CHS (Cenex Harvest States) has released their quarterly report for the period ending 5/31/2023 and while earnings were off just a bit from the year ago quarter their 9 months earnings were quite stellar.
The company has numerous preferreds outstanding which can be seen here.
Thanks to J for posting this late last night.
This language from the 10-Q should detail why they aren’t redeeming the preferreds.
Expecting to pay 168 million in dividends means they are keeping all of them outstanding until at least August 30, 2023, when they move into fiscal 2024. The reason seems to be paying off the common holders who want to redeem their stakes.
Page 43
Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding as of May 31, 2023. We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal 2023. Dividends paid on our preferred stock during the nine months ended May 31, 2023, were $126.5 million.
•Patronage. Our Board of Directors has authorized approximately $500.0 million of our fiscal 2022 patronage-sourced earnings to be paid to our member-owners during fiscal 2023. During the nine months ended May 31, 2023, we distributed $502.9 million of cash patronage related to the year ended August 31, 2022.
•Equity redemptions. Our Board of Directors has authorized equity redemptions of up to $500.0 million to be distributed in fiscal 2023 in the form of redemptions of qualified and nonqualified equity owned by individual producer-members and association members. During the nine months ended May 31, 2023, we redeemed $480.4 million of member equity.
Do I understand correctly that what CHS calls a reset issue is actually FTF? (This is based on looking at QOL rather than the prospectuses.)
Yep, its a fixed to float. They can get a pass here, because 8-10 years when this was issued resets werent around in US (they were starting to become the norm in CAD then though). So no one really gave it much thought back then.
Dates of interest…
P 7/23
O 9/23
N 3/24
M 9/24
L 1/25
Keep those dates in mind
Nice – I have been accumulating CHSCL and CHSCN, having gotten only 100 of the former at $24.88 (on 10/10/22) before it rose well above par. The CHSCN, I was able to accumulate 500 shares at an average of $24.80 (on 5/1/23). I was hoping to get a total of 1000 shares in both combined so still looking to pick up 400 or so on a pullback. Looking to hold on to them for a while or until called away.
I’ve been holding CHSCL, CHSCN and M for several months, bought just below par. Looking to add to N if it dips enough below 25. Given interest rate projections for 2024 it would reset at 8% March 2024. Even M would still be at or close to 8% in Sept 2024 but N is my focus for adds now.
Any other resets from other companies worth looking into?
AH – does CHSCL have a reset? I could not find in the prospectus. I’m thinking it does not have a reset provision like the others.
CHSCL is fixed, which is why it trades at a higher premium to par. I’ll add if drops close to 25. For CHSCN I’m only willing to add below 25
Not much market reaction, prices down just a shade.
Trying to buy more CHSCO if it dips below 25.80, it’s a reasonable bet