Bank of Montreal does not intend to exercise its right to redeem its outstanding C$300 million noncumulative five-year rate reset class B preferred shares, series 31, on Nov. 25.
As a result, the holders of series 31 preferred shares have the right to convert all or part of their preferred shares on a 1-for-1 basis into series 32 noncumulative floating-rate class B preferred shares on Nov. 25. Holders who do not exercise their right to convert their series 31 preferred shares into series 32 preferred shares on such date will retain their series 31 preferred shares, unless automatically converted in accordance with certain conditions.
The conversions are subject to the condition that if, after Nov. 12, Bank of Montreal determines that there would be less than 1 million series 31 preferred shares outstanding on Nov. 25, then all remaining series 31 preferred shares will automatically be converted into an equal number of series 32 preferred shares on Nov. 25. Alternatively, if the bank determines that there would be less than 1 million series 32 preferred shares outstanding on Nov. 25, no series 31 preferred shares will be converted into series 32 preferred shares. In either case, the bank will give written notice to that effect to any registered holders of series 31 preferred shares affected by the preceding minimums on or before Nov. 15.
The dividend rate applicable to the series 31 preferred shares for the five-year period starting Nov. 25, 2019, and ending Nov. 24, 2024, and the dividend rate applicable to the series 32 preferred shares for the three-month period beginning Nov. 25, 2019, and ending on Feb. 24, 2020, will be determined and announced via a news release on Oct. 28. A written notice of these dividend rates will also be given to the registered holders of series 31 preferred shares.
Bank of Montreal noted in a news release that beneficial owners of series 31 preferred shares who, on or after Oct. 28, wish to exercise their right of conversion should instruct their broker or other nominee to exercise such right before 5 p.m. ET on Nov. 12.
