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CIBC seeks to raise up to C$300M in preferred stock offering

Canadian Imperial Bank of Commerce signed an agreement with a group of underwriters led by CIBC Capital Markets for an issue of 10 million preferred shares.

The Basel III-compliant series 51 noncumulative rate reset class A preferred shares priced at C$25 apiece. The Toronto-based company expects to raise gross proceeds of C$250 million from the share sale.

The underwriters were given an option to buy up to an additional 2 million shares at the same offering price, exercisable at any time up to two days before closing. The total gross proceeds of the financing will be C$300 million if the underwriters' option is fully exercised.

The offering is expected to close June 4. CIBC expects to use the net proceeds for general purposes.

The shares will yield 5.15% per year, payable quarterly, for an initial period ending July 31, 2024. On July 31, 2024, and on July 31 every five years thereafter, the dividend rate will reset to be equal to the then-current five-year Government of Canada bond yield plus 3.62%.

CIBC may redeem all or any part of the then outstanding shares at par on July 31, 2024, and on July 31 every five years thereafter.

Holders of the shares will have the right to convert their shares into series 52 noncumulative floating-rate class A preferred shares, subject to certain conditions, on July 31, 2024, and on July 31 every five years thereafter. Such holders will be entitled to receive a quarterly floating-rate dividend equal to the three-month Government of Canada Treasury Bill yield plus 3.62%. They may convert their series 52 shares into series 51 shares, subject to certain conditions, on July 31, 2029, and on July 31 every five years thereafter.