NA.PR.A - Series 36 Prospectus – National Bank Preferred Shares

NA.PR.A – Series 36 Prospectus – National Bank Preferred Shares

The following is a set of excerpts from the prospectus document for the Series 36 preferreds. The excerpts, highlight the most relevant information, an investor should know when analyzing this preferred. A link to the prospectus is provided lower in this page. The original document for NA.PR.A – Series 36 Prospectus – National Bank Preferred Shares was used for the excerpts and the important information was highlighted for quick access.

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Excerpt: Size and initial yield

June 6, 2016 NATIONAL BANK OF CANADA $400,000,000 (16,000,000 Shares) Non-cumulative 5-Year Rate Reset First Preferred Shares Series 36 (Non-Viability Contingent Capital (NVCC))
The holders of Non-cumulative 5-Year Rate Reset First Preferred Shares Series 36 (Non-Viability Contingent Capital (NVCC)) (the “Series 36 Preferred Shares”) of National Bank of Canada (the “Bank”) will be entitled to receive fixed non-cumulative preferential cash dividends, as and when declared by the board of directors of the Bank (the “Board of Directors”), for the initial period commencing on the closing date and ending on and including August 15, 2021 (the “Initial Fixed Rate Period”), payable quarterly on the fifteenth day of February, May, August and November in each year, at an annual rate equal to $1.35 per share.
The initial dividend, if declared, will be payable on November 15, 2016 and will be $0.5733 per share, based on the anticipated closing date of June 13, 2016. Reference is made to “Details of the Offering”.

Excerpt: Reset Date and Yield Terms

For each five-year period after the Initial Fixed Rate Period (each a “Subsequent Fixed Rate Period”), the holders of Series 36 Preferred Shares will be entitled to receive fixed non-cumulative preferential cash dividends, as and when declared by the Board of Directors, payable quarterly on the fifteenth day of February, May, August and November in each year, in the amount per share per annum determined by multiplying the Annual Fixed Dividend Rate (as defined herein) applicable to such Subsequent Fixed Rate Period by $25.00.
The Annual Fixed Dividend Rate for any Subsequent Fixed Rate Period will be determined by the Bank on the 30th day prior to the first day of such Subsequent Fixed Rate Period and will be equal to the sum of the Government of Canada Yield (as defined herein) on the date on which the Annual Fixed Dividend Rate is determined plus 4.66%. Reference is made to “Details of the Offering”.

Excerpt: Conversion Terms

<Option to Convert Into Series 37 Preferred Shares The holders of Series 36 Preferred Shares will have the right, at their option, to convert their shares into Noncumulative Floating Rate First Preferred Shares Series 37 of the Bank (Non-Viability Contingent Capital (NVCC)) (the “Series 37 Preferred Shares”), subject to certain conditions, on August 15, 2021 and on August 15 every five years thereafter.
The holders of Series 37 Preferred Shares will be entitled to receive floating rate non-cumulative preferential cash dividends, as and when declared by the Board of Directors, payable quarterly on the fifteenth day of February, May, August and November in each year (the initial quarterly dividend period and each subsequent quarterly dividend period is referred to as a “Quarterly Floating Rate Period”), in the amount per share determined by multiplying the applicable Floating Quarterly Dividend Rate (as defined herein) by $25.00.
The Floating Quarterly Dividend Rate will be equal to the sum of the T-Bill Rate (as defined herein) plus 4.66%, calculated on the basis of the actual number of days elapsed in the applicable Quarterly Floating Rate Period divided by 365, determined on the 30th day prior to the first day of the applicable Quarterly Floating Rate Period. Reference is made to “Details of the Offering”.
*****Conversion to Common *****
Effective January 1, 2013 in accordance with capital adequacy requirements adopted by the Office of the Superintendent of Financial Institutions Canada (“OSFI”), non-common capital instruments issued after January 1, 2013, including subordinated debt securities or first preferred shares, must include terms providing for the full and permanent conversion of such securities into common shares upon the occurrence of certain trigger events relating to financial viability (the “Non-Viable Capital Contingency Provisions”) in order to qualify as regulatory capital.
The terms of the Series 36 Preferred Shares and the Series 37 Preferred Shares provide that such shares will automatically and immediately be converted, on a full and permanent basis, into a specified number of common shares of the Bank (the “Common Shares”) upon the occurrence of a Trigger Event (as defined herein).
Reference is made to “Details of the Offering”. The Bank has applied to list the Series 36 Preferred Shares, the Series 37 Preferred Shares and the Common Shares into which such shares may be converted upon the occurrence of a Trigger Event on the Toronto Stock Exchange (the “TSX”).