PrefBlog

TransAlta Corporation has announced:

that it has agreed to issue to a syndicate of underwriters led by CIBC, RBC Capital Markets and Scotia Capital Inc. for distribution to the public 8,000,000 Cumulative Rate Reset First Preferred Shares, Series C (the “Series C Shares”). The Series C Shares will be issued at a price of $25.00 per Series C Share, for aggregate gross proceeds of $200 million. Holders of the Series C Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 4.60% annually for the initial period ending June 30, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.10%.

Holders of Series C Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Reset First Preferred Shares, Series D (the “Series D Shares”), subject to certain conditions, on June 30, 2017 and on June 30 every five years thereafter. Holders of the Series D Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.10%.

TransAlta Corporation has granted the underwriters an option, exercisable in whole or in part prior to closing, to purchase up to an additional 2,000,000 Series C Shares at the same offering price. The Series C Shares will be offered by way of prospectus supplement under the short form base shelf prospectus of TransAlta Corporation dated November 15, 2011. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the Offering will be used to partially fund capital projects, for other general corporate purposes and to reduce short term indebtedness of the Corporation and its affiliates. The offering is expected to close on or about November 30, 2011.

They announced shortly afterwards that they:

increased its previously announced bought deal financing to $275 million. TransAlta Corporation has agreed to issue to a syndicate of underwriters led by CIBC, RBC Capital Markets and Scotia Capital Inc. for distribution to the public 11,000,000 Cumulative Rate Reset First Preferred Shares, Series C (the “Series C Shares”). The Series C Shares will be issued at a price of $25.00 per Series C Share, for aggregate gross proceeds of $275 million.

Update 2011-11-24: Rated Pfd-3 by DBRS

Bell Aliant has announced:

that its subsidiary Bell Aliant Preferred Equity Inc. (the “Company”) will be issuing 4,000,000 Cumulative Rate Reset Preferred Shares, Series C (the “Series C Preferred Shares”), at a price of $25.00 per Series C Preferred Share, for aggregate gross proceeds of $100 million on a bought-deal basis to a syndicate of underwriters led by RBC Capital Markets, Scotia Capital and BMO Capital Markets.

The underwriters have been granted an over-allotment option to purchase an additional 600,000 Series C Preferred Shares at the offering price. Should the over-allotment option be fully exercised, the total gross proceeds of the Series C Preferred Share offering will be $115 million.

The Series C Preferred Shares will pay cumulative dividends of $1.1375 per share per annum, yielding 4.55 per cent, payable quarterly if, as and when declared by the Company’s board of directors (with the first quarterly dividend to be paid on March 31, 2012), for the initial five-year period ending March 31, 2017. The dividend rate will be reset on March 31, 2017 and every five years thereafter at a rate equal to the five-year Government of Canada bond yield plus 3.09 per cent. The Series C Preferred Shares will be redeemable by the issuer on or after March 31, 2017, in accordance with their terms.

Holders of the Series C Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preferred Shares, Series D, (the “Series D Preferred Shares”) subject to certain conditions, on March 31, 2017 and on March 31 every five years thereafter. Holders of the Series D Preferred Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.09 per cent, if, as and when declared by the Company’s board of directors.

The Series C Preferred Shares will be offered for sale to the public in each of the provinces and territories of Canada pursuant to a short form prospectus to be filed with Canadian securities regulatory authorities in all Canadian provinces and territories. The offering is scheduled to close on or about December 7, 2011, subject to certain conditions, including obtaining all necessary regulatory approvals.

The net proceeds of this offering will be used to make a lump-sum voluntary contribution to certain of Bell Aliant’s pension plans and for general corporate purposes.

The ‘use of funds ‘ is fascinating, especially since their 11Q3 press release notes that they made a $200-million contribution in 11Q1. The 11Q3 report notes:

Net benefit plans cost included in operating costs (pension expense) in 2011 will be $60–$65 million based on a discount rate of 5.3 per cent and a long-term rate of return on plan assets of 6.1 per cent, up from a comparable 2010 IFRS-based pension expense of $53 million;

The Statement of Comprehensive Income includes $150.2-million “Actuarial losses on defined benefit pension (DB) and other post-employment benefits (OPEB) plans”; the year-to-date figure is $176.4-million. Note 5 of the 11Q3 report is kind of horrific …they have a “Net benefit obligation as at September 30, 2011” of a little over $1-billion. Maybe we’ll see some more preferred share issues from these guys!

