{"id":2172,"date":"2008-05-21T21:31:26","date_gmt":"2008-05-22T01:31:26","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=2172"},"modified":"2008-05-21T21:31:26","modified_gmt":"2008-05-22T01:31:26","slug":"cu-inc-issues-long-term-debs","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=2172","title":{"rendered":"CU Inc. Issues Long Term Debs"},"content":{"rendered":"

CU Inc. has an issue trading on the Toronto Stock Exchange, CIU.PR.A, now bid at 20.50 for a pre-tax bid-YTW of 5.64% based on a limitMaturity<\/a>; this is an interest-equivalent of 7.90% at a conversion factor of 1.4x. These are Series 1 Preferred<\/b>. The company also has an approximately equal value of “Series Second Preferred” outstanding, all of which are held by the parent company.<\/p>\n

Today they issued some 30-year debs<\/a> at 5.58%.<\/p>\n

Mainly I was interested in this because of the 232bp interest-equivalent spread between the prefs and the long debs, but there’s a little twist …<\/p>\n

A grossly abbreviated statement of their liabilites is:<\/p>\n

\n\n\n\n\n\n\n\n\n\n\n
CIU Inc. Liabilities<\/td>\n<\/tr>\n
Item<\/td>\nValue
CAD Millions<\/td>\n<\/tr>\n
Current Liabilities<\/td>\n250.6<\/td>\n<\/tr>\n
Non-Current Non-Capital<\/td>\n229.6<\/td>\n<\/tr>\n
Long-Term Debt<\/td>\n2,459.4<\/td>\n<\/tr>\n
Series 1 Prefs<\/td>\n115.0<\/td>\n<\/tr>\n
Series 2 Prefs<\/td>\n130.0<\/td>\n<\/tr>\n
Equity<\/td>\n1,675.5<\/td>\n<\/tr>\n
Total<\/b><\/td>\n4,860.1<\/b><\/td>\n<\/tr>\n<\/table>\n<\/div>\n

According to the prospectus for CIU.PR.A:<\/p>\n

In the event of the liquidation, dissolution or winding up of the Corporation, or other distribution of assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the holders of the Series 1 Preferred Shares shall be entitled to receive the amount paid up on such shares together with all accrued and unpaid cumulative preferential dividends thereon and, if such liquidation, dissolution, winding-up or distribution is voluntary, a premium of $1.00 per share if such event commences prior to June 1, 2009, and, if such event commences thereafter, a premium equivalent to the premium payable on redemption if such shares were to be redeemed at the date of commencement of any such voluntary liquidation, dissolution, winding-up or distribution, before any amount shall be paid or any property or assets of the Corporation shall be distributed to the holders of any Class A non-voting shares or Class B common shares or other shares ranking junior to the Series 1 Preferred Shares. After payment to the holders of the Series 1 Preferred Shares of the amounts so payable to them, they shall not be entitled to share in any further distribution of the property or assets of the Corporation.<\/p><\/blockquote>\n

… which is not entirely satisfactory, because nowhere in the document is the seniority of the “Series Second Preferred Shares” clearly defined relative to the “Series 1 Preferred Shares”.<\/p>\n

I have used their contact form<\/a> to ask the question:<\/p>\n

Are the CU Inc. Series 1 Preferred Shares junior, senior, or parri passu to the Series Second Preferred Shares?<\/p>\n

Where may I find legal documentation of the relative status?<\/p><\/blockquote>\n

Update, 2008-5-27<\/b>: I have received a note from Atco staff denying the existence of Series Second Preferred shares. Further inquiries are in progress.<\/p>\n","protected":false},"excerpt":{"rendered":"

CU Inc. has an issue trading on the Toronto Stock Exchange, CIU.PR.A, now bid at 20.50 for a pre-tax bid-YTW of 5.64% based on a limitMaturity; this is an interest-equivalent of 7.90% at a conversion …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,13,28],"tags":[],"class_list":["post-2172","post","type-post","status-publish","format-standard","hentry","category-better-communication-please","category-issue-comments","category-spreads-to-bonds"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2172","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2172"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/2172\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}