New Issue: EPP FixedReset 7.00%+418

EPCOR Power Equity has announced:

that EPCOR Power Equity Ltd. will issue 4,000,000 Cumulative Rate Reset Preferred Shares, Series 2 (the “Series 2 Shares”) at a price of $25.00 per share, for aggregate gross proceeds of $100 million (the “Offering”) on a bought deal agreement basis to a syndicate of underwriters in Canada led by CIBC World Markets Inc. and Scotia Capital Inc.

The Series 2 Shares will pay fixed cumulative dividends of $1.75 per share per annum, yielding 7.0% per annum, payable on the last business day of March, June, September and December of each year, as and when declared by the board of directors of the Corporation, for the initial five-year period ending December 31, 2014. The first quarterly dividend of $0.28288 per share is expected to be paid on December 31, 2009. The dividend rate will reset on December 31, 2014 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 4.18%. The Series 2 Shares are redeemable by the Corporation on December 31, 2014 and on December 31 every five years thereafter.

The holders of Series 2 Shares will have the right to convert their shares into Cumulative Floating Rate Preferred Shares, Series 3 (the “Series 3 Shares”) of the Corporation, subject to certain conditions, on December 31, 2014 and on December 31 of every fifth year thereafter. The holders of Series 3 Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the board of directors of the Corporation, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate and 4.18%.

The Partnership will fully and unconditionally guarantee the payment of dividends, as and when declared, the amounts payable on a redemption of the Series 2 Shares or Series 3 Shares for cash and the amounts payable in the event of the liquidation, dissolution and winding up of the Issuer.

The offering is expected to close on or about November 2, 2009, subject to certain conditions, including conditions set forth in the underwriting agreement. The net proceeds will be used to repay outstanding bank indebtedness.

The first coupon is scheduled for payment 12/31, for $0.28288, assuming closing 2009-11-2

Update: The PerpetualDiscount EPP.PR.A closed today at 16.55b to yield 7.42% at the bid price. Therefore, according to the BERS Calculator (and, of course, the assumptions embedded therein), the Break-Even Rate Shock is 0.62%.

One Response to “New Issue: EPP FixedReset 7.00%+418”

  1. […] the FixedReset 7.00%+418 announced mid-October has closed […]

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