PrefBlog

On November 17, Quadravest announced:

Financial 15 Split Corp. (the “Company”) is pleased to announce it has filed a preliminary short form prospectus in each of the provinces of Canada with respect to an offering of Preferred Shares and Class A Shares of the Company. The offering will be co-led by National Bank Financial Inc., CIBC, RBC Capital Markets, Scotia Capital Inc., and will also include BMO Capital Markets, GMP Securities L.P., Canaccord Genuity Corp., Raymond James, Desjardins Securities Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

The Preferred Shares will be offered at a price of $10.00 per Preferred Share to yield 5.25% and the Class A Shares will be offered at a price of $8.75 per Class A Share to yield 17.24%.

The closing price on the TSX of each of the Preferred Shares and the Class A Shares on November 16, 2016 was $10.15 and $9.02, respectively.

Since inception of the Company, the aggregate dividends paid on the Preferred Shares have been $6.81 per share and the aggregate dividends paid on the Class A Shares have been $15.63 per share, for a combined total of $22.44. All distributions to date have been made in tax advantage eligible Canadian dividends or capital gains dividends.

The net proceeds of the offering will be used by the Company to invest in an actively managed, high quality portfolio consisting of 15 financial services companies made up of Canadian and U.S. issuers as follows:

Bank of Montreal	National Bank of Canada	Bank of America Corp.
The Bank of Nova Scotia	Manulife Financial Corporation	Citigroup Inc.
Canadian Imperial Bank of Commerce	Sun Life Financial Services of Canada Inc.	Goldman Sachs Group Inc.
Royal Bank of Canada	Great-West Lifeco Inc.	JP Morgan Chase & Co.
The Toronto-Dominion Bank	CI Financial Corp.	Wells Fargo & Co.

The Company’s investment objectives are:
Preferred Shares:
i. to provide holders of the Preferred Shares with fixed, cumulative preferential monthly cash dividends currently in the amount of 5.25% annually, to be set by the Board of Directors annually subject to a minimum of 5.25% until 2020; and
ii. on or about the termination date, currently December 1, 2020 (subject to further 5 year extensions thereafter), to pay the holders of the Preferred Shares $10.00 per Preferred Share.

Class A Shares:
i. to provide holders of the Class A Shares with regular monthly cash dividends in an amount to be determined by the Board of the Directors; and
ii. to permit holders to participate in all growth in the net asset value of the Company above $10 per Unit, by paying holders on or about the termination date of December 1, 2020 (subject to further 5 year extensions thereafter) such amounts as remain in the Company after paying $10 per Preferred Share.

The sales period of this overnight offering will end at 9:00 a.m. EST on November 18, 2016.

On November 18, Quadravest further announced:

Financial 15 Split Corp. (the “Company”) is pleased to announce it has completed the overnight marketing of up to 2,040,000 Preferred Shares and up to 2,040,000 Class A Shares of the Company. Total proceeds of the offering are expected to be approximately $38.3 million.

The offering is being co-led by National Bank Financial Inc., CIBC, RBC Capital Markets, Scotia Capital Inc., and also includes BMO Capital Markets, GMP Securities L.P., Canaccord Genuity Corp., Raymond James, Desjardins Securities Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

The sales period of the overnight offering has now ended.

There was a similar offering in November 2015.

The offering price of $18.75 per unit looks pretty good compared to the November 15 NAVPU of $16.80. They’ve done well!

The fund is getting quite large (and therefore, the preferred shares are getting quite liquid!) – according to the 16H1 Financial Statements, total fund assets were $297.3-million with just over 19-million units outstanding.

Update 2016-12-2: Deal closed:

Financial 15 Split Corp. (the “Company”) is pleased to announce it has completed the overnight offering of 2,040,000 Preferred Shares and 2,040,000 Class A Shares of the Company. Total proceeds of the offering were $38.3 million, bringing the Company’s net assets to approximately $366.2 million. The shares will trade on the Toronto Stock Exchange under the existing symbols of FTN.PR.A (Preferred Shares) and FTN (Class A Shares).

The Preferred Shares were offered at a price of $10.00 per Preferred Share to yield 5.25% and the Class A Shares were offered at a price of $8.75 per Class A Share to yield 17.24%.

The offering was co-led by National Bank Financial Inc., CIBC, RBC Capital Markets, Scotia Capital Inc., and also included BMO Capital Markets, GMP Securities L.P., Canaccord Genuity Corp., Raymond James, Desjardins Securities Inc., Mackie Research Capital Corporation and Manulife Securities Incorporated.

Brookfield Asset Management Inc. has announced:

the completion of its previously announced Class A Preference Shares, Series 46 issue in the amount of C$300,000,000. The offering was underwritten on a bought deal basis by a syndicate led by TD Securities Inc. and Scotiabank.

The Preferred Shares, Series 46 were issued at a price of C$25.00 per share, for gross proceeds of C$300,000,000. Holders of the Series 46 Shares will be entitled to receive a cumulative quarterly fixed dividend yielding 4.80% annually for the initial period ending March 31, 2022. Thereafter, the dividend rate will be reset every five years at a rate equal to the greater of: (i) the 5-year Government of Canada bond yield plus 3.85%, and (ii) 4.80%. The Series 44 Shares will commence trading on the Toronto Stock Exchange this morning under the ticker symbol BAM.PF.I. The Preferred Shares, Series 46 may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements under the U.S. Securities Act.

BAM.PF.I is a FixedReset, 4.80%+385M480 announced November 10. It will be tracked by HIMIPref™ and has been assigned to the FixedReset subindex.

BAM.PF.I traded a very good 1,374,591 shares today in a range of 24.85-00 before closing at 24.95-96, 85×1. Vital statistics are:

An Implied Volatility analysis yields ambiguous results:

Click for Big

While BAM.PF.I looks a little expensive in this analysis (with a theoretical price of 24.58), it must be remembered that
i) the fit is very messy
ii) the analysis makes no accounting for the reset floor

RONA Inc. has announced (although not yet on its website):

that the holders (collectively, the “Preferred Shareholders”) of record of its Cumulative 5-Year Rate Reset Series 6 Class A Preferred Shares and Cumulative Floating Rate Series 7 Class A Preferred Shares (collectively, the “Preferred Shares”) have approved the statutory plan of arrangement for the acquisition of the Preferred Shares by Gestion Lowe’s Canada, Inc., a wholly-owned subsidiary of Lowe’s Companies, Inc., for C$24 per Preferred Share, in cash, at the special meeting held today pursuant to the arrangement agreement dated Oct. 6, 2016 (the “Arrangement”).

The Arrangement was approved by 95.19% of the votes cast by the Preferred Shareholders present in person or represented by proxy at the special meeting.

The completion of the Arrangement remains subject to the granting of the final order by the Québec Superior Court and the satisfaction or waiver of the other customary closing conditions. If court approval is obtained and the other conditions to the completion of the Arrangement are satisfied or waived, RONA expects that the Arrangement will be completed on or about Nov. 18, 2016.

RON.PR.A and RON.PR.B have provided great entertainment this year and were last mentioned on PrefBlog when the Plan of Arrangement was proposed in early October.