West Edmonton Mall Property Inc. (WEMPI) raised gross proceeds of $900 million by way of a private placement offering comprised of an aggregate principal amount of $350 million 4.309 per cent first mortgage 10-year interest-only Series B1 bonds and an aggregate principal amount of $550 million 4.056 per cent first mortgage 10-year amortizing Series B2 bonds. The financing is the largest first mortgage bond offering in Canada to date and achieved credit ratings of A by DBRS Limited and A2 by Moody's Investor Services, Inc.
WEMPI owns the West Edmonton Mall located in Edmonton, Alberta.
An unusual feature for the structure of this transaction, seldom seen in Canada, was the inclusion of an advancing servicer. Such inclusion required extensive multi-party negotiations for settlement of various documentation, including a servicing agreement, cash management agreement and blocked accounts agreement.
RBC Dominion Securities Inc., TD Securities Inc. and Scotia Capital Inc. acted as agents in connection with the offering.
In order to proceed with such private placement of first mortgage bonds, WEMPI completed a defeasance of approximately $600 million of its 5.66 per cent first mortgage bonds due September 2016, that were secured by the mall. The defeasance was accomplished by providing substitute security for the mall in the form of a portfolio of Government of Canada obligations. The government obligations were sufficient in amount and yield to fully amortize such existing first mortgage bonds.
WEMPI was advised by Fasken Martineau DuMoulin LLP with a team led by Jon Levin with Bruce Blain, Alex Nikolic, Laura Fetter and Jesse Bertollo (corporate and capital markets). Donald Neeland and Danielle Bourgeois of Field LLP acted as Alberta counsel for WEMPI, while Edwin Lauren-son and John Sullivan (finance) and John Lutz (tax) of McDermott Will & Emery LLP acted as US counsel.
McCarthy Tétrault LLP represented the agents for the offering with a team of John Currie, William McCullough, Patrick Kee, James Morand, Andrew Parker, David Badour, Leila Rafi, Mark Christensen and Elizabeth Rafferty. Jason Lehner, Ethan Siller and Drew Valentine of Shearman & Sterling LLP acted as US counsel to the agents.
The servicer for the defeased bonds, Midland Loan Services, a division of PNC Bank, National Association, was represented by Robert Antenore and Stephanie Robinson of McMillan LLP.
The trustee for the defeased bonds and the new 10-year bonds, Computershare Trust Company of Canada, was represented by its internal legal team, which included Sol Kafai and Sean Pigott. The servicer for the new 10-year bonds, Midland Loan Services, a division of PNC Bank, National Association, was represented by Kenda Tomes and Patrick Calland of Stinson Leonard Street LLP.