New Issue: AER FixedReset 6.50%+375

Issuer: Groupe Aeroplan Inc.

Issue: Cumulative Rate Reset Preferred Shares, Series 1

Size: 6-million shares (=$150-million) + greenshoe 900,000 shares (=$22.5-million)

Dividend: 6.50% (cumulative) until first Exchange Date. Resets to GOC-5 + 375bp every exchange date. First dividend $0.31164, payable 3/31 assuming 1/20 close.

Exchange: every Exchange Date, to and from floaters. Floaters pay 3-month bills +375, reset quarterly. Either issue may become mandatory if there are insufficient volunteers for the other.

Redemption: every Exchange Date at $25.00. Floaters are the same, and at any other time for $25.50.

Exchange Dates: 2015-3-31 and every five years thereafter

Ratings: Pfd-3 (DBRS); P-3 (S&P)

Update: AER finally got around to issuing its Press Release:

Groupe Aeroplan Inc. (AER: TSX) announced today that it has agreed to issue to a syndicate of underwriters led by CIBC World Markets Inc., RBC Dominion Securities Inc. and TD Securities Inc. as Co-Bookrunners for distribution to the public, 6.0 million cumulative rate reset Preferred Shares, Series 1 (the “Preferred Shares, Series 1”). The Preferred Shares, Series 1 will be issued at a price of C$25.00 per share, for aggregate gross proceeds of C$150 million. Holders of the Preferred Shares, Series 1 will be entitled to receive a cumulative quarterly fixed dividend yielding 6.5% annually for the initial five year period ending March 31, 2015. The dividend rate will be reset on March 31, 2015 and every five years thereafter at a rate equal to the 5-year Government of Canada bond yield plus 3.75%. The Preferred Shares, Series 1 will be redeemable by Groupe Aeroplan Inc. on March 31, 2015, and every five years thereafter in accordance with their terms.

Holders of Preferred Shares, Series 1 will have the right, at their option, to convert their shares into cumulative floating rate preferred shares, series 2 (the “Preferred Shares, Series 2”), subject to certain conditions, on March 31, 2015 and on March 31 every five years thereafter. Holders of the Preferred Shares, Series 2 will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.75%.

Groupe Aeroplan Inc. has granted the underwriters an over-allotment option, exercisable in whole or in part anytime up to 30 days following closing, to purchase an additional 900,000 Preferred Shares, Series 1 at the same offering price. Should the over-allotment option be fully exercised, the total gross proceeds of the financing will be C$172.5 million.

The Preferred Shares, Series 1 will be offered by way of a prospectus supplement to the amended and restated base shelf prospectus dated March 26, 2009 filed with the securities regulatory authorities in all provinces and territories of Canada.

The net proceeds of the issue will be used by Groupe Aeroplan Inc. to repay indebtedness, and for general corporate purposes.

3 Responses to “New Issue: AER FixedReset 6.50%+375”

  1. […] their median weighted average yield all the way up to 3.56%! Perhaps three new issues in two days (AER, 6.50%+375, BPO, 6.15%+307 and FTS, 4.25%+145) is just a bit too much, too fast. Volume was […]

  2. […] recorded another shut-out on the volume tables, probably related to tomorrow’s closing of the AER 6.50%+375 and BPO 6.15%+307 FixedReset issues. Price action was muted, with PerpetualDiscounts up 2bp and […]

  3. […] This is the FixedReset 6.50%+375 issue announced January 12. […]

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