{"id":26994,"date":"2014-12-02T23:35:41","date_gmt":"2014-12-03T04:35:41","guid":{"rendered":"http:\/\/prefblog.com\/?p=26994"},"modified":"2014-12-02T23:35:41","modified_gmt":"2014-12-03T04:35:41","slug":"ffh-pr-c-to-reset-to-4-578","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=26994","title":{"rendered":"FFH.PR.C To Reset To 4.578%"},"content":{"rendered":"

Fairfax Financial Holdings Limited has announced<\/a>:<\/p>\n

that it has determined the fixed dividend rate on its Cumulative 5-Year Rate Reset Preferred Shares, Series C (“Series C Shares”) (TSX:FFH.PR.C) for the five years commencing January 1, 2015 and ending December 31, 2019, with the result that the quarterly dividends on the Series C Shares during that period will be paid at an annual rate equal to Cdn.$1.14450 per share.<\/p>\n

Holders of Series C Shares have the right, at their option, to convert all or part of their Series C Shares, on a one-for-one basis, into Cumulative Floating Rate Preferred Shares, Series D (the “Series D Shares”), effective December 31, 2014. The deadline for exercising this conversion privilege is 5:00 p.m. (Toronto time) on December 16, 2014.<\/p>\n

The quarterly floating rate dividends on the Series D Shares will be paid at an annual rate, calculated for each quarter, of 3.15% over the annual yield on three-month Government of Canada treasury bills (calculated as set out in the prospectus supplement relating to the public offering of the Series C Shares dated September 29, 2009). The quarterly dividend amount in respect of the initial dividend period will be Cdn.$0.25212 per share, payable on March 31, 2015.<\/p>\n

As provided in the share conditions of the Series C Shares, (i) if Fairfax determines that there would be fewer than 1,000,000 Series C Shares outstanding after December 31, 2014, all remaining Series C Shares will be automatically converted into Series D Shares on a one-for-one basis effective December 31, 2014; and (ii) if Fairfax determines that there would be fewer than 1,000,000 Series D Shares outstanding after December 31, 2014, no Series C Shares will be permitted to be converted into Series D Shares. There are currently 10,000,000 Series C Shares outstanding.<\/p>\n

The Toronto Stock Exchange (“TSX”) has conditionally approved the listing of the Series D Shares effective upon conversion. Listing of the Series D Shares is subject to Fairfax fulfilling all the listing requirements of the TSX and, upon approval, the Series D Shares will be listed on the TSX under the trading symbol “FFH.PR.D”.<\/p><\/blockquote>\n

FFH.PR.C is a FixedReset, 5.75%+315, which commenced trading 2009-10-5<\/a> after being announced 2009-9-29<\/a>.<\/p>\n

From a 5.75% coupon to 4.578% is a big hit – a reduction in income of just over 20%.<\/p>\n

The new rate of 4.578% implies that the five-year Canada was at 1.428% at time of measurement, significantly higher than 1.346%”used for TRP.PR.A<\/a>. Very curious.<\/p>\n

Using similar arguments to those made with respect to TRP.PR.A<\/a>, I suggest that conversion to the FloatingReset issue is currently favoured, with a projected price on the FloatingReset of 25.06 compared to 24.78 for the FixedReset. However, any decision should be made at the last possible moment – which will be earlier than the company’s last possible moment of 5pm, December 16, 2014. Check with your broker to determine what their deadline is!<\/p>\n","protected":false},"excerpt":{"rendered":"

Fairfax Financial Holdings Limited has announced: that it has determined the fixed dividend rate on its Cumulative 5-Year Rate Reset Preferred Shares, Series C (“Series C Shares”) (TSX:FFH.PR.C) for the five years commencing January 1, …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-26994","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/26994","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=26994"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/26994\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=26994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=26994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=26994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}