Algonquin Power & Utilities Corp. Announces Dividend Rates on Cumulative Rate Reset Preferred Shares, Series D, and Cumulative Floating Rate Preferred Shares, Series E

Rhea-AI Summary

Algonquin Power & Utilities Corp. announces dividend rates for its Series D and Series E Preferred Shares. The dividend rates for Series D and Series E Preferred Shares are determined based on government bond yields. Holders of Series D Preferred Shares will receive fixed cumulative preferential cash dividends, while holders of Series E Preferred Shares will receive floating rate cumulative preferential cash dividends. The announcement includes specific dividend rates for upcoming periods and conversion instructions for Series D Preferred Shares.

Insights

Financial Analyst

The announcement of Algonquin Power & Utilities Corp. regarding the dividend rates for its Series D and Series E Preferred Shares is a significant piece of information for current and potential investors. The reset of the dividend rate to 6.853% for Series D Preferred Shares, pegged to the 5-year Government of Canada bond yield plus a margin, is indicative of the company's approach to offering competitive returns in line with market interest rates. Similarly, the floating dividend rate for the Series E Preferred Shares at 8.261%, tied to the 3-month Government of Canada Treasury Bill yield, suggests a responsiveness to short-term interest rate changes.

These rates are crucial for income-focused investors who depend on dividends as a source of regular income. The reset and floating rates provide a hedge against interest rate volatility, which is particularly relevant in the current economic climate where interest rates have been subject to fluctuations. Investors will weigh the attractiveness of these rates against alternative investment opportunities, considering factors such as the stability of the company's cash flows, its credit rating and the overall health of the utility sector.

Market Research Analyst

From a market perspective, the adjustment of dividend rates for preferred shares can influence investor perception of Algonquin Power & Utilities Corp.'s financial health and its ability to sustain payments. The fact that the company has set the dividend rates above the benchmark government bond yields could be interpreted as a positive signal of its financial stability and a commitment to maintaining investor confidence.

Moreover, the option for Series D shareholders to convert to Series E shares introduces an element of flexibility that might appeal to investors seeking to capitalize on potential shifts in interest rates. The conversion deadline is also a critical date for the market, as it could impact the liquidity and market pricing of these preferred shares. The market will closely monitor the uptake of conversion offers to gauge investor sentiment towards fixed versus floating dividends in the current economic environment.

Legal Expert

From a legal standpoint, the adherence to the terms outlined for both Series D and Series E Preferred Shares is essential. The company must ensure compliance with the conditions set forth in the share prospectus, including the precise calculation of dividend rates and the strict observance of deadlines for conversion rights. Failure to comply could result in legal repercussions and damage to investor trust. The communication to beneficial owners of Series D Preferred Shares regarding the exercise of their conversion right underscores the importance of transparency and due process in corporate actions.

It is also important to note that the declaration of dividends is contingent upon board approval, reflecting the company's governance structure and the discretionary nature of dividend payments. Investors should be aware that while the rates are announced, actual dividends are not guaranteed and depend on the company's financial performance and strategic decisions by the board.

OAKVILLE, ON, March 4, 2024 /PRNewswire/ - Further to the news release of Algonquin Power & Utilities Corp. ("AQN" or the "Company") (TSX: AQN) (NYSE: AQN) dated February 20, 2024, the Company announced today the applicable dividend rates, determined as of March 1, 2024, for its Cumulative Rate Reset Preferred Shares, Series D (the "Series D Preferred Shares") and Cumulative Floating Rate Preferred Shares, Series E (the "Series E Preferred Shares").

With respect to any Series D Preferred Shares that remain outstanding after April 1, 2024, holders thereof will be entitled to receive quarterly fixed cumulative preferential cash dividends, if, as and when declared by the board of directors of the Company (the "Board"). The dividend rate for the 5-year period from and including March 31, 2024 to but excluding March 31, 2029 will be 6.853%, being equal to the 5-year Government of Canada bond yield determined as of March 1, 2024 plus 3.28%, in accordance with the terms of the Series D Preferred Shares.

With respect to any Series E Preferred Shares that may be issued on April 1, 2024, holders thereof will be entitled to receive quarterly floating rate cumulative preferential cash dividends, if, as and when declared by the Board. The dividend rate for the 3-month floating rate period from and including March 31, 2024 to but excluding June 30, 2024 will be 8.261%, being equal to the 3-month Government of Canada Treasury Bill yield determined as of March 1, 2024 plus 3.28%, calculated on the basis of the actual number of days in such quarterly period divided by 365, in accordance with the terms of the Series E Preferred Shares.

Beneficial owners of Series D Preferred Shares who wish to exercise their conversion right should communicate with their broker or other nominee to ensure their instructions are followed so that the registered holder of the Series D Preferred Shares can meet the deadline to exercise such conversion right, which is 5:00 p.m. (EST) on March 18, 2024.

About Algonquin Power & Utilities Corp.

Algonquin Power & Utilities Corp., parent company of Liberty, is a diversified international generation, transmission, and distribution utility with approximately $18 billion of total assets. AQN is committed to providing safe, secure, reliable, cost-effective, and sustainable energy and water solutions through its portfolio of generation, transmission, and distribution utility investments to over one million customer connections, largely in the United States and Canada. In addition, AQN owns, operates, and/or has net interests in over 4 GW of installed renewable energy capacity.

AQN's common shares, preferred shares, Series A, and preferred shares, Series D are listed on the Toronto Stock Exchange under the symbols AQN, AQN.PR.A, and AQN.PR.D, respectively. AQN's common shares, Series 2019-A subordinated notes and equity units are listed on the New York Stock Exchange under the symbols AQN, AQNB, and AQNU, respectively.

Visit AQN at www.algonquinpower.com and follow us on Twitter @AQN_Utilities.

Caution Regarding Forward-Looking Information

Certain statements included in this press release constitute "forward-looking information" within the meaning of applicable securities laws in each of the provinces and territories of Canada and the respective policies, regulations and rules under such laws and "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). The words "will" and "expects" (and grammatical variations of such terms) and similar expressions are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Specific forward-looking statements in this press release include, but are not limited to, the declaration of quarterly dividends. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. AQN cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Forward-looking statements contained herein are provided for the purposes of presenting information about management's current expectations and plans relating to the future and such information may not be appropriate for other purposes. Material risk factors and assumptions include those set out in AQN's Annual Information Form and Management Discussion & Analysis for the year ended December 31, 2022, and in AQN's Management Discussion & Analysis for the three and nine months ended September 30, 2023, each of which is available on SEDAR+ and EDGAR. 

Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, AQN undertakes no obligation to update any forward-looking statements to reflect new information, subsequent or otherwise.

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SOURCE Algonquin Power & Utilities Corp.

FAQ

What dividend rates were announced for Algonquin Power & Utilities Corp.'s Series D Preferred Shares?

The dividend rate for the 5-year period from March 31, 2024, to March 31, 2029, will be 6.853%.

What type of dividends will holders of Series E Preferred Shares receive?

Holders of Series E Preferred Shares will receive quarterly floating rate cumulative preferential cash dividends.

When is the deadline for beneficial owners of Series D Preferred Shares to exercise their conversion right?

The deadline for exercising the conversion right for Series D Preferred Shares is 5:00 p.m. (EST) on March 18, 2024.