Park Lawn Corporation and Premium Brands Holdings Corporation

Hi,

I would like to know what you think about the new emission from Park Lawn Corporation and Premium Brands Holdings Corporation. Not sure exactly what both of them mean.

Premieum brand offer Convertible Unsecured Subordinated Debentures at $1,000 for a minimum of 5,000$ at 4.20% per annum payable semi-annually and ending in 2027.

As for Park Lawn they offer Senior Unsecured Debentures at $1,000 for a minimum of 5,000$ at 5,75% per annum payable semi-annually and ending in 2025.

Is this kinda link bond ? Why are they offering this instead only normal action ?

thanks for educating me a bit more 🙂

Sébastien

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Asked on June 25, 2020 7:52 pm

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Private answer

Allo Sebastien,

Yes, a debenture is like a bond. In this environment, companies are raising cash at pretty healthy clip. Typically, proceeds are used for general ops, or to make acquisitions. Nothing to be concerned about here, it is par for the course for many of these companies.

There is a slight difference between the two however. A convertible debenture, means it can be converted into common stock. In Premium Brands case, they can be "converted into common shares at a conversion price of $142.40 per common share, being a conversion rate of 7.0227 common shares for each $1,000 principal amount of Debentures."

In this case, PBH's offering may be dilutive to current shareholders if debentures are converted to shares. In PLC's case it is not, as they are not convertible.

Worth noting, PBH has announced a share offering at the same time at a price of $86.30 per share. This means, that the company's share price is likely to hover around here until the new shares are absorbed by the markets.

Hope this clarifies.

Mat

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Posted by Mathieu Litalien

Answered on June 26, 2020 5:54 am

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