Enbridge Inc. has announced:
that it does not intend to exercise its right to redeem its currently outstanding Cumulative Redeemable Preference Shares, Series 5 (Series 5 Shares) (TSX: ENB.PF.V) on March 1, 2024. As a result, subject to certain conditions, the holders of the Series 5 Shares have the right to convert all or part of their Series 5 Shares on a one-for-one basis into Cumulative Redeemable Preference Shares, Series 6 of Enbridge (Series 6 Shares) on March 1, 2024. Holders who do not exercise their right to convert their Series 5 Shares into Series 6 Shares will retain their Series 5 Shares.
The foregoing conversion right is subject to the conditions that: (i) if Enbridge determines that there would be less than 1,000,000 Series 5 Shares outstanding after March 1, 2024, then all remaining Series 5 Shares will automatically be converted into Series 6 Shares on a one-for-one basis on March 1, 2024; and (ii) alternatively, if Enbridge determines that there would be less than 1,000,000 Series 6 Shares outstanding after March 1, 2024, no Series 5 Shares will be converted into Series 6 Shares. There are currently 8,000,000 Series 5 Shares outstanding.
With respect to any Series 5 Shares that remain outstanding after March 1, 2024, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The new annual dividend rate applicable to the Series 5 Shares for the five-year period commencing on March 1, 2024 to, but excluding, March 1, 2029 will be 6.683 percent, being equal to the five-year United States Treasury bond yield of 3.863 percent determined as of today plus 2.82 percent in accordance with the terms of the Series 5 Shares.
With respect to any Series 6 Shares that may be issued on March 1, 2024, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, as and when declared by the Board of Directors of Enbridge. The dividend rate applicable to the Series 6 Shares for the three-month floating rate period commencing on March 1, 2024 to, but excluding, June 1, 2024 will be 2.05869 percent, based on the annual rate on three month United States Government treasury bills for the most recent treasury bills auction of 5.37 percent plus 2.82 percent in accordance with the terms of the Series 6 Shares (the Floating Quarterly Dividend Rate). The Floating Quarterly Dividend Rate will be reset every quarter.
Beneficial holders of Series 5 Shares who wish to exercise their right of conversion during the conversion period, which runs from January 31, 2024 until 5:00 p.m. (EST) on February 15, 2024, should communicate as soon as possible with their broker or other intermediary for more information. It is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary time to complete the necessary steps. Any notices received after this deadline will not be valid.
ENB.PF.V was issued as a US-Pay FixedReset, 4.40%+282, that commenced trading 2013-9-27 after being announced 2013-9-19. It reset to 5.3753% effective 2019-3-1. There was no conversion in 2019. The issue is not tracked by HIMIPref™.
Thanks to Assiduous Reader newbiepref for bringing this to my attention!
Update, 2024-2-18: No conversion:
Enbridge Inc. (TSX: ENB) (NYSE: ENB) (Enbridge) announced today that none of its outstanding Cumulative Redeemable Preference Shares, Series 5 (Series 5 Shares) will be converted into Cumulative Redeemable Preference Shares, Series 6 (Series 6 Shares) on March 1, 2024.
After taking into account all conversion notices received from holders of its outstanding Series 5 Shares by the February 15, 2024 deadline for the conversion of the Series 5 Shares into Series 6 Shares, less than the 1,000,000 Series 5 Shares required to give effect to conversions into Series 6 Shares were tendered for conversion.
All the floaters are trading higher than their fixed pairs right now and I thought the conversion of some of ENB.PF.V to a 2.05869% March 1st dividend (8.23476% annualized) would be a done deal. Sure the 3-mo T-bill could collapse to zero in May, but is the market that bearish on long term rates that not a million shares wanted to convert? Can anyone help me out here?
For my part I think the floaters are trading higher because the last resets were at low levels and mathematically it’s very likely the floater will pay more dividends until the next reset. I would expect the prices to converge by the next reset, at which point you may as well have the more liquid issue.
It’s also just hard to reach a million shares… many holders aren’t even paying attention or don’t know how to send instructions, there’s a catch-22 coordination issue around if people don’t think there’ll be a conversion they won’t bother instructing which means there wont be a conversion etc. Needs a really large holder or two to make it happen.