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National Bank of Canada has announced:

Further to its announcement of September 20, 2023, National Bank of Canada (the “Bank”) (TSX: NA) announced today the dividend rates applicable to the Non-Cumulative 5‑Year Rate Reset First Preferred Shares, Series 42 Non-Viability Contingent Capital (NVCC) (the “Series 42 Shares”) and the Non-Cumulative Floating Rate First Preferred Shares, Series 43 (NVCC) (the “Series 43 Shares”).

Holders of Series 42 Shares, should any remain outstanding after November 15, 2023, will be entitled to receive fixed-rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the five-year period commencing on November 16, 2023, and ending on November 15, 2028, will be 7.056%, being equal to the sum of the five-year Government of Canada Bond yield (4.286%) plus 2.77%, as determined in accordance with the terms of the Series 42 Shares.
Holders of Series 43 Shares, should any be issued on November 15, 2023, will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of the Bank and subject to the provisions of the Bank Act (Canada). The dividend rate for the three-month period commencing on November 16, 2023, and ending on February 15, 2024, will be 7.93%, being equal to the sum of the 90-day Government of Canada Treasury Bill yield (5.16%) plus 2.77%, calculated on the basis of actual number of days elapsed in such quarterly floating rate period divided by 365, as determined in accordance with the terms of the Series 43 Shares.

Holders of the Series 42 Shares have, subject to certain conditions, the right to convert all or part of their Series 42 Shares on a one-for-one basis into Series 43 Shares on November 15, 2023.

Beneficial owners of Series 42 shares who wish to exercise their conversion right 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 October 31, 2023, at 5:00 p.m. (EDT).

The September 20 press release referenced above stated:

National Bank of Canada (“National Bank”) (TSX: NA) announced today that it does not intend to exercise its right to redeem all or part of the currently outstanding 12,000,000 Series 42 Shares on November 15, 2023. As a result, subject to certain conditions, the holders of the Series 42 Shares will have the right to convert all or part of their Series 42 Shares on a one-for-one basis into Non-Cumulative Floating Rate First Preferred Shares, Series 43 (NVCC) (the “Series 43 Shares”) on November 15, 2023, in accordance with the terms of the Series 42 Shares described in the prospectus supplement dated June 4, 2018.

Holders who do not exercise their right to convert their Series 42 Shares into Series 43 Shares on November 15, 2023, will retain their Series 42 Shares.

The foregoing conversions are subject to the conditions that:

i. if National Bank determines that there would remain outstanding on November 15, 2023, less than 1,000,000 Series 43 Shares, after having taken into account all Series 42 Shares tendered for conversion into Series 43 Shares, then holders of Series 42 Shares will not be entitled to convert their shares into Series 43 Shares, and

ii. alternatively, if National Bank determines that there would remain outstanding on November 15, 2023, less than 1,000,000 Series 42 Shares, after having taken into account all Series 42 Shares tendered for conversion into Series 43 Shares, then all remaining Series 42 Shares will automatically be converted into Series 43 Shares without the consent of the holders on November 15, 2023.

In either case, National Bank shall give a notice to that effect to all registered holders of Series 42 Shares no later than November 8, 2023.

On October 17, 2023, National Bank will give notice of:

i. the annual fixed dividend rate applicable to the Series 42 Shares to which a holder of Series 42 Shares will be entitled for the 5-year period from November 16, 2023, up to and including November 15, 2028; and

ii. the floating quarterly dividend rate applicable to the Series 43 Shares to which a holder of Series 43 Shares will be entitled for the 3-month period from November 16, 2023, up to and including February 15, 2024.

Beneficial owners of Series 42 Shares who wish to exercise their conversion right should communicate with their broker or other nominee to obtain instructions for exercising such right during the conversion period, which will run from October 16, 2023, until October 31, 2023, at 5:00 p.m. (EDT).

NA.PR.G was issued as a FixedReset, 4.95%+277, NVCC compliant, that commenced trading 2018-6-11 after being announced 2018-05-31. It is tracked by HIMIPref™ and is assigned to the FixedResets (Discount) subindex.

Thanks to Assiduous Reader niagara for bringing this to my attention!

This entry was posted on Tuesday, October 17th, 2023 at 10:37 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.