TORONTO, May 31, 2023 /CNW/ - Intact Financial Corporation ("IFC") (TSX: IFC) announced today that it does not intend to exercise its right to redeem all or any part of the currently outstanding Non-cumulative Rate Reset Class A Shares Series 7 of IFC (the "Series 7 Preferred Shares") (TSX: IFC.PR.G) on June 30, 2023. As a result, subject to certain conditions set out in the prospectus supplement dated May 22, 2018 to the short form base shelf prospectus dated November 15, 2017 (the "Prospectus"), relating to the issuance of the Series 7 Preferred Shares, the holders of the Series 7 Preferred Shares will have the right, at their option, to elect to convert all or any of their Series 7 Preferred Shares into Non-cumulative Floating Rate Class A Shares Series 8 of IFC (the "Series 8 Preferred Shares") on a one-for-one basis on June 30, 2023. Holders who do not exercise their right to convert their Series 7 Preferred Shares into Series 8 Preferred Shares on such date will retain their Series 7 Preferred Shares, unless automatically converted in accordance with the conditions below.
With respect to any Series 7 Preferred Shares that may remain outstanding after June 30, 2023, commencing as of such date, holders thereof will be entitled to receive fixed non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of IFC. The annual dividend rate for the Series 7 Preferred Shares for the five-year period from and including June 30,2023 to but excluding June 30, 2028, will be 6.012%, as determined in accordance with the terms of the Series 7 Preferred Shares.
With respect to any Series 8 Preferred Shares that may be issued on June 30, 2023, holders thereof will be entitled to receive floating rate non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors of IFC. The dividend rate for the Series 8 Preferred Shares for the 3-month floating rate period from and including June 30, 2023, to but excluding September 30, 2023, will be 1.79287% (7.113% on an annualized basis), as determined in accordance with the terms of the Series 8 Preferred Shares (the "Floating Quarterly Dividend Rate"). The Floating Quarterly Dividend Rate will be reset every quarter.
The foregoing conversion right for the Series 7 Preferred Shares is subject to the conditions that: (i) if IFC determines that there would be less than 1,000,000 Series 7 Preferred Shares outstanding on June 30, 2023, then all remaining Series 7 Preferred Shares will automatically be converted into an equal number of Series 8 Preferred Shares on June 30, 2023, and (ii) alternatively, if IFC determines that there would be less than 1,000,000 Series 8 Preferred Shares outstanding on June 30, 2023, then no Series 7 Preferred Shares will be converted into Series 8 Preferred Shares. In either case, IFC will give written notice to that effect to any registered holders of Series 7 Preferred Shares on or before June 22, 2023.
The Series 7 Preferred Shares are issued in "book entry only" form and must be purchased or transferred through a participant in the CDS depository service ("CDS Participant"). All rights of holders of Series 7 Preferred Shares must be exercised through CDS or the CDS Participant through which the Series 7 Preferred Shares are held. The deadline for the registered shareholder of any Series 7 Preferred Shares to provide notice of exercise of the right to convert is 5:00 p.m. (ET) on June 15, 2023. Any notices received after this deadline will not be valid. As such, beneficial holders of Series 7 Preferred Shares who wish to exercise their right to convert their shares during the conversion period, which will run from Wednesday, May 31, 2023 until 5:00 p.m. (ET) on Thursday, June 15, 2023, should contact their broker or other intermediary for more information and it is recommended that this be done well in advance of the deadline in order to provide the broker or other intermediary with time to complete the necessary steps.
Holders of the Series 7 Preferred Shares and the Series 8 Preferred Shares (if issued on June 30, 2023) will have the opportunity to convert their shares again on June 30, 2028, and every five years thereafter as long as the shares remain outstanding. Subject to certain conditions described in the Prospectus, IFC may redeem the Series 7 Preferred Shares, in whole or in part, on June 30, 2028, and on June 30 every five years thereafter and may redeem the Series 8 Preferred Shares (if issued), in whole or in part, on any date after June 30, 2023.
The Toronto Stock Exchange ("TSX") has conditionally approved the listing of the Series 8 Preferred Shares effective on conversion. Listing of the Series 8 Preferred Shares is subject to IFC fulfilling all the listing requirements of the TSX.
For more information on the terms of, and risks associated with an investment in, the Series 7 Preferred Shares and the Series 8 Preferred Shares, please see IFC's prospectus supplement dated May 22, 2018, which is available on www.sedar.com.
Neither the Series 7 Preferred Shares nor the Series 8 Preferred Shares have been or will be registered in the United States under the United States Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state of the United States and may not be offered, sold or delivered, directly or indirectly, in the United States, its territories, its possessions and other areas subject to its jurisdiction or to, or for the account or benefit of, a U.S. person (as defined in Regulation S under the Securities Act), except in certain transactions exempt from, or not subject to, the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell or a solicitation to buy securities in the United States and any public offering of the securities in the United States must be made by means of a prospectus.
Intact Financial Corporation (TSX: IFC) is the largest provider of property and casualty (P&C) insurance in Canada, a leading provider of global specialty insurance, and, with RSA, a leader in the U.K. and Ireland. Our business has grown organically and through acquisitions to over $21 billion of total annual premiums.
In Canada, Intact distributes insurance under the Intact Insurance brand through a wide network of brokers, including its wholly-owned subsidiary BrokerLink, and directly to consumers through belairdirect. Intact also provides affinity insurance solutions through the Johnson Affinity Groups.
In the US, Intact Insurance Specialty Solutions provides a range of specialty insurance products and services through independent agencies, regional and national brokers, and wholesalers and managing general agencies.
In the U.K., Ireland, and Europe, Intact provides personal, commercial and specialty insurance solutions through the RSA brands.
Certain statements made in this news release are forward-looking statements. These statements include, without limitation, statements relating to future conversions, redemptions, quantum and payment of dividends with respect to the Series 7 Preferred Shares and the Series 8 Preferred Shares, and the listing of the Series 8 Preferred Shares. All such forward-looking statements are made pursuant to the 'safe harbour' provisions of applicable Canadian securities laws. Unless otherwise indicated, all forward-looking statements in this press release are made as of May 31st, 2023 and are subject to change after that date.
Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on several assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements as a result of various factors, including those discussed in the Company's most recently filed Annual Information Form dated February 7, 2023 and Q1-2023 Management's Discussion and Analysis ("Q1-2023 MD&A") available on SEDAR at www.sedar.com. As a result, we cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements. Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Please read the cautionary note at the beginning of the Q1-2023 MD&A available on SEDAR.
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