HSBC Bank Canada Completes Preferred Share Offering

On April 8, 2009, HSBC Bank Canada completed the offering of 10 million Non-Cumulative 5-year Rate Reset Class 1 Preferred Shares Series E, issued at a price of $25 per share, to raise gross proceeds of $250 million. The offering was made through a syndicate of underwriters led by HSBC Securities (Canada) Inc. and Scotia Capital Inc., and including RBC Dominion Securities Inc., TD Securities Inc., BMO Nesbitt Burns Inc., CIBC World Markets Inc., National Bank Financial Inc., Desjardins Securities Inc., Blackmont Capital Inc., Brookfield Financial Corp., Canaccord Capital Corporation, Dundee Securities Corporation and Raymond James Ltd. The underwriters exercised an option to purchase three million Preferred Shares Series E in addition to the seven million shares that they had previously agreed to purchase.

The Preferred Shares Series E entitle the holders to receive non-cumulative preferential fixed quarterly cash dividends, if, as and when declared by the board of directors of the bank, of 41.25 cents per share, to yield 6.60 per cent annually for the initial period ending June 30, 2014. Thereafter, the dividend rate will reset every five years at a rate equal to 4.85 per cent over the then five-year Government of Canada bond yield. Based on the closing date of April 8, 2009, the first dividend on the Preferred Shares Series E will be payable on June 30, 2009, in the amount of 37.62 cents per share. Subject to regulatory approval, on June 30, 2014, and on June 30 every five years thereafter, the bank may redeem the Preferred Shares Series E in whole or in part at par.

Holders of the Preferred Shares Series E will, subject to certain conditions, have the right to convert all, or any part of, their shares into Non-Cumulative Floating Rate Class 1 Preferred Shares Series F on June 30, 2014, and on June 30 every five years thereafter. Holders of the Preferred Shares Series F will be entitled to receive non-cumulative preferential floating rate quarterly cash dividends if, as and when declared by the board of directors of the bank, equal to the then three-month Government of Canada Treasury Bill yield plus 4.85 per cent.

HSBC Bank Canada was represented by Lynne Charbonneau, assistant general counsel of the bank, and by McCarthy Tétrault LLP with a team led by Michael Urbani (business law) and including Genevieve Pinto (business law); Jill Pereira and Corrie Stepan (financial services) and James Morand (tax).

The syndicate of underwriters was represented by Stikeman Elliott LLP with a team that included Philip J. Henderson and Chris MacIntyre (securities) and Trevor McGowan (tax).