New Issue: BPO FixedReset 6.15%+307

Brookfield Properties has announced:

that it has agreed to issue to a syndicate of underwriters led by TD Securities Inc., CIBC, RBC Capital Markets and Scotia Capital Inc., for distribution to the public, six million Preferred Shares, Series N. The Preferred Shares, Series N will be issued at a price of C$25.00 per share, for aggregate proceeds of C$150 million. Holders of the Preferred Shares, Series N will be entitled to receive a cumulative quarterly fixed dividend yielding 6.15% annually for the initial 6 ½-year period ending June 30, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 3.07%.

Holders of Preferred Shares, Series N will have the right, at their option, to convert their shares into cumulative Preferred Shares, Series O, subject to certain conditions, on June 30, 2016 and on June 30 every five years thereafter. Holders of Preferred Shares, Series O will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.07%.

Brookfield Properties Corporation has granted the underwriters an option, exercisable in whole or in part anytime up to two business days prior to closing, to purchase an additional two million Preferred Shares, Series N at the same offering price. Should the option be fully exercised, the total gross proceeds of the financing will be C$200 million.

The Preferred Shares, Series N will be offered by way of a prospectus supplement to the short-form base shelf prospectus of Brookfield Properties Corporation dated December 15, 2009. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the issue will be added to the general funds of Brookfield Properties Corporation and be used for general corporate purposes. The offering is expected to close on or about January 20, 2010.

I’ll post more later but basically what I said in the post BPO: Issuer Bid for Retractibles? still goes!

Update: OK, here are the comparables:

BPO Issues
Close, 2010-1-11
Ticker Retraction Quote bid YTW
BPO.PR.F 2013-3-31 25.20-35 5.82%
BPO.PR.H 2015-12-31 23.31-35 7.26%
BPO.PR.I 2011-1-1 25.35-44 3.90%
BPO.PR.J 2014-12-31 22.98-12 7.04%
BPO.PR.K 2016-12-31 22.17-22 7.38%
BPO.PR.L Never.
25.60-69 6.27%
(to presumed call
on reset date)

So here’s my question: Why would you buy this new issue and hope you’ll get your money back 2016-6-30, when you can buy, f’rinstance, BPO.PR.H and get paid more for less risk?

Update, 2010-1-12: Brookfield Properties has announced:

that as a result of strong investor demand for its previously announced public offering of Preferred Shares, Series N, it has agreed to increase the size of the offering from C$150 million to C$275 million or from 6,000,000 Preferred Shares to 11,000,000 Preferred Shares. There will be no underwriters’ option, as was previously granted.

2 Responses to “New Issue: BPO FixedReset 6.15%+307”

  1. […] Brookfield Properties announced a FixedReset 6.15%+307 issue on January 11. […]

  2. […] was issued a FixedReset 6.15%+307, that commenced trading 2010-1-20 after being announced 2010-1-11. The issue attracted some unfavourable comment on issue due to the relatively long call lock-out […]

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