Terms

Series

Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3

Liquidation Preference

$25.00

Coupon Rate

6.75%

Rate Type

Fixed To Floating

Annual Dividend

$1.69

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

September 30, 2024

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Indebtedness Of Chs Inc., Any Future Senior Equity Capital Approved By 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); Senior To: Patronage Refunds, Patrons' Equities, Any Class Or Series Of Capital Stock Designated Junior By The Board Of Directors

Regulatory (Basel III) Call

No

Tax Classification

Other

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

19,000,000

Prospectus Summary

CHS Inc., a Minnesota agricultural cooperative, is issuing 19,000,000 shares of its Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3 (NASDAQ: CHSCM) at a $25.00 liquidation preference. The stock pays a fixed dividend of 6.75% per annum ($1.6875/share annually, $0.421875 quarterly) through September 29, 2024, then resets quarterly to 3-month LIBOR plus 415.5 basis points, capped at 8.00% per annum. The security is cumulative, meaning any dividends the Board elects not to declare accumulate and must be paid before any distributions to junior securities — but the Board retains full discretion on timing of actual payment. The Series 3 Preferred ranks pari passu with CHS's existing preferred issues — the 8% Cumulative Redeemable Preferred (CHSCP), Class B Series 1 (CHSCO), and Class B Series 2 (CHSCN) — and is senior only to patronage refunds, patrons' equities, and other junior-designated equity. It is structurally subordinate to all indebtedness of CHS (approximately $1.3 billion in long-term debt as of May 31, 2014). There is no regulatory capital call provision, as CHS is a cooperative and not a bank. Future senior preferred stock may be issued with majority Class B holder consent, which could further subordinate this series. At the $25.00 offering price, the initial yield is exactly 6.75%, with quarterly payments on March 31, June 30, September 30, and December 31 (commencing December 31, 2014). Because CHS is a cooperative rather than a C-corporation, dividends are unlikely to qualify for the preferential 15%/20% qualified dividend income (QDI) rate or the corporate dividends-received deduction (DRD) — investors should consult their tax advisors. The prospectus notes redemption is a taxable event. There is no formal dividend stopper mechanism, but the Board may suspend payments indefinitely for any reason; accumulated but unpaid dividends must be satisfied before junior distributions resume.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

There is no explicit dividend stopper provision blocking junior security dividends; however, the Board of Directors must declare dividends and may decline to pay them for any reason, including debt covenant restrictions or legal prohibitions on distributions.

Div Score Breakdown

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