FirstService details plan to eliminate 7% series 1 preference shares

By Toni Weeks

San Luis Obispo, Calif., April 30 - FirstService Corp. gave details in a press release on its plan to simplify its capital structure by eliminating its 7% series 1 cumulative preference shares.

The preference shares will be eliminated in a two-step process. The first step is a partial cash redemption of 30% of the outstanding preferreds at $25.1582 per share, and the second is the conversion of all remaining preferreds into subordinate voting shares at a ratio of 0.7943 subordinate voting shares for each preferred converted.

According to the release, the company's board of directors has waived its right to terminate the redemption and/or conversion process, thereby confirming that both will proceed on May 3. The preferreds will be delisted (TSX: FSV.PR.U) from trading at the close of business on May 3.

FirstService said it will redeem 1,569,190 preferred shares for a total redemption consideration of $39.5 million. The preferreds to be redeemed will be selected on a pro rata basis.

Immediately after the partial redemption, the remaining 3,661,444 preferred shares will be converted into fully paid, non-assessable and freely tradable subordinate voting shares. The ratio will be 0.7943 subordinate voting shares issued per each preferred, with any fractional shares to be satisfied with a payment based on the market price.

To determine the ratio, the redemption price of each preferred was divided by 95% of $33.34, which is the weighted average trading price of the subordinate voting shares for the 20 consecutive trading days ending on the fourth day prior to the conversion date.

The company noted in the release that the conversion will result in the issuance of roughly 2,908,300 subordinate voting shares. Following conversion, there will be 31,697,000 subordinate voting shares outstanding.

In addition, FirstService has decided to pay a dividend on its common shares, which are comprised of its subordinate voting shares and multiple voting shares. The company will begin paying quarterly cash dividends of $0.10 per share, with the first dividend payment to be made for the quarter ending June 30.

Toronto-based FirstService is a global property manager for residential and commercial properties.

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