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Greetings,

I have been on the lookout for some preferred shares and this just popped up:

Power Financial Corporation
Perpetual Non-Cumulative First Preferred Shares, Series O


Issuer: Power Financial Corporation

Issue: Non-Cumulative First Preferred Shares, Series O

Use of Proceeds:

The net proceeds will be used to supplement the Corporation’s financial resources and for general corporate purposes.

Dividends:

5.80% per annum, payable quarterly on a non-cumulative basis on the last day of January, April, July, and October in each year. The initial dividend will be paid on January 31, 2010 and will be $0.45288 per Preferred Share based on an anticipated closing date of October 9, 2009.

Ratings:
S&P: P-1(Low)
DBRS: Pfd-1(low)

Listing:

An application will be made to list the Preferred Shares on the Toronto Stock Exchange.

You can review the complete preliminary prospectus here.

About the Offering

Issuer: Power Financial Corporation
Issue: Non-Cumulative First Preferred Shares, Series O
Price: $25.00
Sizing: $150,000,000 (6,000,000 Preferred Shares ).
Closing: October 9, 2009
Unfortunately, this is one of those "bought" deals so no prospectus is available.
However, it looks like unlike most recent issues, this is not a rate-reset pegged to one of the Govt. bond rates.
The 5.8% appears to be fixed.
So with rising interest rates, these shares could really drop in value like a rock.
OTOH, 5.8% is attractive as per current rates.
Am I reading this correctly?
 
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