Bank of Montreal 2015 Annual Report Download - page 156

Notes
During the year ended October 31, 2015, we did not issue any subordinated debt. During the year ended October 31, 2014, we issued $1.0 billion
of 3.12% subordinated debt under our Canadian Medium-Term Note Program. The issue, Series H Medium-Term Notes, Tranche 1, is due
September 19, 2024. The notes reset to a floating rate on September 19, 2019.
During the year ended October 31, 2015, we redeemed all of our outstanding $500 million Subordinated Debentures, Series C Medium-Term
Notes Tranche 2, at a redemption price of 100% of the principal amount plus unpaid accrued interest to the redemption date. During the year ended
October 31, 2014, we did not redeem any of our subordinated debt.
The term to maturity and repayments of our subordinated debt required over the next two years and thereafter are as follows:
(Canadian $ in millions, except as noted) Face value Maturity date Interest rate (%)
Redeemable at our
option beginning in
2015
Total
2014
Total
Debentures Series 16 100 February 2017 10.00 February 2012 (1) 100 100
Debentures Series 20 150 December 2025 to 2040 8.25 Not redeemable 150 150
Series C Medium-Term Notes
Tranche 2 500 April 2020 4.87 April 2015 –500
Series D Medium-Term Notes
Tranche 1 700 April 2021 5.10 April 2016 (2) 700 700
Series F Medium-Term Notes
Tranche 1 900 March 2023 6.17 March 2018 (3) 900 900
Series G Medium-Term Notes
Tranche 1 1,500 July 2021 3.98 July 2016 (4) 1,500 1,500
Series H Medium-Term Notes
Tranche 1 1,000 September 2024 3.12 September 2019 (5) 1,000 1,000
Total (6) 4,350 4,850
(1) Redeemable at the greater of par and the Canada Yield Price after their redemption date of February 20, 2012 until their maturity date of February 20, 2017.
(2) Redeemable at the greater of par and the Canada Yield Price prior to April 21, 2016, and redeemable at par commencing April 21, 2016.
(3) Redeemable at the greater of par and the Canada Yield Price prior to March 28, 2018, and redeemable at par commencing March 28, 2018.
(4) Interest on this issue is payable semi-annually at a fixed rate of 3.979% until July 8, 2016, and at a floating rate equal to the three-month Canadian Dealer Offered Rate (“CDOR”) plus 1.09%, paid
quarterly, thereafter to maturity. This issue is redeemable at par commencing July 8, 2016.
(5) Interest on this issue is payable semi-annually at a fixed rate of 3.12% until September 19, 2019, and at a floating rate equal to the three-month CDOR plus 1.08%, paid quarterly, thereafter to
maturity. This issue is redeemable at par commencing September 19, 2019.
(6) Certain amounts of subordinated debt were issued at a premium or discount and include fair value hedge adjustments which together increased their carrying value as at October 31, 2015 by
$66 million ($63 million in 2014); see Note 8 for further details. Subordinated debt that we repurchase is excluded from the carrying value.
Please refer to the offering circular related to each of the above issues for further details on Canada Yield Price calculations and the definition of CDOR.
Non-Viability Contingent Capital
The Series H Medium-Term Notes include a non-viability contingent capital provision, which is necessary for the notes issued after a certain date to
qualify as regulatory capital under Basel III. As such, the notes are convertible into a variable number of our common shares if OSFI announces that
the bank is, or is about to become, non-viable or if a federal or provincial government in Canada publicly announces that the bank has accepted or
agreed to accept a capital injection, or equivalent support, to avoid non-viability.
Note 16: Capital Trust Securities
We issue BMO Capital Trust Securities (“BMO BOaTS”) through our subsidiary BMO Capital Trust (the “Trust”). The proceeds of BMO BOaTS are used for
general corporate purposes. We consolidate the Trust, and the BMO BOaTS are reported in our Consolidated Balance Sheet as non-controlling interest
in subsidiaries. During the years ended October 31, 2015 and 2014, we did not issue any BMO BOaTS.
Holders of the BMO BOaTS are entitled to receive semi-annual non-cumulative fixed cash distributions as long as we declare dividends on our
preferred shares or, if no preferred shares are outstanding, on our common shares in accordance with our ordinary dividend practice.
Distribution
per BOaTS (1)
Redemption date Principal amount
(Canadian $ in millions, except Distribution) Distribution dates At the option of the Trust 2015 2014
BMO BOaTS
Series D June 30, December 31 27.37 December 31, 2009 –600
Series E June 30, December 31 23.17 (2) December 31, 2010 450 450
450 1,050
(1) Distribution paid on each trust security that has a par value of $1,000.
(2) After December 31, 2015, the distribution will be at the Bankers’ Acceptance Rate plus 1.5%.
Redemption by the Trust
On or after the redemption dates indicated above, and subject to the prior approval of OSFI, the Trust may redeem the securities in whole without the
consent of the holders.
During the year ended October 31, 2015, we redeemed all of our BMO BOaTS Series D at a redemption amount equal to $1,000 for an aggregate
redemption of $600 million, plus unpaid indicated distributions. During the year ended October 31, 2014, there were no redemptions. On
November 27, 2015, we announced our intention to redeem all of our BMO BOaTS Series E on December 31, 2015.
Conversion by the Holders
BMO BOaTS Series E cannot be converted at the option of the holders.
Automatic Exchange
The BMO BOaTS Series E will each be automatically exchanged for 40 Class B Non-Cumulative Preferred Shares of the bank, Series 12, without the
consent of the holders on the occurrence of specific events, such as a wind-up of the bank, a regulatory requirement to increase capital or violations
of regulatory capital requirements.
BMO Financial Group 198th Annual Report 2015 169