New Issue: ALA FixedReset, 4.75%+306

AltaGas Ltd. has announced:

that it will issue 6,000,000 Cumulative Redeemable Rate Reset Preferred Shares, Series G (the “Series G Preferred Shares”), at a price of $25.00 per Series G Preferred Share (“the Offering”) for aggregate gross proceeds of $150 million on a bought deal basis. The Series G Preferred Shares will be offered to the public through a syndicate of underwriters co-led by RBC Capital Markets, Scotiabank and TD Securities Inc.

Holders of the Series G Preferred Shares will be entitled to receive a cumulative quarterly fixed dividend for the initial period ending on but excluding September 30, 2019 (the “Initial Period”) at an annual rate of 4.75%, payable on the last day of March, June, September and December, as and when declared by the Board of Directors of AltaGas. The first quarterly dividend payment is payable on September 30, 2014 and shall be $0.2896 per Series G Preferred Share. The dividend rate will reset on September 30, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.06%. The Series G Preferred Shares are redeemable by AltaGas, at its option, on September 30, 2019 and on September 30 of every fifth year thereafter.

Holders of Series G Preferred Shares will have the right to convert all or any part of their shares into Cumulative Redeemable Floating Rate Preferred Shares, Series H (the “Series H Preferred Shares”), subject to certain conditions, on September 30, 2019 and on September 30 every fifth year thereafter. Holders of Series H Preferred Shares will be entitled to receive a cumulative quarterly floating dividend at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 3.06%, as and when declared by the Board of Directors of AltaGas.

The Offering is expected to close on or about July 3, 2014. Net proceeds will be used to reduce outstanding indebtedness and for general corporate purposes. AltaGas has granted to the underwriters an option, exercisable in whole or in part at any time up to 48 hours prior to closing of the Offering, to purchase up to an additional 2,000,000 Series G Preferred Shares at a price of $25.00 per share.

The Series G Preferred Shares will be issued pursuant to a prospectus supplement that will be filed with securities regulatory authorities in Canada under AltaGas’ short form base shelf prospectus dated August 23, 2013. The Offering is only made by way of a prospectus. The prospectus contains important detailed information about the securities being offered. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.

This looks like it is being issued with some concession to the market – ALA.PR.E, which is a FixedReset 5.00%+317, closed today at 25.46-55, 2×21, on heavy volume.

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