SLF DRIP: Preferred Dividends into Possibly Discounted Common

Sun Life Financial has announced:

amendments to its Canadian Dividend Reinvestment and Share Purchase Plan (the “Plan”). The three major Plan changes are:

1. Subject to Toronto Stock Exchange (TSX) approval, Sun Life may issue common shares from treasury at a discount to the average market price to dividend reinvestment participants. At this time and until further notice, the discount will be 2%. To date, common shares issued under the Plan have been purchased through the TSX with no discount to the average market price.

2. Canadian-resident preferred shareholders will be able to participate in the Plan by electing to have dividends paid on their preferred shares reinvested in common shares of Sun Life Financial Inc.

3. Sun Life has also agreed to pay, on behalf of Plan participants, all fees associated with the Plan, other than brokerage commission payable on the sale of common shares held through the Plan.

The changes will be effective starting with the dividends payable on June 30, 2009 to common and preferred shareholders of record on May 27, 2009. The revised Plan is contained in the Amended and Restated Offering Circular which is available at or

Sun Life may amend or cancel the discount at any time, and Sun Life will continue to determine whether common shares will be purchased under the Plan through the TSX (in which case the discount will not apply) or be newly-issued from treasury. No discount will apply on common shares acquired by participants through optional cash purchases.

The FAQ section of the Amended and Restated Offering Circular states:

The Corporation will announce by press release whether purchases of common shares under the Plan will be made on the open market or through treasury and the applicable discount, if any, included in the Market Price for common shares issued from treasury on a dividend reinvestment.

… while Section E.5 of the

The price that will be paid for Common Shares under the Plan on any Dividend Payment Date (the “Market Price”) will be determined as follows:

For Treasury Purchases, the Market Price will be equal to the weighted average closing trading price of the Common Shares on the Toronto Stock Exchange on the five trading days preceding the Dividend Payment Date, subject to a possible discount of up to 5% that may be applied on Treasury Purchases of Dividend Shares. No discount will apply on Treasury Purchases of Optional Cash Purchase Shares.

For Market Purchases of Dividend Shares and Optional Cash Purchase Shares, the Market Price allocated to each Plan Share, or fraction thereof, acquired by the Plan Agent under the Plan on each Dividend Payment Date will be the volume-weighted average of the applicable best efforts open market purchase price paid per Common Share by the Plan Agent for all Common Shares purchased on that Dividend Payment Date under the Plan.

The Corporation will announce by press release whether purchases of Common Shares under the Plan will be Market Purchases or Treasury Purchases and the applicable discount, if any, for Treasury Purchases of Dividend Shares.

This is, frankly, pretty useless information. I am unable to find one of the fabled press releases and suspect that they will be released only after the end of the registration period, making it impossible to plan.

I do not bother reporting reinvestment plans that do not include a discount to market price and was of two minds as to whether to report this one … but the potential is there – do with it as you see fit.

I recommend an eMail to Sun Life Shareholder Services demanding that, at the very least, the company commit itself one way or the other at time of dividend declaration.

The last mention of Sun Life preferreds in general on PrefBlog reported S&P’s one-notch bond-scale downgrade. These preferreds trade with the symbols SLF.PR.A, SLF.PR.B, SLF.PR.C, SLF.PR.D, SLF.PR.E & SLF.PR.F.

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