Manulife Financial Corporation (MFC) has announced a Canadian public offering of 8 million Non-cumulative Rate Reset Class 1 Shares Series 3 (Series 3 Preferred Shares) shares. The company priced the shares at C$25 per share. The sale proceeds of C$200 million will be used for general corporate purposes, including investments in subsidiaries.

The Preferred Share holders will receive a non-cumulative quarterly fixed dividend yielding 4.20% annually for the initial period ending June 19, 2016. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 1.41%.

Also, Series 3 Preferred Shareholders will have the right to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series 4 (Series 4 Preferred Shares) subject to conditions, on June 19, 2016 and on June 19 every five years thereafter.

Holders of the Series 4 Preferred Shares will also be entitled to receive non-cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 1.41%.

At the end of 2010, Manulife had $1.39 (C$1.4) billion of preferred share capital and paid preferred dividend of $19.4 (CS20) million in 2010. With the issuance, Manulife will have to dish out C$8.4 million more in dividends annually.

Recently, Manulife reported its fourth-quarter 2010 adjusted operating earnings of 59 cents per share, lower than 47 cents reported in the prior-year quarter. The Zacks Consensus Estimate for first-quarter 2011 is 52 cents per share. For full years 2011 and 2012, the Zacks Consensus Estimates are, respectively, $1.68 per share and $1.80 per share.

Manulife’s strong franchise in the Asian markets, solid wealth management, pension and other products offered in the United States and Canada and repositioning of business will help the company post better results in the upcoming quarters.

The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.

Headquartered in Toronto, Canada, Manulife Financial operates as a life insurance company. The company also offers reinsurance services. The company functions as Manulife Financial in Canada and Asia and primarily as John Hancock in the United States. The company competes with MetLife Inc. (MET).

 
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