By Cristal Cody
Tupelo, Miss., Feb. 26 - Element Financial Corp. announced on Wednesday that it priced C$75 million of cumulative rate reset preferred shares with a 6.5% annual dividend for the initial period ending June 30, 2019.
The company sold 3 million shares of series C preferred stock at C$25.00 per share.
The deal includes an over-allotment option of C$11.25 million, or 450,000 shares.
GMP Securities LP, National Bank Financial Inc., BMO Nesbitt Burns Inc., CIBC World Markets, RBC Dominion Securities Inc. and TD Securities Inc. were the co-lead managers.
After the initial period, the dividend rate will reset every five years to an annual rate equal to the five-year Government of Canada bond yield plus 481 basis points.
Series C preferred shareholders will have the right to convert their shares into series D cumulative floating-rate preferred shares, subject to certain conditions and the company's right to redeem the series C preferreds, on June 30, 2019 and on June 30 every five years thereafter.
Series D shareholders will be entitled to receive a quarterly floating-rate dividend equal to the then three-month Government of Canada treasury bill yield plus 481 bps.
Series D shareholders may convert their floating-rate preferred shares into series C preferred shares, subject to certain conditions and the company's right to redeem the floating-rate preferred stock, on June 30, 2024 and on June 30 every five years thereafter.
The Toronto-based equipment finance company plans to use the proceeds from the deal to originate and finance, directly or indirectly, assets as well as for general corporate purposes.
Element Financial brought its first preferred stock offering in December when it sold C$100 million of 6.6% series A cumulative five-year rate reset preferred shares.
"Our initial preferred share offering last December allowed Element to establish our access to this funding option, which is non-dilutive to our common shareholders," Steven K. Hudson, Element's chairman and chief executive officer, said in the release. "This second preferred share transaction allows us to respond to the investor demand that emerged in response to our initial offering, add further diversification to our funding sources and provide Element with access to capital that is not dilutive over 2014 to our common shareholders."
| Issuer: | Element Financial Corp.
|
| Amount: | C$75 million, 3 million shares
|
| Greenshoe: | C$11.25 million, 450,000 shares
|
| Maturity: | June 30, 2019
|
| Securities: | Cumulative rate reset preferred shares
|
| Bookrunners: | GMP Securities LP, National Bank Financial Inc., BMO Nesbitt Burns Inc., CIBC World Markets, RBC Dominion Securities Inc., TD Securities Inc.
|
| Co-managers: | Desjardins Securities Inc., Raymond James Ltd., Manulife Securities Inc.
|
| Dividend: | 6.5%; resets June 30, 2019 and every five years thereafter at the then five-year Government of Canada bond yield plus 481 bps
|
| Price: | C$25.00 per share
|
| Pricing date: | Feb. 26
|
| Settlement date: | March 7
|
| Ratings: | None
|
| Distribution: | Canada
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