Thursday, January 15, 2009

TD Issues $1 billion of equity that is tax deductible......tell me this isn't an income trust or tax leakage?

Making a difference together? Please. TD Bank was nowhere in the income trust marketplace, since TD is no where in the retail brokerage industry in Canada. It was for this self serving reason that TD Bank applauded Flaherty's move to kill income trusts, because it resolves a deficiency in the TD Bank's business. Flaherty killed income trusts on the premise that distributions paid to unitholders on income trusts are paid from pretax cash flows. So how is this $1 billion issue by TD Capital Trust IV any different?

TD plans notes issues to raise $1 billion

January 15, 2009
By Megan Harman
Investment Executive

TD Capital Trust IV, a subsidiary of the Toronto-Dominion Bank, is issuing two different series of notes to raise $1 billion, the bank announced on Thursday.

TD Bank and TD Capital Trust IV entered into an agreement with a syndicate of underwriters led by TD Securities Inc. for the issue, which is expected to close Jan. 26.

The issue will include $550 million of TD Capital Trust IV series 1 notes due June 30, 2108, and $450 million of TD Capital Trust IV series 2 notes, due June 30, 2108

The bank intends to file a final prospectus for the offering with the securities regulators in each of the provinces and territories of Canada.

TD Bank anticipates the notes will qualify as tier 1 capital, with any capital over the 15% regulatory limit to be temporarily counted as tier 2B capital.

Interest on the series 1 notes will be payable semi-annually at a rate of 9.523% per year. Starting on June 30, 2019, and on every fifth anniversary thereafter until June 30, 2104, the interest rate will reset.

Interest on the series 2 will be payable semi-annually at a rate of 10.00% per year. Starting on June 30, 2039, and on every fifth anniversary thereafter until June 30, 2104, the interest rate will reset.

The notes are redeemable by the trust on or after June 30, 2014, in whole or in part.

TD Bank noted that in certain circumstances, the notes or interest may be automatically exchanged or paid by the issuance of non-cumulative Class A first preferred shares of the bank.

The notes will not be listed on any stock exchange.


Dr Mike said...

No doubt about it , it sure pays to be best buds with Jimmy!!

If you are a bank you get The taxpayers money by way of big Jim to buy your crappiest mortgages.

If you are a bank you can issue notes & deduct the interest paid to skin the taxpayer of a few more bucks all thanks to Jimmy the pirate.

Of course if you are Yellow Pages all bets are off--you become instantly shunned by Jim & forced to delist as a trust & return to a corporate structure in order to level some illusional playing field with the advantage ridden TD-like outfits.

If you are a Yellow Pages you have been handcuffed in your ability to grow --your ability to pay your owners has been hampered by the Flaherty as a favor to his personal buds like TD.

I guess the question becomes , how do you get to be best buds with Jim where the gentle hand of gov`t will keep you flush with cash.

I guess only the few at the top of the Conservative food chain have that answer.

Good luck to the rest of us.

Dr Mike.

Anonymous said...

Equity for regulatory purposes, debt for tax purposes, but only for the banks and insurance companies. Capital trust securities have been around for awhile, but the DoF turns a blind eye as long as this type of security does not comprise much of the capital of the issuer.

Why can't BCE issue capital trust securities!!!!!!