PrefBlog

National Bank of Canada has announced:

• Aligned with National Bank’s strategic plan to accelerate growth across all its business lines in Canada
• Provides customers an expanded product and service offering nationally, extensive banking centre network and common customer experience culture
• Maintains branch footprint and Edmonton-based executive and operational presence
• Combination creates stronger competitor, and provides more choice for Canadians
• Concurrent subscription receipt offering of $1 billion

National Bank of Canada (“National Bank”) (TSX: NA) and Canadian Western Bank (“CWB”) (TSX: CWB) today announced they have entered into a definitive agreement (the “Agreement”) for National Bank to acquire CWB, a diversified financial services institution based in Edmonton, Alberta. The transaction brings together two complementary banks with growing businesses, enabling the united bank to enhance services to customers by offering a comprehensive product and service platform at national scale, with a regionally focused service model.

National Bank will acquire all of the issued and outstanding common shares of CWB (the “CWB Shares”) by way of a share exchange (the “Transaction”), valuing CWB at approximately $5.0 billion (the “CWB Equity Value”).
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Each CWB Share, other than those held by National Bank, will be exchanged for 0.450 of a common share (the “National Bank Shares”) of National Bank (the “Exchange Ratio”). Based on the 20-day volume weighted average trading price of the National Bank Shares on the TSX as of June 11, 2024, the Exchange Ratio values each CWB Share at $52.24, representing a 110% premium to the closing price of the CWB Shares on the TSX of $24.89 as of June 11, 2024, and a 100% premium to the volume weighted average trading price of the CWB Shares over the last 20 days. The National Bank Shares to be issued upon closing of the Transaction will represent a pro forma ownership of approximately 10.5% of National Bank by CWB shareholders, taking into account the Private Placement and the Public Offering (as defined below).

The Transaction is subject to approval of 662/3% of the votes cast by CWB shareholders at a special meeting of shareholders (the “Meeting”) expected to be held in September 2024 to approve an amendment to CWB’s by-laws to provide for the share exchange.
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Each CWB Share, other than those held by National Bank, will be exchanged for 0.450 of a common share (the “National Bank Shares”) of National Bank (the “Exchange Ratio”). Based on the 20-day volume weighted average trading price of the National Bank Shares on the TSX as of June 11, 2024, the Exchange Ratio values each CWB Share at $52.24, representing a 110% premium to the closing price of the CWB Shares on the TSX of $24.89 as of June 11, 2024, and a 100% premium to the volume weighted average trading price of the CWB Shares over the last 20 days. The National Bank Shares to be issued upon closing of the Transaction will represent a pro forma ownership of approximately 10.5% of National Bank by CWB shareholders, taking into account the Private Placement and the Public Offering (as defined below).

The Transaction is subject to approval of 662/3% of the votes cast by CWB shareholders at a special meeting of shareholders (the “Meeting”) expected to be held in September 2024 to approve an amendment to CWB’s by-laws to provide for the share exchange.
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ACQUISITION FINANCING

National Bank also announced today that it intends to complete an equity financing in connection with the Transaction. The equity financing is comprised of a public offering (the “Public Offering”) and concurrent private placement (the “Private Placement”) of subscription receipts (the “Subscription Receipts”) for gross proceeds totaling approximately $1.0 billion before giving effect to the Over-Allotment Option and the Additional Subscription Option (as defined below).

Pursuant to the Public Offering, National Bank has agreed to issue and sell 4,453,000 Subscription Receipts at a price of $112.30 for total gross proceeds of approximately $500 million. The Public Offering is being underwritten on a bought-deal basis by a syndicate of underwriters led by National Bank Financial Inc. (“NBF”). National Bank has granted the underwriters an option (the “Over-Allotment Option”) to purchase up to an additional 667,950 Subscription Receipts at the public offering price exercisable up to 30 days after closing of the public offering.

Pursuant to the concurrent Private Placement, National Bank has agreed to issue and sell 4,453,000 Subscription Receipts at the public offering price to Caisse de dépôt et placement du Québec or an affiliate thereof (“CDPQ”) for gross proceeds of approximately $500 million. All of CDPQ’s Subscription Receipts will be subject to a statutory hold period of four months plus one day from the date of their issuance. CDPQ will have the right to purchase up to an additional 667,950 Subscription Receipts, to maintain its pro-rata ownership and subject to, and in the same proportion as, the Over-Allotment Option being exercised by the underwriters (the “Additional Subscription Option”).

National Bank intends to use the net proceeds from the equity financing to support strong regulatory capital ratios following the closing of the Transaction, to fund any cash consideration under the terms of the Transaction and to pay the Transaction expenses.

Affected issues are CWB.PR.B and CWB.PR.D.

Thanks to Assiduous Reader IrateAR for bringing this to my attention!

Royal Bank of Canada has announced (on June 10):

its intention to redeem all of its issued and outstanding Non-Viability Contingent Capital (NVCC) Non-Cumulative 5-Year Rate Reset First Preferred Shares, Series BB (Series BB shares) (TSX: RY.PR.H) on August 24, 2024, for cash at a redemption price of $25.00 per share to be paid on August 24, 2024.

There are 20,000,000 Series BB shares outstanding, representing $500 million of capital. The redemptions will be financed out of the general corporate funds of Royal Bank of Canada.

The final quarterly dividend of $0.228125 for each of the Series BB shares will be paid separately from the redemption price for each of the Series BB Shares and in the usual manner on August 23, 2024 to shareholders of record at the close of business on July 25, 2024. After such dividend payments, the holders of Series BB shares will cease to be entitled to dividends.

RY.PR.H was issued as a FixedReset, 3.90%+226, NVCC-Compliant issue that commenced trading 2014-6-3 after being announced 2014-5-23. The bank gave notice of extension on 2019-7-22. RY.PR.H reset at 3.65% effective 2019-8-24. I recommended against conversion and there was no conversion. The issue is tracked by HIMIPref™ and has been assigned to the FixedReset-Discount subindex.

Thanks to Assiduous Reader IrateAr for bringing this to my attention!