Pembina: Holders may convert series 3 rate-reset class A preferreds

By Susanna Moon

Chicago, Jan. 30 – Pembina Pipeline Corp. said holders may exercise the conversion option for its 6 million of outstanding series 3 cumulative redeemable rate-reset class A preferred shares until 5 p.m. ET on Feb. 14.

The notes are convertible because the company is forgoing the redemption option on the preferreds on the conversion date of March 1, according to a company announcement.

As a result, holders may convert the series 3 preferreds into series 4 cumulative redeemable floating-rate class A preferred shares on a 1 for 1 basis.

For the series 3 preferreds, the annual dividend rate for the five-year period to March 1, 2024 will be 4.478%, which is equal to the five-year Government of Canada bond yield of 1.878% as of Wednesday plus 260 basis points.

For the series 4 preferreds that may be issued March 1, the annual dividend rate for the three-month period to June 1, 2019 will be 4.227%, which is the annual rate of interest for the most recent auction of 90-day Government of Canada treasury bills of 1.627% plus 260 bps, reset every quarter.

If the outstanding amount immediately following the conversion is less than 1 million series 3 preferreds, all remaining series 3 preferreds will be converted automatically into series 4 preferreds on a 1 for 1 basis effective March 1, 2019; or if the outstanding immediately after the conversion results in less than 1 million series 4 preferreds, holders of series 3 preferreds may not convert their series 3 preferreds into series 4 preferreds on the conversion date.

The dividend payable on March 1 to holders of the series 3 shares of record on Feb. 1 will be $0.293750 per share, consistent with the dividend on Oct. 2, 2013, the company noted.

The company’s stock (Toronto: PPL) closed at C$45.67 on Jan. 29.

Calgary, Alta.-based Pembina Pipeline is a transportation and midstream service provider to the energy industry.

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