Chemtrade announces $80 million public offering of convertible debentures
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TORONTO, March 4 /CNW/ - Chemtrade Logistics Income Fund (TSX: CHE:UN) ("Chemtrade" or the "Fund") today announced that it has entered into an agreement with a syndicate of underwriters led by Scotia Capital Inc. and BMO Capital Markets and including TD Securities Inc. pursuant to which the underwriters will purchase $80 million principal amount of convertible unsecured subordinated debentures (the "Debentures") at a price of $1,000 per Debenture. Chemtrade has also granted the underwriters an over-allotment option to purchase up to an additional $12 million aggregate principal amount of Debentures at the same price, exercisable in whole or in part at any time for a period of 30 days following closing.
The Debentures will mature on March 31, 2017 and will accrue interest at the rate of 6.0% per annum payable semi-annually in arrears on March 31 and September 30 in each year, commencing on September 30, 2010. At the holder's option, the Debentures may be converted into trust units of the Fund at any time prior to the earlier of the maturity date and the date of redemption specified by the Fund at a conversion price of $16.00 per unit. The Debentures will be direct, unsecured obligations of Chemtrade, subordinated to other indebtedness of the Fund and ranking equally with all other unsecured subordinated indebtedness.
The Debentures will not be redeemable before and including March 31, 2013. On or after April 1, 2013 and prior to April 1, 2015, Chemtrade may, at its option, redeem the Debentures in whole or in part provided that the volume weighted average trading price of the trust units of the Fund on the Toronto Stock Exchange during the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of redemption is given is not less than 125% of the conversion price. On or after April 1, 2015 and prior to the maturity date, Chemtrade may, at its option, redeem the Debentures, in whole or in part, from time to time at par plus accrued and unpaid interest.
Chemtrade will use the net proceeds of the offering to repay existing indebtedness under its credit facility and for general trust purposes.
Mark Davis, President and CEO of Chemtrade, said, "This financing strengthens our balance sheet and increases our financial flexibility. As the economy emerges from the recession, we believe there may be selective opportunities to build our operations through acquiring new businesses, and our enhanced financial position will enable us to act decisively in that regard."
The offering is scheduled to close on or about March 24, 2010 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange.
A preliminary short-form prospectus will be filed with securities regulatory authorities in all provinces of Canada, other than Quebec. The securities offered have not and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction.
Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world. Chemtrade is one of North America's largest suppliers of sulphuric acid, liquid sulphur dioxide and sodium hydrosulphite, and a leading processor of spent acid. Chemtrade is also a leading regional supplier of sulphur, sodium chlorate, phosphorous pentasulphide, and zinc oxide.
This news release contains certain statements which may constitute "forward-looking" statements within the meaning of certain securities laws, including the "safe harbour" provisions of the Securities Act (Ontario). The use of any of the words "anticipate", "continue", estimate", "expect", "expected", "intend", "may", "will", "project", "plan", "should", "believe" and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this news release describe the expectations of Chemtrade as of the date of this news release. Our actual results could be materially different from our expectations if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, we cannot guarantee that any forward-looking statement will materialize. Forward-looking statements do not take into account the effect that transactions or non-recurring items announced or occurring after the statements are made may have on our business. We disclaim any intention or obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.
This news release contains forward-looking statements about the objectives, strategies, financial condition, results of operations and businesses of the Fund, including, but not limited to:
- the Fund's use of net proceeds of the offering; - the occurrence of, and ability of the Fund to act upon, any acquisition opportunity; and - completion of the offering.
Further information can be found in the disclosure documents filed by Chemtrade Logistics Income Fund with the securities regulatory authorities, available at www.sedar.com.
For further information: Mark Davis, President and CEO, Tel: (416) 496-4176; Rohit Bhardwaj, Vice President Finance & CFO, Tel: (416) 496-4177
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