ALA.PR.G / ALA.PR.H : Forced Conversion To FixedReset

AltaGas Ltd. has announced (on 2024-9-30):

that 1,114,177 Cumulative Redeemable Floating Rate Preferred Shares, Series H (the “Series H Shares”) (TSX: ALA.PR.H) were converted into Cumulative Redeemable Five-Year Rate Reset Preferred Shares, Series G (the “Series G Shares”) (TSX: ALA.PR.G) on a one-for-one basis today (the “Conversion Date”). This included 883,163 Series H Shares tendered for conversion to Series G Shares prior to the conversion period deadline of 5:00 pm Eastern Time on September 13, 2024, and the remaining 231,014 Series H Shares converted automatically into Series G Shares in accordance with the terms of the Series H Shares. In addition, any of the Series G Shares that were tendered for conversion into Series H Shares were not converted and remain Series G Shares.

Following the conversion of Series H Shares, 8,000,000 Series G Shares are now outstanding while no Series H Shares remain outstanding. AltaGas made an application to the Toronto Stock Exchange (“TSX”) to have the Series H Shares voluntarily de-listed following the Conversion Date. AltaGas expects the TSX to de-list the Series H Shares as of close of markets on September 30, 2024.

As a reminder, holders of Series G Shares shall be entitled to receive, as and when declared by the Board of Directors of AltaGas, fixed cumulative preferential cash dividends, payable quarterly. The annual dividend rate applicable to the Series G Shares for the five-year period commencing on and including September 30, 2024 to, but excluding, September 30, 2029, is 6.017 percent. The Series G Shares will continue to be listed on the TSX under the symbol ALA.PR.G. Quarterly dividend payments for the prior period were paid on September 27, 2024.

Holders of Series G Shares will have the right to convert all or any of their shares into Series H Shares again in September 2029 (every fifth year) in accordance with the terms of the shares, subject to AltaGas’ option to redeem such shares for cash at that time.

ALA.PR.G was issued as a FixedReset, 4.75%+306, that commenced trading 2014-7-3 after being announced 2014-6-23. Notice of extension was announced 2019-8-29. The issue reset at 4.242% effective 2019-9-30. I recommended against conversion. News that some were converted was reported on 2019-9-24; there was, in fact a 14% conversion. A very confused notice of extension was issued on 2024-8-30 and resulted in an exchange of eMails with Investor Relations. The issue reset to 6.017% effective 2024-9-30. The issue is tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns. In December, 2018, the issue was downgraded to Pfd-3(low) by DBRS and to P-3 by S&P. DBRS withdrew its rating in November 2021. S&P continues to rate the ALA preferreds at P-3.

ALA.PR.H is a FloatingReset, Bills+306, that arose through a 14% conversion from ALA.PR.G in September, 2019.

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