Sun Life Financial Inc. (TSX: SLF) is planning a Canadian public offering of $250 million of preferred shares,

The net proceeds of the offering will be used for general corporate purposes, Sun Life said. They are expected to qualify as Tier 1 capital of Sun Life Financial Inc. under current capital adequacy guidelines established by the Office of the Superintendent of Financial Institutions.

The Class A Non-Cumulative Rate Reset Preferred Shares Series 8R will be issued to the public at $25 per share and holders will be entitled to receive non-cumulative preferential fixed quarterly dividends for the initial period ending June 30, 2015. The quarterly dividend will be 27.1875¢ per share, to yield 4.35% annually.

On June 30, 2015, and every five years thereafter, the dividend rate will reset at a rate equal to the 5-Year Government of Canada bond yield plus 1.41%.

Subject to certain conditions, holders may elect to convert any or all of their Series 8R Shares into an equal number of Class A Non-Cumulative Floating Rate Preferred Shares Series 9QR on June 30, 2015 and on the 30th of June every fifth year following. Holders of the Series 9QR Shares will be entitled to receive non-cumulative preferential floating rate quarterly dividends equal to the then 3-month Government of Canada Treasury Bill yield plus 1.41%.

The offering will be underwritten by a syndicate led by Scotia Capital Inc., RBC Dominion Securities Inc. and TD Securities Inc. on a bought deal basis, and is expected to close on May 25.

The underwriters have been granted an option to purchase up to an additional $50 million of the Series 8R Shares exercisable at any time up to two business days before closing. The maximum gross proceeds raised under the offering will be $300 million if this option is exercised in full.

Subject to regulatory approval, Sun Life may redeem the Series 8R Shares in whole or in part on June 30, 2015 and on the 30th of June every five years following.

An application is being made to list the shares on the Toronto Stock Exchange.

IE