DBRS Assigns Rating of Pfd-3 to TransAlta’s Preferred Share Issue

DBRS has today assigned a rating of Pfd-3 with a Stable trend to the preferred shares offering by TransAlta Corporation (TransAlta). The $250 million cumulative redeemable rate reset first preferred shares, plus $50 million Underwriter’s option, Series A (First Preferreds) will yield 4.60% per annum for the initial five-year period. The dividend rate will change on March 31, 2016, and every five years thereafter at a rate equal to the sum of the then five-year government of Canada bond yield plus 2.03%. The First Preferreds are redeemable by TransAlta on March 31, 2016, and on March 31 every five years thereafter.

The First Preferreds are being issued pursuant to the prospectus supplement dated December 3, 2010, to the short form base shelf prospectus dated October 9, 2009, and are expected to settle on December 10, 2010. The First Preferreds will rank on parity with any future series of first preferred shares of TransAlta, and net proceeds from the offering will be used to partially fund capital projects, for general corporate purposes and to reduce short-term indebtedness.

DBRS currently rates TransAlta’s Unsecured Debt/Medium-Term Notes at BBB with a Stable trend.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodologies are Rating North American Energy Utilities (Electric, Natural Gas and Pipelines) and DBRS Preferred Share and Hybrid Criteria for Corporate Issuers (Excluding Financial Institutions), which can be found on our website under Methodologies.