TD Bank 2014 Annual Report Download - page 187

TD BANK GROUP ANNUAL REPORT 2014 FINANCIAL RESULTS 185
5-Year Rate Reset Preferred Shares, Series 3
On July 31, 2014, the Bank issued 20 million non-cumulative 5-Year
Rate Reset Preferred Shares, Series 3 (Series 3 shares) for gross cash
consideration of $500 million. Quarterly non-cumulative cash dividends,
if declared, will be paid at a per annum rate of 3.80% for the initial
period from and including July 31, 2014, to but excluding July 31,
2019. Thereafter, the dividend rate will reset every five years to equal
the then five-year Government of Canada bond yield plus 2.27%.
Holders of the Series 3 shares will have the right to convert their shares
into non-cumulative Floating Rate Preferred Shares, Series 4 (Series 4
shares), subject to certain conditions, on July 31, 2019, and on July 31
every five years thereafter and vice versa. The Series 3 shares are
redeemable by the Bank for cash, subject to regulatory consent, at
$25 per share on July 31, 2019, and on July 31 every five years there-
after. If the NVCC Provisions were to be triggered, the maximum
number of common shares that could be issued based on the formula
for conversion applicable to the Series 3 shares, and assuming there
are no declared and unpaid dividends on the Series 3 shares or Series 4
shares, as applicable, would be 100 million.
NORMAL COURSE ISSUER BID
On June 19, 2013, the Bank announced that the Toronto Stock
Exchange (TSX) approved the Bank’s normal course issuer bid to repur-
chase, for cancellation, up to 24 million of the Bank’s common shares.
The bid commenced on June 21, 2013, and expired in accordance
with its terms in June 2014. During the year ended October 31, 2014,
the Bank repurchased 4 million common shares under this bid at an
average price of $54.15 for a total amount of $220 million. During
the year ended October 31, 2013, the Bank repurchased 18 million
common shares under this bid at an average price of $43.25 for a
total amount of $780 million.
DIVIDEND REINVESTMENT PLAN
The Bank offers a dividend reinvestment plan for its common
shareholders. Participation in the plan is optional and under the
terms of the plan, cash dividends on common shares are used to
purchase additional common shares. At the option of the Bank, the
common shares may be issued from the Bank’s treasury at an average
market price based on the last five trading days before the date of
the dividend payment, with a discount of between 0% to 5% at the
Bank’s discretion, or from the open market at market price. During
the year, 6.4 million common shares at a discount of 0% were issued
from the Bank’s treasury (2013 – 6.5 million shares at a discount of
1% and 5.6 million common shares at a discount of 0%) under the
dividend reinvestment plan.
DIVIDEND RESTRICTIONS
The Bank is prohibited by the Bank Act from declaring dividends on
its preferred or common shares if there are reasonable grounds for
believing that the Bank is, or the payment would cause the Bank to be,
in contravention of the capital adequacy and liquidity regulations of
the Bank Act or directions of OSFI. The Bank does not anticipate that
this condition will restrict it from paying dividends in the normal course
of business.
The Bank is also restricted from paying dividends in the event that
either Trust III or Trust IV fails to pay semi-annual distributions or inter-
est in full to holders of their respective trust securities, TD CaTS III and
TD CaTS IV Notes. In addition, the ability to pay dividends on common
shares without the approval of the holders of the outstanding preferred
shares is restricted unless all dividends on the preferred shares have
been declared and paid or set apart for payment. Currently, these
limitations do not restrict the payment of dividends on common shares
or preferred shares.