.C states and is not a surprise.
So it appears that there is no ex-dividend date for the final payment? This seems quite unusual. I would have expected an ex-date of 19 Dec. (as with NPI.PR.A) followed by trading slightly below par until the redemption date. What’s going on?
prefQC: The final quarterly dividend of $0.3175 per Series 3 Preferred Share payable on December 30, 2022 will be the final quarterly dividend on the Series 3 Preferred Shares and shall be considered to be an accrued and unpaid dividend and included in the Redemption Price.
I own these shares and they have been redeemed. However, the final dividend has not been paid and has indeed been included as part of the redemption price. Not sure how this is possible. Does anyone know where to find the original prospectus? These shares were cumulative so it seems to me that the final dividend must be paid. Thoughts?
Found the prospectus. It states (like the press release) that the shares will be redeemed “at a price of $25.00 per Series 3 Preferred Share together with all accrued and unpaid dividends thereon up to, BUT EXCLUDING, December 31, 2022.” Interesting and unusual I think. Looked up a redemption of preferred shares by Pembina Pipeline recently and they DID pay the final dividend.
“at a price of $25.00 per Series 3 Preferred Share together with all accrued and unpaid dividends thereon up to, BUT EXCLUDING, December 31, 2022.” Interesting and unusual I think.
It’s certainly not unusual for interest or dividends not to be paid with respect to the day of maturity or redemption. If I issue you a bond today that matures tomorrow, I’m not going to pay you two days’ interest!