DBRS Finalizes Pfd-2 (low) Rating on Valener Preferred Shares

DBRS has today finalized its rating of Pfd-2 (low) with a Stable trend on the Cumulative Rate Reset Preferred Shares, Series A (Series A Preferred Shares), of Valener Inc. (Valener or the Company). The Series A Preferred Shares have a dividend rate of 4.35% per annum, payable quarterly for the initial period ending October 15, 2017. The dividend rate will reset on October 15, 2017, and every five years thereafter at a rate equal to the sum of the five-year Government of Canada bond yield plus 2.81%. The Series A Preferred Shares are redeemable by Valener on or after October 15, 2017, in accordance with their terms. Aggregate gross proceeds will be $100 million with no underwriters’ options.

Holders of the Series A Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Preferred Shares, Series B (Series B Preferred Shares), subject to certain conditions, on October 15, 2017, and on October 15 every five years thereafter. Holders of the Series B Preferred Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 2.81%.

The Series A Preferred Shares were issued under the Short Form Prospectus dated May 30, 2012, and were settled on June 6, 2012. The DBRS rating is based on the expectation that the Series A Preferred Shares will remain the most highly ranked preferred shares issued by Valener and will rank equally with any future preferred shares of the Company. Net proceeds from the offering will be used for subscription of additional units of Gaz Métro Limited Partnership (Gaz Métro) in order for Gaz Métro to finance the equity portion of its proposed acquisition of Central Vermont Public Service Corporation (CVPS) and the development of Green Mountain Power Corporation’s Kingdom Community Wind Project in Vermont. The balance, if any, will be used for general corporate purposes. In the event the CVPS acquisition does not proceed, Valener will use the net proceeds of the offering to repay amounts under its credit facility and for general corporate purposes.

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

The applicable methodology is Rating Companies in the North American Energy Utilities (Electric and Natural Gas) Industry, which can be found on our website under Methodologies.