Barry Critchley was kind enough to quote me in his piece TransAlta pref shareholders not happy with consolidation plan:
Others disagree. For instance, James Hymas, a portfolio manager at Hymas Investment Counsel and the publisher of Prefblog, called it “an appalling, abusive offer. TransAlta’s extant preferred shares are trading well below their call price, which gives them a lot of room to make impressive capital gains should market conditions improve.” In Hymas’s view, the plan “effectively lowers the redemption price of the preferred shares outstanding, which will allow any such gains to be scooped up by the company instead of its preferred shareholders.”
This week, Hymas weighed in again. In an interview he said the “amount of extra income being offered is not just minimal but will disappear completely on reset with only a modest rise in government of Canada five year rates.” Accordingly if five year Canada bonds rise “significantly, the extant issues will pay more than the (proposed) new issue.”
Hymas also was critical of the process that will see those members of the soliciting group collect $0.13 per share per favorable vote — but nothing in the event the vote is unfavorable. The large difference in payments, “really makes me think they understand very well how cruddy their offer is.”
This follows previous posts on this topic:
- TA Proposes Sleazy Exchange Offer
- TransAlta plays the Grinch with its preferred share holders
- TransAlta Nudges TA.PR.D Offer; Hopes To Pay Sleaze Fees To Banks
Affected issues are TA.PR.D, TA.PR.E, TA.PR.F, TA.PR.H and TA.PR.J.