TransCanada Corp. has announced that it does not intend to exercise its right to redeem its Cumulative Redeemable First Preferred Shares, Series 5 (Series 5 Shares) on 30 January 2016. As a result, subject to certain conditions, the holders of Series 5 Shares have the right to choose one of the following options with regard to their shares:
- To retain any or all of their Series 5 Shares and continue to receive a fixed rate quarterly dividend; or
- To convert, on a one-for-one basis, any or all of their Series 5 Shares into Cumulative Redeemable First Preferred Shares, Series 6 (Series 6 Shares) of TransCanada and receive a floating rate quarterly dividend.
The dividend rate applicable to the Series 5 Shares for the five-year period commencing on 30 January 2016 to, but excluding, 30 January 2021 will equal the Government of Canada five-year bond yield on 31 December 2015 plus 1.54%. The dividend rate applicable to the Series 6 Shares for the three-month period commencing on 30 January 2016 to, but excluding, 30 April 2016 will equal the Government of Canada 90-day treasury bill rate on 31 December 2015 plus 1.54%. Both rates will be calculated according to the terms of the prospectus supplement dated 17 June 2010, and announced by way of a news release on 31 December 2015.
Beneficial owners of Series 5 Shares who wish to exercise their right of conversion should communicate as soon as possible with their broker or other nominee and ensure that they follow their instructions in order to meet the deadline to exercise such right, which is 5 p.m. (EDT) on 15 January 2016.
The foregoing conversions are subject to the conditions that: (i) if TransCanada determines that there would be less than one million Series 5 Shares outstanding after 30 January 2016, then all remaining Series 5 Shares will automatically be converted into Series 6 Shares on a one-for-one basis on 30 January 2016, and (ii) alternatively, if TransCanada determines that there would be less than one million Series 6 Shares outstanding after 30 January 2016, no Series 5 Shares will be converted into Series 6 Shares.
Holders of the Series 5 Shares and the Series 6 Shares will have the opportunity to convert their shares again on 30 January 2021, and every five years thereafter as long as the shares remain outstanding, as stated in a press release from TransCanada.
Edited from press release by Angharad Lock
Read the article online at: https://www.worldpipelines.com/business-news/16122015/transcanada-announces-series-5-preferred-shares-conversion-privilege-1813/