Husky Energy Inc. cumulative redeemable preferred T.HSE.PR.B

RE:Preferreds

[RagingBull3]

HSE/CVE clearly stated if they voted to convert to CVE Preferreds that terms would not be the same..... they would be "substantially the same"..... that is not the same.

One of the Benefits of Preferred is the Equity Backing that it has (they come before commons).... What's going to be "backing" the Preferreds in a "subsidary"??

More importantly, why wouldn't they offer to roll the Preferreds over to CVE Preferreds with the SAME TERMS?  

CanSiamCyp wrote: IMO, CVE will ignore the preferred owners.

Kinder Morgan prefs were converted to Pembina prefs when that takeover occurred - nothing changed except the ticker.

Another - even more extreme example: a decade or so ago, I purchased common shares of the Canadian small cap Capstone Infrastructure (CSE). After a few years, CSE was bought out by a private company from the UK and CSE was delisted from the TSX (and my commons were bought back at a profit). However, the private UK company chose to keep the CSE prefs intact and they still trade on the TSX up to the present - as fixed resets with a spread of 271 b.p. - and no credit rating by S&P or DBRS:

CSE.PR.A CAPSTONE INFRAST Ser A Rate Reset NR NR 10.35

So bottom line: HSE prefs will continue to trade at market determined price levels - either under the HSE ticker or the CVE ticker - depending on how pref owners vote. Do not expect any change/improvement in the terms or conditions.

The only possibility for price improvement would be if CVE decides they can borrow debt more cheaply than continuing to pay the pref dividends (and recall that debt interest is pre tax and deductible from corporate income while pref dividends are post tax and non deductible). They then could decide to (a) buy back prefs at current market prices using an NCIB (as Brookfield entities have been doing in recent years), or (b) redeem the issues at the 5-year reset date. Given the long-term view of CVE, the former is more likely, beinf a gradual and more cost-effective elimination of prefs, than the latter!

Cheers!