BCE reports results of Series AE and AF Preferred Share conversions

Rhea-AI Summary

BCE Inc. has announced the results of its Series AE and AF Preferred Share conversion process. On February 1, 2025, 8,050 of 8,779,487 fixed-rate Series AF Preferred Shares will convert to floating-rate Series AE Preferred Shares, while 2,479,334 of 5,810,913 Series AE Preferred Shares will convert to Series AF Preferred Shares.

Following these conversions, there will be 11,250,771 Series AF Preferred Shares and 3,339,629 Series AE Preferred Shares outstanding. Both series will continue trading on the Toronto Stock Exchange under BCE.PR.F and BCE.PR.E symbols respectively. The Series AF shares will pay quarterly fixed dividends at an annual rate of 5.496% for the next five years, while Series AE shares will continue paying monthly floating adjustable dividends based on the prime rate.

Positive

• Fixed annual dividend rate of 5.496% established for Series AF Preferred Shares
• Both preferred share series maintain Toronto Stock Exchange listing

Negative

• None.

Insights

Financial Markets Analyst

BCE's preferred share conversion announcement reveals strategic positioning in their capital structure. The conversion rates - with 8,050 Series AF shares converting to AE and 2.48M Series AE converting to AF - show investors' clear preference for fixed-rate shares in the current market environment. The new 5.496% annual fixed dividend rate for Series AF shares appears attractive compared to the floating rate alternative.

The net result increases fixed-rate Series AF shares to 11.25M while reducing floating-rate Series AE shares to 3.34M. This shift demonstrates shareholders' risk-averse stance, preferring predictable fixed returns over variable rates tied to the prime rate. For BCE, this provides more certainty in dividend obligations while maintaining flexibility through the remaining floating-rate shares.

For retail investors wondering about the implications: Think of this like homeowners choosing between fixed and variable rate mortgages. Most are currently opting for the certainty of fixed rates, expecting interest rates to remain elevated. The 5.496% yield is particularly compelling given BCE's strong market position and investment-grade rating.

Corporate Finance Expert

The mechanics of this preferred share conversion reflect sophisticated capital management by BCE. The relatively low conversion rate from fixed to floating (only 8,050 Series AF shares) versus the substantial conversion to fixed-rate (2.48M Series AE shares) indicates strong market sentiment about future interest rate trajectories. This creates a more predictable cost structure for BCE's preferred share component.

From a balance sheet perspective, this reconfiguration maintains the same total preferred share count while optimizing the fixed-to-floating ratio. The 5.496% fixed rate for Series AF strikes a balance between attractive investor returns and manageable corporate costs. The continued floating rate structure for Series AE shares, based on prime rate plus an adjustment factor, provides BCE with natural interest rate hedging for a portion of their preferred share obligations.

MONTRÉAL, Jan. 21, 2025 /PRNewswire/ - BCE Inc. (TSX: BCE) (NYSE: BCE) today announced that 8,050 of its 8,779,487 fixed-rate Cumulative Redeemable First Preferred Shares, Series AF ("Series AF Preferred Shares") have been tendered for conversion on February 1, 2025, on a one-for-one basis, into floating-rate Cumulative Redeemable First Preferred Shares, Series AE ("Series AE Preferred Shares"). In addition, 2,479,334 of its 5,810,913 Series AE Preferred Shares have been tendered for conversion on February 1, 2025, on a one-for-one basis, into Series AF Preferred Shares. Consequently, excluding any Series AE Preferred Shares and Series AF Preferred Shares that may be purchased for cancellation by BCE pursuant to its normal course issuer bid between January 21, 2025 and February 1, 2025, 11,250,771 Series AF Preferred Shares and 3,339,629 Series AE Preferred Shares would be issued and outstanding on February 1, 2025. The Series AF Preferred Shares and the Series AE Preferred Shares will continue to be listed on the Toronto Stock Exchange under the symbols BCE.PR.F and BCE.PR.E, respectively.

The Series AF Preferred Shares will pay on a quarterly basis, for the five-year period beginning on February 1, 2025, as and when declared by the Board of Directors of BCE, a fixed cash dividend based on an annual fixed dividend rate of 5.496%.

The Series AE Preferred Shares will continue to pay a monthly floating adjustable cash dividend for the five-year period beginning on February 1, 2025, as and when declared by the Board of Directors of BCE. The monthly floating adjustable dividend for any particular month will continue to be calculated based on the prime rate for such month and using the Designated Percentage for such month representing the sum of an adjustment factor (based on the market price of the Series AE Preferred Shares in the preceding month) and the Designated Percentage for the preceding month.

About BCE

BCE is Canada's largest communications company,¹ providing advanced Bell broadband Internet, wireless, TV, media and business communications services. To learn more, please visit Bell.ca or BCE.ca.

Through Bell for Better, we are investing to create a better today and a better tomorrow by supporting the social and economic prosperity of our communities. This includes the Bell Let's Talk initiative, which promotes Canadian mental health with national awareness and anti-stigma campaigns like Bell Let's Talk Day and significant Bell funding of community care and access, research and workplace initiatives throughout the country. To learn more, please visit Bell.ca/LetsTalk.

1 Based on total revenue and total combined customer connections.

Media inquiries

Ellen Murphy
media@bell.ca 

Investor inquiries

Richard Bengian
Richard.bengian@bell.ca 

View original content:https://www.prnewswire.com/news-releases/bce-reports-results-of-series-ae-and-af-preferred-share-conversions-302355835.html

SOURCE Bell Canada (MTL)

FAQ

What is the new dividend rate for BCE Series AF Preferred Shares starting February 2025?

BCE Series AF Preferred Shares will pay a fixed annual dividend rate of 5.496% for the five-year period beginning February 1, 2025.

How many BCE Series AF Preferred Shares will be outstanding after February 1, 2025?

After the conversion, 11,250,771 BCE Series AF Preferred Shares will be outstanding.

How many BCE Series AE Preferred Shares will be outstanding after February 1, 2025?

After the conversion, 3,339,629 BCE Series AE Preferred Shares will be outstanding.

How is the dividend calculated for BCE Series AE Preferred Shares?

BCE Series AE Preferred Shares pay a monthly floating adjustable dividend calculated based on the prime rate and a Designated Percentage that includes an adjustment factor based on market price.