Aimia Inc. has announced:
the applicable dividend rates for its Cumulative Rate Reset Preferred Shares, Series 3 (the “Series 3 Shares”) and its Cumulative Floating Rate Preferred Shares, Series 4 (the “Series 4 Shares”), further to its February 22, 2024 notice and announcement that it will not exercise its right to redeem all or any part of the outstanding Series 3 Shares and, as a result of which, subject to certain conditions, the holders of the Series 3 Shares will have the right to convert all or any number of their Series 3 Shares into Series 4 Shares on a one-for-one basis.
With respect to any Series 3 Shares that remain outstanding on or after on April 1, 2024 (March 31, 2024 falling on a Sunday, a non-business day), holders of the Series 3 Shares will be entitled to receive fixed, cumulative, preferential cash dividends, payable quarterly, as and when declared by the Company’s Board of Directors. The annual dividend rate for the five-year period from and including March 31, 2024 to, but excluding, March 31, 2029 will be 7.773%, being equal to the five-year Government of Canada bond yield plus 4.20%, as determined in accordance with the rights, privileges, restrictions and conditions attaching to the Series 3 Shares.
With respect to any Series 4 Shares that may be issued on April 1, 2024, holders of the Series 4 Shares will be entitled to receive quarterly floating rate, cumulative, preferential cash dividends, as and when declared by the Board of Directors of Aimia. The dividend rate for the floating rate period from and including March 31, 2024 to, but excluding, June 30, 2024 will be 9.181%, being equal to the three-month Government of Canada Treasury Bill yield plus 4.20% per annum, calculated on the basis of the actual number of days in such quarterly period divided by 36, as determined in accordance with the rights, privileges, restrictions and conditions attaching to the Series 4 Shares (the “Floating Quarterly Dividend Rate”). The Floating Quarterly Dividend Rate will be reset every quarter.
The Series 3 Shares are issued in “book entry only” form and must be purchased or transferred through a participant (a “CDS Participant”) in the depository service of CDS Clearing and Depository Services Inc. (“CDS”). All rights of holders of Series 3 Shares must be exercised through CDS or the CDS Participant through which the Series 3 Shares are held. As such, beneficial owners of Series 3 Shares who wish to exercise their conversion right should communicate as soon as possible with their broker or other nominee to obtain instructions for exercising such right through CDS on or prior to the deadline for exercise, which is 5:00 p.m. (Eastern time) on March 18, 2024. All notices received after this deadline will not be valid.
Holders of Series 3 Shares as of the applicable record date remain eligible to receive dividends on their Series 3 Shares, as and when declared by the Board of Directors of Aimia, for the period from and including December 31, 2023 to, but excluding, March 31, 2024 at the current annual dividend rate of 6.01%.
All inquiries regarding the conversion of Aimia’s Series 3 Shares should be directed to the Company’s Transfer Agent, TSX Trust Company at 1-800-387-0825 or shareholderinquiries@tmx.com.
AIM.PR.C was issued as a FixedReset, 6.25%+420, that commenced trading 2014-1-15 after being announced 2014-1-6. The extension was announced 2019-2-26. AIM.PR.C reset at 6.011% effective 2019-3-31 (not 6.01%, as stated in the original press release) I recommended against conversion and there was no conversion. Notice of extension was provided in 2024. The issue is tracked by HIMIPref™ but relegated to the Scraps-FixedReset (Discount) subindex on credit concerns.
Thanks to Assiduous Reader niagara for bringing this to my attention!
AIM is launching a SIB to steal the upside of their three preferred share series, offering a token premium to market to swap them for notes.
I’m very surprised PH&N signed up for this deal. What are they thinking?
They are effectively crystallizing a spread >7% (which is on its way down with the normalization of the market AND the improving business conditions at AMIA) in order to get a nominally similar annual distribution (paid twice per year instead of quarterly) that is taxed as income rather than as dividends. The only thing they seem to gain here is a maturity date #BFD.
The swap prices (for prefs) need to be at least 30% higher for this to be a reasonable deal. No way am I offering my Series 1 prefs to the abusive offer. Nice try by insiders here to scoop value.
couple possibilities come to mind. they may also be a shareholder, they could hold prefs largely in untaxable accounts, or they simply want an exit once and for all albeit in 5 yrs time. less likely is a view that rates are gonna go much lower
they do gain seniority and a maturity but is odd that a bigger premium wasn’t offered.
not sure payment frequency would be a factor in decision