Date Closed

July 16, 2024

Lead Office

Toronto

Value

150.00 Million CAD

On July 16, 2024, EQB Inc. closed its offering of C$150 million 8.000% Limited Recourse Capital Notes, Series 1 (Subordinated Indebtedness) (the “Notes”) in Canada. EQB Inc. is the 100% owner of Equitable Bank (the “Bank”), a Schedule 1 bank regulated by the Office of the Superintendent of Financial Institutions Canada.

The Notes bear interest at 8.000% annually, and are expected to mature on October 31, 2084. In connection with the issuance of the Notes, EQB Inc. issued Non-Cumulative 5-Year Fixed Rate Reset Preferred Shares, Series 5 (the "Series 5 Shares"), to be held by Computershare Trust Company of Canada, as trustee of EQB LRCN Limited Recourse Trust (the "Limited Recourse Trust"). In the case of non-payment of interest on or principal of the Notes when due, the recourse of each Note holder will be limited to that holder's proportionate share of the Limited Recourse Trust's assets held in respect of the Notes, which will consist of the Series 5 Shares, except in limited circumstances.

The gross proceeds from the sale of the Notes were used by EQB Inc. to acquire $150 million 8.001% Limited Recourse Capital Notes, Series 1 (Non-Viability Contingent Capital (NVCC)) (Subordinated Indebtedness) of the Bank (the "Bank Notes"). The Bank Notes are intended to qualify as additional Tier 1 capital of the Bank within the meaning of the regulatory capital adequacy requirements to which the Bank is subject. The proceeds to the Bank from the sale of the Bank Notes will be added to the Bank's general funds and will be utilized for general banking purposes, which may include the redemption of outstanding capital securities of the Bank, and/or the repayment of other outstanding liabilities of the Bank.

EQB Inc., headquartered in Toronto, Ontario, is a digital financial services company with $123 billion in combined assets under management and administration (as at April 30, 2024). It offers banking services through Equitable Bank, its wholly owned subsidiary.

McCarthy Tétrault advised EQB Inc. with a team led by Andrew Parker and Jo-Anna Brimmer that included Suzie Cusson, Samantha Pettinato, Jonathan Leung, Novalee Davy, Dan Schechner (Capital Markets), Kabir Jamal, Len Nesbitt and Adam Unick (Tax).