Terms

Series

Class B Cumulative Redeemable Preferred Stock, Series 4

Liquidation Preference

$25.00

Coupon Rate

7.5%

Rate Type

Fixed

Annual Dividend

$1.88

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

January 21, 2025

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Indebtedness Of Chs, Any Future Capital Stock Designated As Senior With Approval Of Majority Of Class B Preferred Stock Holders; Pari Passu With: 8% Cumulative Redeemable Preferred Stock (Chscp), Class B Series 1 Preferred Stock (Chsco), Class B Series 2 Preferred Stock (Chscn), Class B Series 3 Preferred Stock (Chscm); Senior To: Patronage Refunds, Patrons' Equities, Any Class Or Series Of Capital Stock Designated As Junior By The Board Of Directors

Regulatory (Basel III) Call

No

Tax Classification

Other

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

18,000,000

Prospectus Summary

CHS Inc., a Minnesota agricultural cooperative, is offering 18,000,000 shares of its Class B Cumulative Redeemable Preferred Stock, Series 4 (NASDAQ: CHSCL), with a $25.00 liquidation preference and a fixed annual dividend rate of 7.500% ($1.875 per share per annum, or $0.46875 per quarter), payable quarterly on March 31, June 30, September 30, and December 31. The stock is perpetual with no stated maturity. Dividends are cumulative — meaning unpaid dividends accumulate as an obligation of CHS — but payment still requires Board declaration, so CHS can defer payments indefinitely, which is a meaningful credit risk for income investors. The Series 4 preferred ranks senior to patronage refunds and any junior-designated equity, and is pari passu with CHS's existing preferred series (8% CHSCP, Series 1 CHSCO, Series 2 CHSCN, and Series 3 CHSCM). It is subordinate to all outstanding indebtedness of CHS (approximately $1.3 billion of long-term debt as of November 2014) and to any future equity that holders of Class B preferred stock vote to permit as senior. As a cooperative, CHS does not have traditional common equity — the subordinate capital consists of patronage refunds and patrons' equities. There is no regulatory capital call provision, as CHS is not a bank. CHS may also issue future pari passu preferred without restriction. At a $25.00 issue price, the effective yield at par is 7.50%. Because CHS is a cooperative rather than a C-corporation in the traditional sense, dividends on this preferred stock are unlikely to qualify for the preferential 15%/20% qualified dividend income (QDI) rate for individual investors or the dividends-received deduction (DRD) for corporate holders — investors should consult the 'Material U.S. Federal Income Tax Considerations' section and their own tax advisors. Dividends are payable on March 31, June 30, September 30, and December 31. No explicit record date rule or dividend stopper blocking junior distributions is stated, but the Board retains full discretion to withhold payments for any reason, including debt covenant compliance or insufficient funds.

Summarized from the SEC prospectus filing.

Distribution History

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

There is no explicit dividend stopper provision; however, dividends are subject to Board declaration and may be withheld indefinitely even though they accumulate as an obligation of CHS.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 57 (Average)