Wellington Weekly

Wednesday Market Note (Incl. An ECM Update)

November 17, 2021

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Although there may be over one month to go in the calendar year until 2021 comes to a close, the capital markets typically close the second week of December. That means, we have under one month until the new issue market, and the broader markets for that matter, hit a standstill.

With that being said there was no shortage of deal flow in the new issue market this week, as companies tapped the capital markets at a ferocious pace, but notably across convert desks.

Mid-last week Pluribus closed its books for its public offering of subscription receipts, raising $25M plus the shoe. The deal was priced at $6.75 per share, and was managed by a syndicate of dealers including Canaccord Genuity, Scotia Capital, Desjardins, PI and Raymond James.

Flagship Communities hit the market following American Hotel’s debenture offering. The REIT raised $40M of units on a bought deal basis led by BMO Nesbitt. The syndicate included a flurry of retail-oriented dealers. A great niche real estate play focused on manufactured housing with regional footprint in stable markets. The REIT has a portfolio of 63 MHCs consisting of over 11K lots. The REIT pays a ~3% dividend yield and trades at just over 20x P/AFFO.

Up next we have NervGen Pharma Corp., a clinical stage biotech company. The company raised $9.2M of equity units via a bought deal led by IA Private Wealth. The book was majority retail filled, which is impressive in this environment - a transaction worth noting.

Lastly, the following names flooded the market with a flurry of convertible debenture new issues. Given all the transactions, I will be replacing my typical “Notable ECM Transactions” section, with the following convertible debenture transactions. One transaction worth noting is NFI Group. NFI hit the market with one of the largest convertible debenture transactions I have seen in a very long time, raising $300M. This structure is a convert arbitrageur’s dream - long the convert on a recovery name then lay in the hedges on the way up. NFI pays a dividend yield of 3.7%.

Timbercreek

• Offering Size: $40M (no OID)

• Price: 5% up 20% @ $9.48 strike

Dirtt Environmental

• Offering Size: $35M (no OID)

• Price: 6.25% up 35% @ $3.12 strike

Well Health Technologies

• Offering Size: $65M (no OID)

• Price: 5.50% up 40% @ $6.59 strike

Slate Office

• Offering Size: $75M (no OID)

• Price: 5.50% up 33% @ $ 5.13 strike

NFI Group Inc.

• Offering Size: $300M (no OID)

• Price: 5% up 20% @ $25.70 strike

American Hotel Inc.

• Offering Size: US$50M (no OID)

• Price: 6% up 30% @ $4.74 strike

Quarterhill

• Offering Size: $50M (no OID)

• Price: 6% up 35% @ $2.82 strike

Ag Growth

• Offering Size: $100M (no OID)

• Price: 5% up 60% @ $28.21 strike

Good Natured Products

• Offering Size: $15M (no OID)

• Price: 7% up 31% @ $0.81 strike

Cheers,

G.G.