TransAlta scraps plans to swap out preferreds, drops Thursday meeting

By Susanna Moon

Chicago, Feb. 10 – TransAlta Corp. terminated plans to exchange its first preferred shares for shares in a single new series of cumulative redeemable minimum rate-reset first preferred shares.

Given this decision, the meetings of preferred shareholders set for Feb. 16 have been canceled, according to a company update on Friday.

No explanation was given for the decision.

As previously announced, TransAlta planned to hold a vote for the proposed exchange of all of its first preferred shares for the new series of preferreds.

Under the arrangement, holders of the series A shares would have received 0.530 shares of a new preferred, revised from 0.503 shares.

The exchange ratio is an implied offer premium of 10.9% to the Dec. 16 closing price for the series A preferreds on the Toronto Stock Exchange.

The terms of the new preferreds would be substantially the same as those of the existing first preferreds except for an adjustment to the reset spread to 529 basis points, a change to Dec. 31, 2021 for the next reset date and the addition of a minimum reset coupon rate of 6.5%.

The company has four series of cumulative redeemable rate reset first preferreds outstanding, which are the series A shares, series C shares, series E shares and series G shares, and one series of cumulative redeemable floating-rate first preferreds outstanding, or the series B shares.

Holders of series B shares would receive 0.550 of a new preferred; holders of series C shares would receive 0.705 of a new preferred; holders of series E shares would receive 0.790 of a new preferred; and holders of series G shares would receive 0.820 of a new preferred.

The exchange ratios of the series B preferreds, series C preferreds, series E preferreds and series G preferred shares remain unchanged, with ratios providing premiums in the range of 13% to 17%, the filing noted.

TransAlta is a power generation and wholesale marketing company based in Calgary, Alta.

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