QUANTUMONLINE.COM SECURITY DESCRIPTION: Algonquin Power & Utilities Corp. Equity Units, stated amount $50 per unit, initially consisting of Corporate Units which include a stock purchase contract due 06/15/2024 and a 1/20 undivided beneficial ownership interest in a 1.18% remarketable senior notes due 2026 with a principal amount of $1000.00. The stock purchase contract requires the holder to purchase for $50 a variable number of shares of Algonquin Power & Utilities Corp. (NYSE:AQN) common stock no later than 06/15/2024 and pays a contract adjustment rate of 6.57% per annum. The stock purchase settlement rate will be 2.7778 shares per unit if the then current market price is equal to or greater than $18.00 and 3.3333 shares per unit if the market price is equal to or less than $15.00. For market prices between those values the settlement rate will be $50 divided by the market value. Prior to the IPO of this security, the last reported sale price of the common stock on 06/15/2021 was $16.08 per share. The stock purchase contract may be settled any time at the holder’s option and the company will deliver 2.7778 shares of common stock for each purchase contract.
The 1.18% remarketable senior notes due 2026 is due 06/15/2026 and is subject to reset and remarketing between 03/13/2024 and 05/30/2024, with a final remarketing in a five day period ending on 06/13/2024. The 1.18% remarketable senior notes due 2026 are pledged as collateral to secure the holder's obligations under the stock purchase contract.
The Corporate Units pay quarterly distributions of 7.75% ($3.875 per annum on 3/15, 6/15, 9/15 & 12/15 to holders of record on the record date which will be 3/1, 6/1, 9/1, & 12/1 prior to the payment date (NOTE: the ex-dividend date is one business day prior to the record date).
Distributions paid by these securities are derived from interest paid on the underlying debt securities and therefore are NOT eligible for the preferential 15% to 20% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders.
The holder has the right at any time to convert the Corporate Units to Tresury Units by the substitution of a specified zero-coupon U.S. Treasury security for the 1.18% remarketable senior notes due 2026 and to later recreate Corporate Units.
The 1.18% remarketable senior notes due 2026 are unsecured and rank equally with the company's other unsecured senior indebtedness. This security was Not rated by Moody’s and Rated BB+ by S&P at the date of its IPO. See the IPO prospectus for extensive additional information on the equity units and their mandatory conversion provisions.
