NA.PR.E - Series 40 Prospectus – National Bank Preferred Shares

NA.PR.E – Series 40 Prospectus – National Bank Preferred Shares

The following is a set of excerpts from the prospectus document for the Series 40 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.E – Series 40 Prospectus – National Bank Preferred Shares was used for the excerpts and the important information was highlighted for quick access.

Follow this link for additional information on National Bank and a comparison of all National Bank preferred shares available in the Canadian Market today.

Excerpt: Size and initial yield

January 15, 2018 NATIONAL BANK OF CANADA $300,000,000 (12,000,000 Shares) Non-cumulative 5-Year Rate Reset First Preferred Shares Series 40 (Non-Viability Contingent Capital (NVCC))
The holders of Non-cumulative 5-Year Rate Reset First Preferred Shares Series 40 (Non-Viability Contingent Capital (NVCC)) (the “Series 40 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 May 15, 2023 (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 $1.1500 per share.
The initial dividend, if declared, will be payable on May 15, 2018 and will be $0.3560 per share, based on the anticipated closing date of January 22, 2018. 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 40 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 2.58%. Reference is made to “Details of the Offering”.

Excerpt: Conversion Terms

Option to Convert Into Series 41 Preferred Shares The holders of Series 40 Preferred Shares will have the right, at their option, to convert their shares into Noncumulative Floating Rate First Preferred Shares Series 41 of the Bank (Non-Viability Contingent Capital (NVCC)) (the “Series 41 Preferred Shares”), subject to certain conditions, on May 15, 2023 and on May 15 every five years thereafter.
The holders of Series 41 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 2.58%, calculated on the basis of the actual number of days elapsed in the applicable Quarterly Floating Rate Period divided by 365, S-2 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 *****
Subject to the provisions of the Bank Act (Canada) (the “Bank Act”) and to the prior consent of the Superintendent of Financial Institutions Canada (the “Superintendent”) and to the provisions described below under “Details of the Offering – Provisions Common to the Series 40 Preferred Shares and the Series 41 Preferred Shares – Restrictions on Dividends and Retirement of Shares”, on May 15, 2023 and on May 15, every five years thereafter, the Bank may redeem all or any part of the then outstanding Series 40 Preferred Shares, at the Bank’s option without the consent of the holder, by the payment of an amount in cash for each such share so redeemed of $25.00 together with all declared and unpaid dividends to the date fixed for redemption.
Reference is made to “Details of the Offering”. The Series 40 Preferred Shares and the Series 41 Preferred Shares do not have a fixed maturity date and are not redeemable at the option of the holders of Series 40 Preferred Shares or Series 41 Preferred Shares. Reference is made to “Risk Factors”.
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 40 Preferred Shares and the Series 41 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 40 Preferred Shares, the Series 41 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”). Listing will be subject to the Bank fulfilling all of the requirements of the TSX.