S&C Advises Bank of Montreal in U.S.$750 Million Offering of Limited Recourse Capital Notes

Bank of Montreal (BMO) closed an SEC-registered offering of U.S.$750 million non-viability contingent capital (NVCC) Additional Tier 1 Limited Recourse Capital Notes, Series 5 (LRCNs) on July 17, 2024.

The LRCNs bear interest at a rate of 7.300% annually, payable quarterly, for the initial period ending, but excluding, November 26, 2034. Thereafter, the interest rate on the LRCNs will reset every five years at a rate equal to the prevailing 5-year U.S. Treasury Rate plus 3.01%. The LRCNs will mature on November 26, 2084. In connection with the issuance of the LRCNs, BMO issued 750,000 Non-Cumulative 5-Year Fixed Rate Reset Class B Preferred Shares, Series 54 (NVCC) to be held by Computershare Trust Company of Canada, as trustee for BMO LRCN Trust. In the case of non-payment of interest on or principal of the LRCNs when due, the recourse of each LRCN holder will be limited to that holder's proportionate share of the Limited Recourse Trust's assets, which will initially consist of Preferred Shares Series 54.

The offering followed BMO's inaugural SEC-registered offering of U.S.$1 billion LRCNs in March.

The S&C team advising Bank of Montreal as U.S. counsel included Mario Schollmeyer and Lilian Zhao. Eric Wang, Saul Brander and Vincent Lan advised on tax matters.