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Shaw Communications is a Canadian cable company that is one of the biggest providers of internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. In fiscal 2021, more than 75% of Shaw's total revenue resulted from this wireline business. Shaw is also now a national wireless service provider after acquiring Wind Mobile in... see more

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Shaw Communications Inc. > Pref Shares - What Happens and When

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Post by RetailRube on Mar 18, 2021 8:40pm

Pref Shares - What Happens and When

I own the SJR.PR.B shares (rate-reset every 90 days). Here is my research on what will happen to my shares. I intend to hold until the redemption.

Per the press release announcing the deal: "Under the Arrangement Agreement, Rogers has the right to cause Shaw to redeem its outstanding preferred shares on June 30, 2021 in accordance with their terms by providing written notice to Shaw. As of the date of this news release, Rogers has not exercised this right."

Here's why they intend to redeem on June 30 and not wait for regulatory approval: It is an 5-year anniversary date of the official original issue date. Per the Prospectus Supplement (dated May 20, 2011) says on redemptions on page S-1: "The Series A Shares shall not be redeemable prior to June 30, 2016. On Jun 30, 2016, and on June 30 in every fifth year thereafter, the Corporation may, at its option, upon not less than 30 days and not more than 60 days prior written notice, redeem for cash all or any part of the outstanding Series A Shares by payment of $25.00 per Series A Share plus all accrued and unpaid dividends to the date fixed for redemption ..."

The timing for Rogers is pure luck. Otherwise they have to wait for the actual windup transaction of Shaw. Although they could redeem the 90-day pref shares on any date by paying $25.50.

Per the press release of the deal, there will be a Special Meeting in May for shareholders to approve the takeover. Then I expect Rogers to put the redemption demand to Shaw immediately after the Special Meeting. Shaw will announce the redemption immediately, but no later than May 31 (to meet the 30 day minimum).

So I will get cashed out on June 30th, about 70 days from now. I may check back 6-9 months later to see if the regulators approved the deal.

Why are pref shares not trading around $24 by now? If the deal fails, I get to keep my inflation-protected pref shares and someday when interest rates go up, I will still get redeemed at $25. But an Arb doesn't have my time horizon.

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