Manulife Financial Corporation Announces Decision Not to Redeem Series 19 Preferred Shares
Manulife Financial Corporation, a leading international financial services group based in Toronto, Canada, made an important announcement on January 29, 2025. The company declared that it will not be exercising its right to redeem the 10,000,000 Non-cumulative Rate Reset Class 1 Shares Series 19 (the “Series 19 Preferred Shares”) on March 19, 2025. This decision comes in accordance with the terms outlined in the prospectus supplement for these shares, which was issued on November 26, 2014.
Implications for Series 19 Preferred Shareholders
As a result of Manulife’s decision, the holders of the Series 19 Preferred Shares will have the option, at their discretion, to convert all or a portion of their Series 19 Preferred Shares into Non-cumulative Floating Rate Class 1 Shares Series 20 of Manulife on March 19, 2025. The Prospectus specifies the conditions under which this conversion can occur. This conversion feature allows Series 19 Preferred Shareholders to receive floating rate dividends, which may be more attractive in a rising interest rate environment.
Impact on the Wider Market
Manulife’s decision not to redeem the Series 19 Preferred Shares may have a ripple effect on the wider financial market. This development could potentially influence the demand for other preferred shares with similar conversion features, as investors may see this as a sign of confidence in the underlying issuer’s financial position and the attractiveness of the floating rate dividends.
Additional Information
- Manulife Financial Corporation is a leading international financial services group based in Toronto, Canada. It operates primarily in Asia, Canada, and the United States.
- The Series 19 Preferred Shares were issued on November 26, 2014, and have a maturity date of March 19, 2045.
- The Series 19 Preferred Shares have a fixed dividend rate of 4.65% until March 19, 2025, after which the dividend rate resets every five years based on the then-prevailing 5-year Government of Canada bond yield.
- The Series 20 Preferred Shares, which will be issued upon conversion of the Series 19 Preferred Shares, will have a floating dividend rate that is reset every three months based on the then-prevailing 3-month Treasury bill rate plus a spread.
Conclusion
Manulife Financial Corporation’s decision not to redeem its Series 19 Preferred Shares on March 19, 2025, provides Series 19 Preferred Shareholders with the opportunity to convert their shares into Series 20 Preferred Shares, which offer floating rate dividends. This move may also impact the demand for other preferred shares with similar conversion features and could be seen as a sign of confidence in Manulife’s financial position. Investors are advised to closely monitor the market and consult with their financial advisors to determine the potential implications of this development for their portfolios.
