iA Financial Corporation and RF Capital Group Inc. have announced:
that they have entered into a definitive agreement (the “Arrangement Agreement”), pursuant to which iA will acquire all of the issued and outstanding common shares of RF Capital for $20.00 per share in cash (the “Transaction”).
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Pursuant to the Arrangement Agreement, iA will also acquire all of the issued and outstanding Cumulative 5-Year Rate Reset Preferred Shares, Series B of RF Capital (the “Series B Preferred Shares”) for $25.00 per share in cash, representing a premium to the 30-day volume weighted average share price on the TSX for the period ending on July 25, 2025 of 63% (plus all accrued and unpaid dividends and, to the extent closing occurs prior to March 31, 2026, a cash amount per Series B Preferred Share equal to the amount of the dividends that would have been payable in respect of a Series B Preferred Share from (and including) closing to (and excluding) March 31, 2026, as if the Series B Preferred Shares had remained outstanding during this period))
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The Transaction is subject to the approval by at least two-thirds of the votes cast by common shareholders voting in person or by proxy at the Meeting. The acquisition of the Series B Preferred Shares is conditional upon the approval of at least two-thirds of the votes cast by Series B preferred shareholders voting in person or by proxy at the Meeting. However, completion of the Transaction is not conditional upon the approval of the Series B preferred shareholders. If the requisite approval from the Series B preferred shareholders is not obtained, such Series B Preferred Shares will remain outstanding in accordance with their terms. Further details regarding the applicable voting requirements will be contained in the Circular.
RCG.PR.B was issued as GMP.PR.B, a FixedReset 5.50%+289, which commenced trading 2011-2-22 after being announced 2011-2-1. The notice of extension was reported on PrefBlog. The issue reset at 3.611% in 2016; there was a 22% conversion to GMP.PR.C. It is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns. The ticker was changed from GMP.PR.B to RCG.PR.B in 2020, following a name change. The issue reset to 3.73% in 2021 and at that time there was a forced conversion to the FixedReset.
Thanks to Assiduous Reader Fireseeker for bringing this to my attention!
This was a nice surprise to wake up to, alongside the Brookfield/Birch Hill take out of FN as well. Wish I had more days like this 🙂
FN.PR.A/B should have moved much higher than they did. The spread demanded by the market is still far too high in light of the acquisition IMO.
Why on earth did they take the company private in a cash deal, only to leave $98MM of illiquid preferred shares trading publicly? The next reset/extend date is Jan 2026 so they could just redeem them at that time, but the deal closes in Q4/25. Why not just include them in the transaction? Before the spike yesterday they were a cheap preferred, but where should an illiquid pref of a private company that isn’t reporting quarterly, trade? If they do in fact leave them in place, who would want them?
Well, at these prices, I would continue to own it. A comparable situation is CSE.PR.A. Complete financials and MD&A are available quarterly for this company with a private owner (and should be for FN also). It does suffer from an illiquidity premium but nothing like FN.PR.A/B currently. The hypothetical new issue spread for CSE is ~5.5% vs ~8.0% for FN today.
I suspect that the FN prefs will be eliminated at reset and may be subject to buyback and retirement at market prices before then.