Premium Brands Announces Cornerstone Investment from CPPIB
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VANCOUVER, May 21, 2019 /CNW/ - Premium Brands Holdings Corporation ("Premium Brands" or the "Company") (TSX:PBH) is pleased to announce that it has completed a private placement of 2,631,000 common shares from treasury to Canada Pension Plan Investment Board ("CPPIB") at a price of $76.02 per common share for aggregate gross proceeds of approximately $200 million (the "CPPIB Private Placement"). This is based on a 1.5% discount to the five-day volume-weighted average trading price of the Company's common shares as of the close of trading on May 17, 2019.
Premium Brands intends to use the net proceeds of the CPPIB Private Placement to repay debt, finance organic and acquisition growth opportunities and for general corporate purposes.
Strategic Rationale
- Long-Term Strategic Partner – CPPIB has a strong track record of supporting long-term value creation in its investments both within Canada and internationally.
- Strengthened Financial Position – Based on the Company's unutilized credit capacity as at March 30, 2019, together with the net proceeds of the CPPIB Private Placement and the Concurrent Financing (as defined herein), the Company expects to have approximately $416 million of liquidity to support its organic and acquisition growth opportunities.
"We are very pleased to be entering into this long-term partnership with CPPIB as we embark on the next stage of our growth strategy," said George Paleologou, President and CEO of Premium Brands. "As we have expanded our footprint across North America our pipeline of acquisition and organic growth opportunities has scaled dramatically. By partnering with CPPIB not only do we better position ourselves to execute on these opportunities but we also secure a long term focused shareholder who shares our values and vision for the future. Furthermore, we gain access to the insights of a leading global investor, which will become increasingly important as we start to look beyond North America," added Mr. Paleologou.
"Premium Brands' strong track record of value creation, combined with its opportunities to expand its portfolio in Canada and the U.S., make this a compelling investment for CPPIB," said Deborah Orida, Senior Managing Director & Global Head of Active Equities, CPPIB. "This investment builds on our Relationship Investments group's strategy to provide strategic, long-term capital to leading public companies where we can help create greater value through ongoing partnership," added Ms. Orida.
Details of the CPPIB Private Placement
The common shares of Premium Brands issued to CPPIB pursuant to the CPPIB Private Placement represent approximately 7.1% of the outstanding common shares of the Company following closing of the transaction and the Concurrent Financing, as further described below. Premium Brands has also agreed, subject to certain conditions, to provide CPPIB with certain board nomination rights in respect of its investment in the Company and a pre-emptive right to participate in future public and private offerings of securities of the Company. In addition, CPPIB also received a capital commitment payment from the Company equal to 2.5% of the aggregate subscription price of the CPPIB Private Placement.
Premium Brands will file copies of the subscription agreement and the registration rights agreement on the Company's SEDAR profile at www.sedar.com.
Concurrent Financing
Concurrent with the closing of the CPPIB Private Placement, Premium Brands is pleased to announce that it has entered into subscription agreements with certain shareholders of the Company pursuant to which such shareholders have agreed to purchase on a private placement basis an aggregate of 788,000 common shares from treasury at a price of $76.02 per share for aggregate gross proceeds of approximately $60 million (the "Concurrent Financing").
Premium Brands expects to close the Concurrent Financing on or about May 23, 2019, subject to certain conditions. Premium Brands intends to use the net proceeds of the Concurrent Financing to repay debt, finance organic and acquisition growth opportunities and for general corporate purposes.
Advisors
Cormark Securities Inc. acted as exclusive financial advisor and Bryan & Company LLP served as legal counsel to Premium Brands.
About Premium Brands Holdings Corporation
Premium Brands Holdings Corporation owns a broad range of leading specialty food manufacturing and differentiated food distribution businesses with operations across Canada and the United States.
About Canada Pension Plan Investment Board
Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits in the best interests of 20 million contributors and beneficiaries. In order to build a diversified portfolio, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, São Paulo and Sydney, CPPIB is governed and managed independently of the Canada Pension Plan and at arm's length from governments. At March 31, 2019, the CPP Fund totalled C$392.0 billion. For more information about CPPIB, please visit www.cppib.com or follow us on LinkedIn, Facebook or Twitter.
Forward-Looking Statements
This press release contains forward-looking statements with respect to the Company, including its business operations, strategy, financial performance and condition, the use of proceeds of the CPPIB Private Placement and the Concurrent Financing, and the timing of the Concurrent Financing. These statements generally can be identified by the use of forward-looking words such as "may", "could", "should", "would", "will", "expect", "intend", "plan", "estimate", "project", "anticipate", "believe" or "continue", or the negative thereof or similar variations.
Forward-looking statements in this press release are based on certain key expectations and assumptions made by Premium Brands, including, without limitation, that it will obtain all required regulatory approvals and that the Concurrent Financing will be completed.
Although management believes that the expectations reflected in such forward-looking statements are reasonable and represent the Company's internal expectations and belief as of the date hereof, such statements involve unknown risks and uncertainties beyond the Company's control which may cause its actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements.
Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include: (i) the failure of the Concurrent Financing to close; (ii) changes in the cost of raw materials used in the production of the Company's products; (iii) changes in consumer discretionary spending resulting from changes in economic conditions and/or general consumer confidence levels; (iv) changes in the Company's relationships with its larger customers; (v) potential liabilities and expenses resulting from defects in the Company's products; (vi) seasonal and/or weather related fluctuations in the Company's sales; (vii) access to commodity raw materials; (viii) changes in the cost of finished products sourced from third party manufacturers; (ix) changes in consumer food product preferences; * competition from other food manufacturers and distributors; (xi) execution risk associated with the Company's growth and business restructuring initiatives; (xii) risks associated with the Company's business acquisition strategies; (xiii) changes in the value of the Canadian dollar relative to the U.S. dollar; (xiv) failure or breach of the Company's information systems; (xv) new government regulations affecting the Company's business and operations; (xvi) the Company's ability to raise the capital needed to fund its growth initiatives; (xvii) labor related issues including potential disputes with employees represented by labor unions and labor shortages; (xviii) the loss and/or inability to attract key senior personnel; (xix) fluctuations in the interest rates associated with the Company's funded debt; (xx) financial exposure resulting from credit extended to the Company's customers; (xxi) the malfunction of critical equipment used in the Company's operations; (xxii) livestock health issues; (xxiii) international trade issues; and (xxiv) changes in environmental, health and safety standards. Details on these risk factors as well as other factors can be found in the Company's fiscal 2018 MD&A, which is filed electronically through SEDAR and is available online at www.sedar.com.
Unless otherwise indicated, the forward-looking statements in this document are made as of the date hereof and, except as required by applicable law, will not be publicly updated or revised. This cautionary statement expressly qualifies the forward-looking statements in this press release.
The securities offered in this private placement investment have not been registered under the Securities Act of 1933 (the "Securities Act"), as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
SOURCE Premium Brands Holdings Corporation
please contact George Paleologou, President and CEO or Will Kalutycz, CFO at (604) 656-3100.
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