New Issue: MFC FixedReset 4.20%+141

Manulife Financial has announced:

a Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 3 (“Series 3 Preferred Shares”). Manulife will issue eight million Series 3 Preferred Shares priced at $25 per share to raise gross proceeds of $200 million. The offering will be underwritten by a syndicate of investment dealers led by Scotia Capital Inc. and RBC Dominion Securities Inc. and is anticipated to qualify as Tier 1 capital for Manulife. The expected closing date for the offering is March 11, 2011. Manulife intends to file a prospectus supplement to its September 3, 2010 base shelf prospectus in respect of this issue.

Holders of the Series 3 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 4.20% annually, as and when declared by the Board of Directors of Manulife, for the initial period ending June 19, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 1.41%.

Holders of Series 3 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 4 (“Series 4 Preferred Shares”), subject to certain conditions, on June 19, 2016 and on June 19 every five years thereafter. Holders of the Series 4 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends, as and when declared by the Board of Directors of Manulife, at a rate equal to the three-month Government of Canada Treasury Bill yield plus 1.41%.

The net proceeds from the offering will be utilized for general corporate purposes, which may include investments in subsidiaries.

In setting up this issue on HIMIPref™ I have assumed that it will not have a non-viability contingent capital clause, and therefore will be subject to the declining cap on non-qualifying Tier 1 Capital that I anticipate will be applied to Insurance Holding Companies and that therefore it should have a hardMaturity in its call schedule for 2022-1-31.

I hate this. The most important thing in preferred share analysis nowadays is … guessing what OSFI’s going to do. So much for Pillar 3.

One Response to “New Issue: MFC FixedReset 4.20%+141”

  1. […] 4.20%+141 FixedReset was announced March […]

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