Element greenshoe lifts 6.5% rate reset preferreds to C$172.5 million

By Susanna Moon

Chicago, May 29 – Element Financial Corp. said underwriters fully exercised the C$22.5 million over-allotment option on its cumulative rate reset preferred shares, bringing the total deal size to C$172.5 million.

As announced May 20, Element priced C$150 million of the cumulative rate reset preferred shares with a 6.5% annual dividend for the initial five-year period ending Sept. 30, 2020.

In all, the company sold 6.9 million shares of the series G preferred stock at C$25.00 per share.

BMO Capital Markets Corp., CIBC World Markets Inc., National Bank Financial Inc., RBC Capital Markets (Canada) Ltd. and TD Securities Inc. were the lead managers.

The dividend rate will reset every five years at a rate equal to the five-year Government of Canada bond yield plus 534 basis points.

Series G preferred shareholders may convert their shares into series H cumulative floating-rate preferred shares on Sept. 30, 2020 and on Sept. 30 every five years thereafter. Series H shareholders will be entitled to receive a quarterly floating-rate dividend equal to the then current three-month Government of Canada treasury bill plus 534 bps.

Series H preferred shareholders may convert their stock into series G preferred shares on Sept. 30, 2025 and on Sept. 30 every five years thereafter.

The preferred stock sale was held in conjunction with offerings of C$1.55 billion of subscription receipts and C$500 million of extendible convertible subordinated debentures.

Element Financial said in a news release that if an eligible acquisition transaction does not occur, the proceeds from the preferred share offering will be used for general corporate purposes.

Element Financial is a Toronto-based fleet management and equipment finance company.

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