EDMONTON, Alberta ─ Capital Power Corporation (“Capital Power”) (TSX:CPX) announced today that it will issue 6,000,000 Cumulative Rate Reset Preference Shares, Series 5 (the “Series 5 Shares”) at a price of $25 per Series 5 Share (the “Offering”) for aggregate gross proceeds of $150 million on a bought deal basis with a syndicate of underwriters, led by RBC Capital Markets and Scotiabank. In addition, Capital Power has granted the underwriters an option, exercisable in whole or in part anytime up to two business days prior to closing, to purchase up to an additional 2,000,000 Series 5 Shares on the same terms, for additional gross proceeds of up to $50 million. Any additional Series 5 Shares will also be issued on the closing date.
The Series 5 Shares will pay fixed cumulative dividends of $1.125 per share per annum, yielding 4.50% per annum, payable on the last business day of March, June, September and December of each year, as and when declared by the board of directors of Capital Power, for the initial period ending June 30, 2018. Based on a March 14, 2013 closing, the first quarterly dividend of $0.3329 per share is expected to be paid on June 28, 2013. The dividend rate will be reset on June 30, 2018 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 3.15%. The Series 5 Shares are redeemable by Capital Power, at its option, on June 30, 2018 and every five years thereafter.
Holders of Series 5 Shares will have the right to convert all or any part of their shares into Cumulative Floating Rate Preference Shares, Series 6 (the “Series 6 Shares”), subject to certain conditions, on June 30, 2018 and every five years thereafter. Holders of Series 6 Shares will be entitled to receive a cumulative quarterly floating dividend at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 3.15%, as and when declared by the board of directors of Capital Power.
Net proceeds of the offering will be lent to Capital Power L.P. pursuant to a subordinated debt agreement. Capital Power L.P. will use the funds to repay the outstanding balance under its credit facilities, to finance development projects including the Shepard Energy Centre project, and for general corporate purposes.
Standard & Poor’s, a division of the McGraw Hill Companies, Inc. has assigned a rating of P-3 for the Series 5 Shares and DBRS Limited has assigned a preliminary rating of Pfd-3 (low) for the Series 5 Shares.
The Series 5 Shares will be issued pursuant to a prospectus supplement to Capital Power’s short form base shelf prospectus dated February 16, 2012. This prospectus supplement will be filed with securities regulatory authorities in Canada. An application will be made when the prospectus supplement is filed to list the Series 5 Shares and the Series 6 Shares on the Toronto Stock Exchange as of the closing date. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.
Neither the Series 5 Shares nor the Series 6 Shares have been registered under the U.S. Securities Act of 1933, as amended, and neither may be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration requirements. This news release does not constitute an offer to sell or the solicitation of an offer to buy any security, and shall not constitute an offer, solicitation or sale of the securities in any state in which such offer, solicitation or sale would be unlawful.
Certain information in this news release relating to Capital Power is forward-looking and related to anticipated events and strategies. When used in this context, words such as “will”, “anticipate”, “believe”, “plan”, “intend”, “target” and “expect” or similar words suggest future outcomes. By their nature, such statements are subject to significant risks and uncertainties, which include, but are not limited to, regulatory and government decisions, economic conditions, and availability and cost of financing.
All forward-looking information or statements reflect Capital Power’s assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, and other factors it believes are appropriate. Readers are cautioned not to place undue reliance on this forward-looking information. Capital Power undertakes no obligation to update or revise any forward-looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to Capital Power’s Management’s Discussion and Analysis dated and filed March 1, 2013 under Capital Power’s profile on SEDAR at http://www.sedar.com/ and other reports filed by Capital Power with Canadian securities regulators.
About Capital Power
Capital Power (TSX: CPX) is a growth-oriented North American power producer headquartered in Edmonton, Alberta. The company develops, acquires, operates and optimizes power generation from a variety of energy sources. Capital Power owns more than 3,600 megawatts of power generation capacity at 16 facilities across North America. An additional 595 megawatts of owned generation capacity is under construction or in advanced development in Alberta and Ontario.