Pembina Pipeline Corporation (“Pembina” or the “Company”) (TSX: PPL; NYSE: PBA) announced today that it will not exercise its option to redeem its outstanding Cumulative Redeemable Rate Reset Class A Preferred Shares, Series 7 (“Series 7 Shares”) (TSX: PPL.PR.G) on December 1, 2024.
This decision grants Series 7 shareholders the option to convert all or part of their shares into Cumulative Redeemable Floating Rate Class A Preferred Shares, Series 8 (“Series 8 Shares”) on December 1, 2024 (the “Conversion Date”), on a one-for-one basis. Those who choose not to convert will retain their Series 7 Shares.
Under the terms of the Series 7 Shares, Pembina has the following options:
- If fewer than 1,000,000 Series 7 Shares would remain outstanding after the conversion, all remaining Series 7 Shares will be automatically converted into Series 8 Shares on a one-for-one basis.
- If fewer than 1,000,000 Series 8 Shares would be outstanding following the conversion, no Series 7 Shares will be converted.
Currently, there are 10,000,000 Series 7 Shares outstanding.
Shareholders who retain Series 7 Shares after the Conversion Date will continue to receive quarterly fixed cumulative preferential cash dividends, as and when declared by Pembina’s Board of Directors. The annual dividend rate for these shares, effective from December 1, 2024, to December 1, 2029, will be 5.953%, based on the five-year Government of Canada bond yield of 3.013% plus a spread of 2.94%.
For any Series 8 Shares issued, holders will receive quarterly floating-rate cumulative preferential cash dividends, if and when declared by the Board. The annual dividend rate for Series 8 Shares from December 1, 2024, to March 1, 2025, will be 6.583%, which is the sum of the latest 90-day Government of Canada treasury bill yield of 3.643% and a spread of 2.94%. This floating rate will reset quarterly on the first day of March, June, September, and December each year.
Series 7 shareholders who wish to convert their shares must do so between November 1, 2024, and 3:00 pm (MT) / 5:00 pm (ET) on November 18, 2024. They are advised to contact their broker or intermediary well in advance to ensure timely processing, as late notices will not be accepted.