The issue is rated Pfd-3(high) by DBRS.

RioCan Real Estate Investment Trust has announced:

that it has reached an agreement to issue to the public on a bought deal basis, subject to regulatory approval, 5.2 million Cumulative Rate Reset Preferred Trust Units, Series C (the “Series C Units”) at a price of $25 per unit for aggregate gross proceeds of $130 million.

The Series C Units are being issued by a syndicate of underwriters co-led by RBC Capital Markets, CIBC and TD Securities Inc. The Series C Units will pay fixed cumulative distributions of $1.1750 per unit per annum, yielding 4.70% per annum, payable on the last day of March, June, September and December of each year, as and when declared by the board of trustees of RioCan, for the initial approximately five and a half-year period ending June 30, 2017. The first quarterly distribution, if declared, shall be payable on December 31, 2011 and shall be $0.0998 per unit, based on the anticipated closing of the offering of Series C Units of November 30, 2011. The distribution rate will be reset on June 30, 2017 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 3.18%. The Series C Units are redeemable by RioCan, at its option, on June 30, 2017 and on June 30 of every fifth year thereafter.

Holders of Series C Units will have the right to reclassify all or any part of their units as Cumulative Floating Rate Preferred Trust Units, Series D (the “Series D Units”), subject to certain conditions, on June 30, 2017 and on June 30 of every fifth year thereafter. Such reclassification privilege may be subject to certain tax considerations (to be disclosed in the prospectus supplement). Holders of Series D Units will be entitled to receive a cumulative quarterly floating distribution at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 3.18%, as and when declared by the board of trustees of RioCan.

The Series C Units and the Series D Units will rank equally with each other and with the outstanding Series A Preferred Trust Units and the Series B Preferred Trust Units into which they may be reclassified.

DBRS Limited (“DBRS”) has assigned a preliminary rating of Pfd-3 (High) for the Series C Units. It is a condition of closing that Standard & Poor’s, a division of the McGraw Hill Companies, Inc. (“S&P”) assign a rating of P-3 (High) for the Series C Units.

RioCan has also granted the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase a further 780,000 Series C Units at the issue price which, if fully exercised, would result in additional gross proceeds of $19.5 million.

RioCan will use a portion of the proceeds from this offering to redeem its $120 million 5.70% Series K senior unsecured debentures due September 11, 2012 and the balance to repay certain indebtedness, for property acquisitions, to fund development and for general trust purposes.

The offering is being made under RioCan’s amended and restated base shelf short form prospectus dated December 21, 2010 amending and restating the base shelf short form prospectus dated July 6, 2010. The terms of the offering will be described in a prospectus supplement to be filed with Canadian securities regulators. The offering is expected to close on or about November 30, 2011.

DBRS Rates Pfd-3(high):

DBRS has today assigned a rating of Pfd-3 (high) with a Stable trend to the new 5.2 million cumulative five-year rate-reset preferred trust units, Series C (the Preferred Units) issued by RioCan Real Estate Investment Trust (RioCan or the Trust) for total proceeds of $130 million.

The Preferred Units will rank pari passu with every other series and will rank prior to RioCan’s trust units as to the payment of distributions and return of capital in the event of the liquidation, dissolution or winding up of the Trust.

RioCan will use a portion of the proceeds from this offering to redeem its $120 million 5.70% Series K senior unsecured debentures due September 11, 2012, and the balance to repay certain indebtedness, for property acquisitions, to fund development and for general trust purposes.

S&P rates P-3H:

• We assigned our ‘BB+’ global scale rating and our ‘P-3 (High)’ Canadian national scale rating to RioCan’s series C cumulative rate reset preferred trust units.
• The company plans to use net proceeds for general corporate purposes, including debt repayment, and to fund acquisitions and development.
• Our ratings on RioCan reflect the company’s leading market position as a retail landlord in Canada, the stability of its cash flow, and its adequate liquidity profile.
• The outlook is stable as the company’s well-leased portfolio should generate cash flow growth which, along with recent refinancing activity, supports our expectation for modest improvement to debt coverage measures over the next year.