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More Preferred Debt (CAD $250M)


JEast
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I was actually thinking that the rate is not as good as what they obtained in the past.  Since the preferred issue is equity, not debt, it's not tax deductible.  The cost is 5% after tax, so before tax it would be 5%/(1-tax rate) or perhaps ~7.2%.  At this time last year, FFH was floating debt at 5.8%, which strikes me as a much better deal for them than the 5% preferreds.

 

 

SJ

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I was actually thinking that the rate is not as good as what they obtained in the past.  Since the preferred issue is equity, not debt, it's not tax deductible.  The cost is 5% after tax, so before tax it would be 5%/(1-tax rate) or perhaps ~7.2%.  At this time last year, FFH was floating debt at 5.8%, which strikes me as a much better deal for them than the 5% preferreds.

 

 

SJ

 

True on the tax effect. Maybe they are trying to maintain a debt/capital ratio for both themselves and the rating agencies.

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