AQN.PR.A To Reset At 6.469% 6.576%

Update, 2023-12-11: The information given in this post has been corrected by the company. The rate is actually 6.576%

Algonquin Power & Utilities Corp. has announced:

the applicable dividend rates for its Cumulative Rate Reset Preferred Shares, Series A (the “Series A Preferred Shares”) and Cumulative Floating Rate Preferred Shares, Series B (the “Series B Preferred Shares”).

With respect to any Series A Preferred Shares that remain outstanding after January 2, 2024, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, if, as and when declared by the board of directors of the Company (the “Board”). The dividend rate for the 5-year period from and including December 31, 2023 to but excluding December 31, 2028 will be 6.469% [see note above; rate is actually 6.576%], being equal to the 5-year Government of Canada bond yield determined as of today plus 2.94%, in accordance with the terms of the Series A Preferred Shares.

With respect to any Series B Preferred Shares that may be issued on January 2, 2024, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, if, as and when declared by the Board. The dividend rate for the 3-month floating rate period from and including December 31, 2023 to but excluding March 31, 2024 will be 7.982%, being equal to the 3-month Government of Canada Treasury Bill yield determined as of today plus 2.94%, calculated on the basis of the actual number of days in such quarterly period divided by 365, in accordance with the terms of the Series B Preferred Shares.

Beneficial owners of Series A Preferred Shares who wish to exercise their conversion right should communicate with their broker or other nominee to ensure their instructions are followed so that the registered holder of the Series A Preferred Shares can meet the deadline to exercise such conversion right, which is 5:00 p.m. (EST) on December 18, 2023.

AQN.PR.A was issued as a FixedReset, 4.50%+294, that commenced trading 2012-11-9 after being announced 2012-10-25. The 2018-11-28 notice of extension was reported on PrefBlog. The issue reset at 5.162% effective December 31, 2018. I recommended against conversion and there was no conversion. Notice of extension was issued in 2023. The issue is tracked by HIMIPref™, but relegated to the Scraps – FixedReset Discount index on credit concerns.

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

8 Responses to “AQN.PR.A To Reset At 6.469% 6.576%”

  1. longtimelurker says:

    It seems to me that aqn.pr.a should have been calculated based on Dec 1, not December 4. Did anyone else notice this? It’s about a 10 bps swing …in their favor …

  2. jiHymas says:

    From the press release:

    The dividend rate for the 5-year period from and including December 31, 2023 to but excluding December 31, 2028 will be 6.469%,

    Thus the first day of the Subsequent Reset Period is December 31, 2023.

    I assume that the prospectus has the standard language about the calculation date being 30 days prior to the first date of the Subsequent Reset Period, but do not have time at the moment to verify this – perhaps somebody would like to help me out here?

    If the above is correct, then I agree that the Calculation Date should have been December 1.

    A problem has been noted with respect to BPO.PR.T

  3. longtimelurker says:

    Yup….standard language…thank you James…

    The Annual Fixed Dividend Rate for each Subsequent Fixed Rate Period will be equal to the sum of the Government of Canada Yield (as defined herein) on the 30th day prior to the first day of such Subsequent Fixed Rate Period plus 2.94%

  4. longtimelurker says:

    I sent an email to their investor relations group…will report back if they respond…

  5. longtimelurker says:

    I received the following response from investor services this afternoon….

    “…Thank you for your patience. You are correct; we have notified CDS to update the rate by 10.7 basis points for delivery to participants…..”

    So…6.469 + 0.107 = 6.576 😀

  6. jiHymas says:

    I received the following response from investor services this afternoon….

    “…Thank you for your patience. You are correct; we have notified CDS to update the rate by 10.7 basis points for delivery to participants…..”

    Congratulations! All’s well that ends well! I also sent an eMail later on, but have not yet received an answer … perhaps our friends at Algonquin are busily working their way through an enormous stack of eMails …

  7. sherwin says:

    Thank you so much “longtimelurker”! I still find it hard to believe that the onus is on us (aka individual investors) to correct mistakes like this and with recent resets the rate seems to be “all over the places”🤣

  8. […] reset rate was announced last week, but there was a problem: it looked like the company calculated the rate on the wrong […]

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