OTCPK:SJRWF - Post by User
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RetailRubeon Mar 23, 2021 11:00am
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Post# 32857831
Pref Shares - Comparing SJR/RCI to HSE/CVE
Pref Shares - Comparing SJR/RCI to HSE/CVEI researched the Cenovus takeover of Husky and how they handled the Husky Pref Shares.
The conclusion I reached was Cenovus continued the pref shares because energy companies could not borrow any money from Banks in 2020. Anything they did had to be an all-share transaction. Rogers news release is the exact opposite: an all cash transaction (except some shares to theShaw family) and "not conditional on obtaining financing".
Based on the overall picture, I now expect the SJR.PR.A and SJR.PR.B to be redeemed by Shaw Corp. I expect the announcement to occur no later than May 31. Therefore there is no regulatory risk. Regulatory risk occurs many months later. The only risk is Rogers decides to delay funding $300m of redemptions and tolerating the nuisance of Pref Shareholders potentially interfering with income tax planning windup moves.
Background Information: The Cenovus deal was announced Oct 25, 2020. The news release said Husky pref shareholders would be offered Cenovus pref shares having the same terms (i.e., interest rate calculation). Husky pref shareholders had to vote to approve the exchange. If they voted no, then Cenovus would continue the Husky pref shares and run Husky as a wholly-owned subsidiary of Cenovus. But Husky pref shareholders voted yes. So today, if you ask for a quote on HSE.PR anything, it comes back "DEFUNCT".
One last interesting fact: Prior to the Cenovus/Husky deal, Cenovus had pref shares in their capital structure (per annual report balance sheet) authorized but none issued. Rogers also has pref shares authorized (per 2020 annual report just published). But none issued. So if Rogers wanted to do pref shares like Cenovus, they could. But they would need to include a resolution in their upcoming Special Meeting for pref shareholders like me to approve.