B) Preferred Shares NVCC Preferred Share Rights and Privileges
Quarterly Non-cumulative
Date Redeemable/
Redemption Amount
Reset Spread (2)
Annual
Dividend (1)
Yield (3)
Convertible (4)
Convertible to (2)(5)
Series 5 Series 9
$ $
25.00 25.00
$ $
0.2688125
276 bp
4.30% 6.00%
April 30, 2024 Preferred Shares - Series 6 April 30, 2024 Preferred Shares - Series 10
0.375
404 bp
(1) Non-cumulative fixed dividends are payable quarterly as and when declared by the Board of Directors of CWB. (2) The dividend rate will reset on the date redeemable and every five years thereafter at a level of the reset spread basis points over the then five-year Government of Canada Bond Yield. (3) Based on the stated issue price per share of $25.00. (4) Redeemable by CWB, subject to the approval of OSFI, on the date noted and every five years thereafter. Convertible by the shareholders, subject to certain conditions, on the date noted and every five years thereafter if not redeemed by CWB to an equal number of First Preferred Shares Series 6 and Series 10 which are non-cumulative, floating rate preferred shares. (5) If converted, holders of the First Preferred Shares Series 6 and Series 10 will be entitled to receive quarterly floating rate dividends as and when declared by the Board of Directors of CWB, which reset quarterly at a rate equal to the 90-day Government of Canada Treasury Bill rate. bp – basis points Upon the occurrence of a non-viability trigger event (as defined by OSFI), each preferred share will be automatically converted, without the consent of the holders, into CWB common shares. Conversion to common shares will be determined by dividing the preferred share conversion value ($25.00 per preferred share plus any declared but unpaid dividends) by the common share value (the greater of (i) the floor price of $5.00 and (ii) the current market price calculated as the volume-weighted average trading price for the ten consecutive trading days ending on the day immediately prior to the date of the conversion). If a trigger event were to occur, based on a floor price of $5.00, the preferred shares would be converted into approximately 50 million CWB common shares, assuming no accrued interest and no declared and unpaid dividends.
C) Limited Recourse Capital Notes (LRCN)
Redemption Amount
Reset Spread (1)
Earliest Date Redeemable
Interest Rate
Issue Date
Maturity Date
Series 1 Series 2
$ $
1,000 1,000
6.00% 5.00%
October 30, 2020
April 30, 2081
562.1 bp 394.9 bp
April 30, 2026
March 25, 2021
July 31, 2081
July 31, 2026
(1) The interest rate will reset on the date redeemable and every five years thereafter at a level of the reset spread basis points over the then five-year Government of Canada Bond Yield. bp – basis points
Semi-annual interest payments on our Series 1 LRCNs, of $30 per $1,000 principal amount of Series 1 LRCNs were paid on April 30, 2023 and October 31, 2023, for an aggregate total of $7,865 (2022 – $7,988), after tax. Semi-annual interest payments on our Series 2 LRCNs, of $25 per $1,000 principal amount of Series 2 LRCNs were paid on January 31, 2023 and July 31, 2023, for an aggregate total of $5,592 (2022 – $5,730), after tax. In the event of (i) non-payment of interest on any interest payment date, (ii) non-payment of the redemption price in the case of an LRCN redemption, (iii) non-payment of principal at the maturity date, or (iv) an event of default on the notes, noteholders will have recourse limited to receipt of a proportionate amount of Series 11 Preferred Shares for the Series 1 LRCNs and Series 12 Preferred Shares for the Series 2 LRCNs. The delivery of the corresponding preferred shares will represent the full and complete extinguishment of our obligations under the LRCNs. The preferred shares are held by a third party trustee in a consolidated trust, CWB LRT (Limited Recourse Trust). LRCNs are redeemable on or prior to maturity on each five-year anniversary, subject to OSFI approval. The corresponding preferred shares would be redeemed at the same time. The terms of the preferred shares and LRCNs include NVCC provisions necessary for them to qualify as Tier 1 regulatory capital under Basel III. Upon the occurrence of a trigger event (as defined by OSFI), LRCNs will be automatically redeemed by the delivery of common shares after an automatic conversion of the preferred shares. Conversion to common shares will be determined by dividing the share value of the preferred shares (including declared and unpaid dividends) by the common share value (the greater of: (i) a floor price of $5.00 and (ii) the current market price of our common shares based on the volume weighted average trading price for the ten consecutive trading days ending on the day immediately prior to the date of conversion). If a trigger event were to occur, based on a floor price of $5.00, the Series 1 LRCNs and Series 2 LRCNs would be converted into approximately 35 million and 30 million CWB common shares, respectively, assuming no accrued interest and no declared and unpaid dividends. LRCN are compound instruments with both equity and liability features as payments of interest and principal in cash are made at our discretion. Semi-annual interest payments on the LRCNs are recorded when payable. Non-payment of interest and principal in cash does not constitute an event of default and will trigger a delivery of preferred shares. The liability component of the notes has a nominal value and, as a result, the full proceeds received are presented as equity.
D) Dividends The following dividends on common and preferred shares were declared by the Board of Directors and paid during the year:
2023
2022
$1.30 per common share (2022 – $1.22)
$
124,998
$
111,245
$1.08 per preferred share - Series 5 (2022 – $1.08) $1.50 per preferred share - Series 9 (2022 – $1.50)
5,376 7,500
5,376 7,500
Total
$
137,874
$
124,121
Subsequent to October 31, 2023, the Board of Directors of CWB declared a dividend of $0.34 per common share payable on January 4, 2024 to shareholders of record on December 21, 2023, and cash dividends of $0.2688125 per Series 5 and $0.375 per Series 9 preferred share all payable on January 31, 2024 to shareholders of record on January 24, 2024. With respect to these dividend declarations, no liability was recorded on the consolidated balance sheets at October 31, 2023.
CWB Financial Group 2023 Annual Report | 93
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