{"id":23322,"date":"2013-10-09T13:40:19","date_gmt":"2013-10-09T17:40:19","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=23322"},"modified":"2013-10-09T13:40:19","modified_gmt":"2013-10-09T17:40:19","slug":"new-issue-vsn-fixedreset-5-00301","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=23322","title":{"rendered":"New Issue: VSN FixedReset, 5.00%+301"},"content":{"rendered":"

Veresen Inc. has announced<\/a>:<\/p>\n

it has agreed to issue 6,000,000 Cumulative Redeemable Preferred Shares, Series C (“Series C Preferred Shares”) at a price of $25.00 per share (the “Offering”) for aggregate gross proceeds of $150 million on a bought deal basis. The Series C Preferred Shares will be offered to the public through a syndicate of underwriters co-led by Scotiabank,TD Securities Inc. and CIBC.<\/p>\n

The holders of Series C Preferred Shares will be entitled to receive fixed cumulative dividends at an annual rate of 5.00%, representing $1.25 per share, payable quarterly for an initial period up to but excluding March 31, 2019, as and when declared by the Board of Directors of Veresen. The first quarterly dividend payment date is scheduled for December 31, 2013. The dividend rate will reset on March 31, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.01%. The Series C Preferred Shares are redeemable by Veresen, at its option, on March 31, 2019 and on March 31 of every fifth year thereafter at a price of $25.00 per share plus accrued and unpaid dividends.<\/p>\n

Holders of Series C Preferred Shares will have the right to convert all or any part of their shares into Cumulative Redeemable Preferred Shares, Series D (“Series D Preferred Shares”), subject to certain conditions, on March 31, 2019, and on March 31 of every fifth year thereafter. The holders of Series D Preferred Shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the Board of Directors of Veresen, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 3.01%.<\/p>\n

Veresen has granted the underwriters an option to purchase at the offering price an additional 2,000,000 Series C Preferred Shares at a price of $25.00 per share exercisable in whole or in part at any time up to 6:30 AM (Calgary time) on the date that is two business days prior to closing. Should the option be fully exercised, the total gross proceeds of the Offering will be $200 million.<\/p>\n

The Offering is expected to close on or about October 21, 2013, subject to customary closing conditions. Net proceeds from the Offering will be used to reduce indebtedness, partially fund capital expenditures and for other general corporate purposes.<\/p>\n

The Series C Preferred Shares will be issued pursuant to a prospectus supplement that will be filed with the securities regulatory authority in each of the provinces of Canada under Veresen’s short form base shelf prospectus dated September 20, 2013. An application has been made to list the Series C Preferred Shares and the Series D Preferred Shares on the Toronto Stock Exchange. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.<\/p><\/blockquote>\n

Update<\/b>: This issue is somewhat overpriced. I calculate the Yield-to-Worst on the new issue as 4.81% to perpetuity at issue price, while VSN.PR.A (FixedReset, 4.40%+292) which commenced trading in February, 2012<\/a>, is bid at 23.75 to yield 4.92% to perpetuity. The new issue should yield more to account for negative convexity (see the comments), but doesn’t … the issuer and underwriters are hoping everybody looks at the Initial Rate rather than the very similar Issue Reset Spreads.<\/p>\n","protected":false},"excerpt":{"rendered":"

Veresen Inc. has announced: it has agreed to issue 6,000,000 Cumulative Redeemable Preferred Shares, Series C (“Series C Preferred Shares”) at a price of $25.00 per share (the “Offering”) for aggregate gross proceeds of $150 …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17],"tags":[],"class_list":["post-23322","post","type-post","status-publish","format-standard","hentry","category-new-issues"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/23322","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=23322"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/23322\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}