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National Bank of Canada (“National Bank” or the “Bank”) today announced that it has entered into an agreement with a group of agents led by National Bank Financial Inc. for the issuance of $500 million of Limited Recourse Capital Notes, Series 3 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) (the “Notes”).
The Notes will bear interest at a rate of 7.500% annually, payable semi-annually, for the initial period ending on but excluding November 16, 2027. Thereafter, the interest rate on the Notes will reset every 5 years at a rate equal to the prevailing 5-year Government of Canada Yield plus 4.281%. The Notes will mature on November 16, 2082.
Concurrently with the issuance of the Notes, National Bank will issue Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares, Series 46 (Non-Viability Contingent Capital (NVCC)) (the “Series 46 Preferred Shares”) to be held by Computershare Trust Company of Canada as trustee for NBC LRCN Limited Recourse Trust (the “Limited Recourse Trust”). In case of non-payment of interest on or principal of the Notes when due, the recourse of each Note holder will be limited to that holder’s proportionate share of the Limited Recourse Trust’s assets in respect of the Notes, which will consist of Series 46 Preferred Shares except in limited circumstances.
National Bank may redeem the Notes during the period from October 16 to and including November 16, commencing in 2027 and every 5 years thereafter, only upon the redemption by National Bank of the Series 46 Preferred Shares held in the Limited Recourse Trust, in accordance with the terms of such shares and with the prior written approval of the Superintendent of Financial Institutions (Canada), in whole on not less than 10 nor more than 60 days’ prior notice.
The net proceeds from the sale of the Notes will be added to National Bank’s general funds and will be utilized for general banking purposes. It is expected that closing will take place on September 8, 2022. National Bank intends to file in Canada a prospectus supplement to its August 22, 2022 base shelf prospectus in respect of this issue.
The Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or under any state securities laws, and may not be offered, sold, directly or indirectly, or delivered within the United States of America and its territories and possessions or to, or for the account or benefit of, United States persons except in certain transactions exempt from the registration requirements of such Act. This press release shall not constitute an offer to sell or a solicitation to buy securities in the United States.