Husky Energy announces conversion right for series 3 preferred shares

By Sarah Lizee

Olympia, Wash., Dec. 2 – Husky Energy Inc. does not intend to exercise its right to redeem its cumulative redeemable preferred shares, series 3, on Dec. 31, according to a press release.

As a result, holders can retain any or all of their series 3 shares and continue to receive an annual fixed-rate dividend paid quarterly, or convert on a one-for-one basis any or all of their series 3 shares into cumulative redeemable preferred shares, series 4, of Husky and receive a floating-rate quarterly dividend.

Conversion to series 4 shares is subject to the conditions that, if Husky determines that there would be less than 1 million series 3 shares outstanding after Dec. 31, then all remaining series 3 shares will automatically be converted to series 4 shares on a one-for-one basis on Dec. 31, 2019.

If Husky determines that there would be less than 1 million series 4 shares outstanding after Dec. 31, no series 3 shares will be converted into series 4 shares.

In either case, Husky said it will issue a news release to that effect no later than Dec. 24.

Holders of series 3 shares who choose to retain any or all of their shares will receive the new fixed-rate quarterly dividend applicable to the series 3 shares for the five-year period starting Dec. 31 to but excluding Dec. 31, 2024 of 4.636%, being equal to the sum of the Canada five-year bond yield of 1.506% plus 313 basis points.

Holders of series 3 shares who choose to convert their shares to series 4 shares will receive a new floating-rate quarterly dividend applicable to the series 4 shares. The dividend rate applicable to the series 4 shares for the three-month period starting Dec. 31 to but excluding March 31, 2020 will be 4.782%, being equal to the annual rate for the most recent auction of 90-day Canada Treasury Bills of 1.652% plus 313 bps. The floating quarterly dividend rate will be reset every quarter.

The deadline for registered holders to exercise their conversion right is 5 p.m. ET on Dec. 16.

Holders of series 3 shares who do not exercise the right of conversion by the deadline will continue to hold series 3 shares with the new annual fixed-rate dividend.

Holders of the series 3 shares and the series 4 shares will have the opportunity to convert their shares again on Dec. 31, 2024 and every five years afterwards as long as the shares remain outstanding.

The energy company is based in Calgary, Alta.

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