Canadian Western seeks to issue new preferreds, redeem old preferreds

By Susanna Moon

Chicago, Nov. 15 - Canadian Western Bank said it would like to redeem its outstanding preferred shares given capital market conditions, but it must amend a bylaw first in order to issue new preferreds.

In order to do this, the bank will hold a meeting on Dec. 12 for preferred shareholders to amend its bylaw to permit an unlimited number of first preferred shares to be issued, up to an aggregate amount of C$1 billion for all first preferreds outstanding at any time, according to a press release.

The bank has reached the maximum number of authorized preferred shares under the existing bylaw and is currently unable to issue additional preferred shares.

Banks are required by federal law to maintain minimum regulatory capital ratios, Canadian Western noted, and Canadian Western's currently outstanding preferred shares constitute part of this capital.

On April 30, 2014, the dividend yield on these shares will reset to a rate of 500 basis points over the yield on the Government of Canada benchmark security unless the shares are redeemed.

In order to maintain its regulatory capital ratios, Canadian Western will be required to issue replacement capital prior to the redemption of the outstanding preferred shares. Without an amendment to the bylaw, Canadian Western only has the ability to issue common shares as replacement capital, the Edmonton, Alta.-based bank noted.

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