National Bank of Canada is issuing 10 million of its series 42 preferred shares, on a bought deal basis, at a price of $25.00 per share, to raise gross proceeds of C$250 million.
The Montreal-based bank has granted the underwriters an option to purchase up to an additional 2 million shares on the same terms. Should the overallotment option be exercised in full, gross proceeds will be C$300 million.
The offering is expected to close on or about June 11.
National Bank expects to use the net proceeds of the offering for general corporate purposes, and to add to its capital base.
The series 42 preferred shares have an annual yield of 4.95%, payable quarterly, for an initial period ending Nov. 15, 2023, starting Nov. 15, after which the dividend rate will reset every five years at the then-current five-year Government of Canada bond yield, plus 277 basis points. National Bank may redeem the shares in whole or in part at par on Nov. 15, 2023, and on Nov. 15 every five years thereafter, subject to regulatory approvals.
The series 42 preferred shares may be converted into an equal number of series 43 preferred shares, subject to certain conditions, on Nov. 15, 2023, and on Nov. 15 every five years thereafter. Holders of the series 43 preferred shares will receive quarterly floating dividends equal to the 90-day Government of Canada Treasury Bill rate plus 277 basis points.
The group of underwriters for the offering is led by National Bank Financial Inc.
