Canaccord Financial Inc. (TSX: CF) said Thursday it plans to issue $100 million of preferred shares domestically. The proceeds will be used to help fund its previously announced acquisition of Collins Stewart Hawkpoint plc, which closed on March 21.
Canaccord has agreed to issue 4 million cumulative 5-year rate reset first preferred shares, series C, to a syndicate of underwriters led by CIBC, Canaccord Genuity Corp. and RBC Capital Markets for distribution to the public.
The Series C Preferred Shares will be issued at a price of $25.00 per share for aggregate gross proceeds of $100 million. Holders of the Series C Preferred Shares will be entitled to receive fixed, cumulative, preferential dividends payable quarterly, yielding 5.75% annually for the initial period ending on June 30, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the five year Government of Canada bond yield plus 4.03%.
Canaccord has also granted the underwriters an option to purchase up to an additional 600,000 Series C Preferred Shares, on the same terms and conditions as the offering. If this option is exercised in full, the total gross proceeds to Canaccord will be $115 million.
The net proceeds of the offering will be used to reduce outstanding borrowings under the $150 million senior secured credit facility entered into by the Canaccord, as borrower, and provided by CIBC, as lender. The acquisition credit facility funded a portion of the cash paid for Canaccord’s acquisition of Collins Stewart Hawkpoint.
The offering is expected to close on or about April 10, subject to certain conditions, including Toronto Stock Exchange approval.