Pembina Pipeline greenshoe ups rate reset preferreds to C$170 million

By Susanna Moon

Chicago, Jan. 15 – Pembina Pipeline said underwriters exercised C$20 million of the over-allotment option in its 5.75% five-year reset preference shares, bringing the total deal size to C$170 million.

Pembina issue a total of 6.8 million series 11 preferreds, which includes 800,000 preferreds issued under the partial exercise of the greenshoe, according to a company news release.

As previously announced, Pembina said on Jan. 6 that it priced C$150 million of cumulative redeemable minimum rate reset preference shares with a 5.75% annual dividend for the initial period to but excluding March 1, 2021.

The company sold 6 million shares of the series 11 class A preference shares at C$25.00 per share.

The deal included an over-allotment option of 2 million shares.

Scotia Capital Inc., BMO Capital Markets Corp. and RBC Capital Markets (Canada) Ltd. were the lead managers.

The dividend rate will reset on March 1, 2021 and every five years thereafter at a rate equal to the then five-year Government of Canada bond yield plus 500 basis points, and in any event, not less than the government bond yield plus 575 bps.

The series 11 shares are redeemable by Pembina on March 1, 2021 and on March 1 of every fifth year thereafter at a price of C$25.00 per share, plus accrued and unpaid dividends.

Series 11 preferred shareholders will have the right to convert their shares into series 12 cumulative redeemable floating-rate class A preferred shares on March 1, 2021 and on March 1 of every fifth year thereafter.

The holders of series 12 preferred shares will be entitled to receive quarterly floating-rate cumulative dividends at a rate equal to the then 90-day Government of Canada treasury bill rate plus 500 bps.

Pembina Pipeline plans to use the proceeds from the offering to reduce debt under its credit facilities, as well as for capital expenditures and working capital requirements in connection with its 2016 capital program.

The series 11 preferreds were set to begin trading on the Toronto Stock Exchange on Friday under the symbol PPL.PR.K, the company said Friday.

Dividends are expected to be $1.4375 per share annually, and the company’s board of directors declared the initial quarterly dividend of $0.1812 for the period ending March 1.

The Calgary, Alta.-based transportation and midstream service provider serves the North American energy industry.

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