Royal Bank of Canada has announced:
its intention to redeem all of its issued and outstanding Non-Cumulative First Preferred Shares, Series BJ (Series BJ shares) (TSX: RY.PR.P) on February 24, 2022, for cash at a redemption price of $25.75 per share to be paid on February 24, 2022.
There are 6,000,000 Series BJ shares outstanding, representing $150 million of capital. The redemptions will be financed out of the general corporate funds of Royal Bank of Canada.
The final quarterly dividend of $0.328125 for each of the Series BJ shares, subject to declaration by the board of directors, will be paid separately from the redemption price for each of the Series BJ Shares and in the usual manner on February 24, 2022 to shareholders of record at the close of business on January 26, 2022. After such dividend payments, the holders of Series BJ shares will cease to be entitled to dividends.
RY.PR.P is a PerpetualDiscount, 5.25%, that commenced trading 2015-10-2 after being announced 2015-9-24. The issue has been tracked by HIMIPref™ and is assigned to the PerpetualPremium subindex.
Investors should be aware of a tax wrinkle in this redemption, in that the redemption price is 25.75. For tax purposes, this is regarded as a sale at $25.00 and a deemed dividend of $0.75. Those who cannot immediately use any capital loss generated by this sale to offset capital gains on current taxes should seriously consider selling on the market; by being redeemed they are paying tax immediately on the dividend but getting no immediate offset; by selling at around 25.75, they will at least avoid such a grievous mismatch in the relative timing of the two taxes.
Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention!
This entry was posted on Thursday, January 20th, 2022 at 9:31 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.
RY.PR.P To Be Redeemed
Royal Bank of Canada has announced:
RY.PR.P is a PerpetualDiscount, 5.25%, that commenced trading 2015-10-2 after being announced 2015-9-24. The issue has been tracked by HIMIPref™ and is assigned to the PerpetualPremium subindex.
Investors should be aware of a tax wrinkle in this redemption, in that the redemption price is 25.75. For tax purposes, this is regarded as a sale at $25.00 and a deemed dividend of $0.75. Those who cannot immediately use any capital loss generated by this sale to offset capital gains on current taxes should seriously consider selling on the market; by being redeemed they are paying tax immediately on the dividend but getting no immediate offset; by selling at around 25.75, they will at least avoid such a grievous mismatch in the relative timing of the two taxes.
Thanks to Assiduous Reader CanSiamCyp for bringing this to my attention!
This entry was posted on Thursday, January 20th, 2022 at 9:31 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.