Bank of Nova Scotia plans to raise $200 million in a public offering of preferred shares, the bank said Wednesday.

Scotiabank said it will issue eight million Series 26 preferred shares at $25 per share, as part of the bank’s “ongoing and proactive management of its Tier 1 capital structure.”

Holders of Preferred Shares Series 26 will be entitled to receive a non-cumulative quarterly fixed dividend for the initial period ending April 25, 2014 yielding 6.25% per year, when declared by the board of directors of Scotiabank. Thereafter, the dividend rate will reset every five years at a rate equal to 4.14% over the five-year Government of Canada bond yield.

Shareholders will, subject to certain conditions, have the right to convert all or any part of their shares to non-cumulative floating rate preferred shares Series 27 of Scotiabank on April 26, 2014 and on April 26 every five years thereafter.

Holders of the Preferred Shares Series 27 will be entitled to receive a non-cumulative quarterly floating dividend at a rate equal to the three-month Government of Canada Treasury Bill yield plus 4.14%, as and when declared by the Scotiabank board. Holders of Preferred Shares Series 27 will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series 26 on April 26, 2019 and on April 26 every five years thereafter.

Scotiabank has agreed to sell the Preferred Shares Series 26 to a syndicate of underwriters led by Scotia Capital Inc. on a bought deal basis. The bank has granted to the underwriters an option to purchase up to an additional three million Preferred Shares Series 26 at closing, which option is exercisable by the underwriters any time up to 48 hours before closing.

Closing is expected to occur on January 21.

IE