Pembina Pipeline Corp. (NYSE: PBA; TO: PPL) entered into an agreement with a syndicate of underwriters for the purchase of 6 million cumulative redeemable rate reset class A preferred shares, series 3 at $25 per share for distribution to the public.
The holders of series 3 preferred shares will be entitled to receive fixed cumulative dividends at an annual rate of $1.1750 per share, payable quarterly on the 1st day of March, June, September and December, as and when declared by the board of directors of Pembina, yielding 4.7% per annum, for the initial fixed rate period to but excluding March 1, 2019. The first quarterly dividend payment date is scheduled for Dec. 1, 2013. The dividend rate will reset on March 1, 2019 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.6%. The series 3 preferred shares are redeemable by Pembina, at its option, on March 1, 2019 and on March 1 of every fifth year thereafter at $25 per share plus accrued and unpaid dividends.
The holders of series 3 preferred shares will have the right to convert their shares into cumulative redeemable floating rate class A preferred shares, series 4, subject to certain conditions, on March 1, 2019 and on March 1 of every fifth year thereafter. The holders of series 4 preferred shares will be entitled to receive quarterly floating rate cumulative dividends, as and when declared by the board of directors of Pembina, at a rate equal to the sum of the then 90-day Government of Canada treasury bill rate plus 2.6%.
Pembina has granted to the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2 million series 3 preferred shares at $25 per share. RBC Capital Markets and Scotiabank led the syndicate of underwriters.
Proceeds will be used to partially fund capital projects, to reduce short-term indebtedness and for other general corporate purposes of the company and its affiliates.
Closing of the offering is expected on Oct. 2, subject to customary closing conditions.
The offering is being made by means of a prospectus supplement under the short form base shelf prospectus filed by the company on Feb. 22, 2013 in each of the provinces of Canada.
Pembina Pipeline Corp. provides transportation and midstream services for the energy industry in North America. The company is headquartered in Calgary.