CALGARY, Alberta, Feb 24 (Reuters) - Manulife Financial Corp (MFC.TO), Canada’s largest insurance company, said on Tuesday it will issue as much as C$275 million ($222 million) of preferred shares to strengthen its balance sheet.
The move comes a day after Manulife denied reports it was poised to issue common stock, saying it remained well capitalized despite the sharp drop in its share price.
The company said it will issue eight million series 4 preferred shares at C$25 each to raise C$200 million.
Underwriters, led by RBC Capital Markets and CIBC World Markets, have the option of buying up to an additional 3 million of the preferreds for C$75 million more in gross proceeds, the company said.
The shares pay a noncumulative quarterly fixed dividend yielding 6.6 percent annually until June 19, 2014. They can be converted into floating rate class A preferred shares, series 5, on June 19 in the five years after that.
Manulife said on Monday that it would not raise common equity capital unless it needed to for a strategic transaction. But it said any deal would have to be beneficial to its shareholders and maintain its capital position.
Manulife common shares rose 97 Canadian cents, or nearly 8 percent, to C$13.50 on the Toronto Stock Exchange on Tuesday. They are down 65 percent in the past year.
$1-$1.24 Canadian Reporting by Jeffrey Jones; editing by Rob Wilson