Consistent Earnings Growth and Digital Engagement
Limited Recourse Capital Notes (LRCN)
LRCN Overview
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ID
▪ LRCN holders' interests rank equally with other LRCNs and Preferred Shares and are senior to common shares. LRCNs
are issued only to institutional investors with no trading restrictions within the US nor, after 4 months, within Canada
LRCNs qualify as AT1 capital, while being tax deductible for banks. LRCNs are not currently subject to withholding tax
and pay Additional Amounts if withholding tax is levied in the future (LRCNs only, not on recourse assets)
■ Limited Recourse: Upon a Recourse Event, investors in LRCNs have recourse only to the assets held in the Trust, initially
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Preferred Shares 108; TD can also exchange the Preferred Shares into AT1 perpetual debt, subject to OSFI approval
Recourse Events are defined as follows:
1. Non-payment in cash of interest (5 business day cure right) 4. Event of Default (bankruptcy, insolvency or liquidation)
2. Non-payment in cash of the principal on the maturity date
3. Non-payment of redemption proceeds in cash
5. A Trigger Event 109
LRCN Structure
1
Proceeds
LRCN
Investors
TD
(Issuer)
LRCNs
2
Preferred
Shares
Trust
1
TD (Issuer)
2
■ TD issues LRCNs to investors and receives proceeds in return
Coupon payments are paid by TD, generated through internal cash flow
Limited Recourse Trust (Trust)
■ The Trust is established by TD and acquires Non-Cumulative 5-Year
NVCC Fixed Rate Reset Preferred Shares from TD ("LRCN Preferred
Shares")
■
Upon a Recourse Event, the Limited Recourse assets held in the Trust
are delivered to investors
■ The dividend rate (including reset spread and benchmark reference)
and payment frequency on the LRCN Preferred Shares match LRCNs
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