Manulife Financial Corp. is planning Canadian public offering of Non-cumulative Rate Reset Class 1 Shares Series 1, the company said Monday.

Manulife will issue eight million Series 1 Preferred Shares priced at $25 per share to raise gross proceeds of $200 million.

The offering will be underwritten by a syndicate of investment dealers led by Scotia Capital Inc. and RBC Dominion Securities Inc. and is anticipated to qualify as Tier 1 capital for Manulife.

Approximately half of the net proceeds from the offering will be applied to reduce amounts outstanding under Manulife’s credit facility with Canadian chartered banks and the balance of the net proceeds will be utilized for general corporate purposes, the company says.

Manulife has also granted the underwriters an option to purchase up to an additional two million Series 1 Preferred Shares. The maximum gross proceeds raised under the offering will be $250 million should this option be exercised in full.

Holders of the Series 1 Preferred Shares will be entitled to receive a non-cumulative quarterly fixed dividend yielding 5.60% annually for the initial period ending Sept. 19, 2014. Thereafter, the dividend rate will be reset every five years at a rate equal to the 5-year Government of Canada bond yield plus 3.23%.

Holders of Series 1 Preferred Shares will have the right, at their option, to convert their shares into Non-cumulative Rate Reset Class 1 Shares Series, subject to certain conditions, on Sept. 19, 2014 and on September 19 every five years thereafter. Holders of the Series 2 Preferred Shares will be entitled to receive non-cumulative quarterly floating dividends at a rate equal to the three-month Government of Canada Treasury Bill yield plus 3.23%.

Manulife intends to file a prospectus supplement to its May 8, 2009 amended and restated base shelf prospectus in respect of this issue.

The expected closing date for the offering is June 3.

IE