Press release from Marketwire
Canexus Corporation Announces Offering of $100,000,000 of Convertible Debentures to Fund Unit Train Capability Expansion at NATO, Redeem Series I Debentures and Enhance its Capital Position
Monday, August 12, 2013
Canexus Corporation Announces Offering of $100,000,000 of Convertible Debentures to Fund Unit Train Capability Expansion at NATO, Redeem Series I Debentures and Enhance its Capital Position16:10 EDT Monday, August 12, 2013
CALGARY, ALBERTA--(Marketwired - Aug. 12, 2013) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.
Canexus Corporation (TSX:CUS) (the "Corporation" or "Canexus") today announced that it has entered into a "bought deal" financing agreement with a syndicate of underwriters, co-led by Scotiabank, CIBC and National Bank Financial Inc., under which the underwriters have agreed to purchase from Canexus and sell to the public 6.00% Convertible Unsecured Subordinated Debentures (the "Debentures") at a price of $1,000 per Debenture for total gross proceeds of $100,000,000 (the "Offering"). Canexus has also granted the underwriters an over-allotment option (the "Over-Allotment Option") to purchase up to an aggregate principal amount of Debentures equal to the lesser of the underwriters' over-allocation position and $15,000,000 at the same price, exercisable in whole or in part, at the sole discretion of the underwriters, until 30 days following the closing of the Offering, to cover the underwriters' over-allocation position. If the Over-Allotment Option is exercised in full, the gross proceeds raised pursuant to the Offering will be $115,000,000.
The net proceeds of the Offering will be used to partially fund incremental unit train capability at the North American Terminal Operations ("NATO") at Bruderheim, Alberta and to redeem the 8.00% Unsecured Subordinated Series I Convertible Debentures due December 31, 2014 (the "Series I Debentures"), with the remaining net proceeds being utilized to repay bank indebtedness in order to enhance Canexus' capital position.
With the recent announcement for the guaranteed capacity allotment from the Cold Lake pipeline system, and the pipeline receiving and unit train loading services agreement with Cenovus Energy Inc., the board of directors of Canexus (the "Board of Directors") recently approved the staged expansion to increase capacity of the Canexus Bruderheim Terminal from seven to 13 unit trains per week. The capacity expansion is expected to be operational by mid-2014. The total estimated cost of the pipeline connected unit train facility is $225 million (inclusive of capital spending to facilitate large scale movements from rail to pipeline of condensate in the future). Canexus continues to make solid progress with additional potential customers for unit train shipments under multi-year, take-or-pay terms. Operating cash flow for unit train operations, assuming 11 unit trains per week, could exceed $50 million annually. Unit train operations will have access to both Canadian Pacific and Canadian National Railway systems on start-up.
Canexus is also pleased to announce it intends to redeem the entire approximately $6.8 million outstanding principal amount of its Series I Debentures in accordance with the indenture governing such Debentures.
The Debentures will bear interest from the date of issue at 6.00% per annum, payable semiannually in arrears on June 30 and December 31 each year commencing December 31, 2013. The Debentures will have a maturity date of December 31, 2020 (the "Maturity Date").
The Debentures will be convertible into freely tradeable Common Shares at the option of the holder at any time prior to the close of business on the earlier of the Maturity Date and the business day immediately preceding the date specified by the Corporation for redemption of the Debentures at a conversion price of $11.35 per Common Share, being a conversion rate of 88.1057 Common Shares per $1,000 principal amount of Debentures. Holders converting their Debentures will receive accrued and unpaid interest thereon.
The Offering is expected to close on August 30, 2013.
"We are pleased to announce funding for the continued development and expansion of our Bruderheim Terminal unit train capabilities from seven to 13 unit trains per week, as announced in our August 7, 2013 press release. The offering of Debentures also allows us to enhance our financial position at an attractive long term interest rate," said Mr. Gary Kubera, President and Chief Executive Officer.
Dividends are currently payable on a quarterly basis at an annual rate of $0.5472 per Common Share.
The Offering is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange. Pursuant to the Offering, the Debentures will be offered in each of the provinces of Canada, other than the province of Quebec, by way of a short form prospectus, and by way of private placement in the United States to Qualified Institutional Buyers pursuant to Rule 144A under the United States Securities Act of 1933, as amended, and internationally as permitted by the Corporation.
Canexus produces sodium chlorate and chlor-alkali products largely for the pulp and paper and water treatment industries. Our four plants in Canada and two at one site in Brazil are reliable, low-cost, strategically-located facilities that capitalize on competitive electricity costs and transportation infrastructure to minimize production and delivery costs. Canexus also provides fee-for-service hydrocarbon transloading services to the oil and gas industry from its terminal at Bruderheim, Alberta. Canexus targets opportunities to maximize shareholder returns and delivers high-quality products to its customers. Canexus common shares (CUS) and debentures (Series I - CUS.DB; Series III - CUS.DB.A; Series IV - CUS.DB.B) trade on the Toronto Stock Exchange. More information about Canexus is available at www.canexus.ca.
Forward Looking Statements
This press release contains forward looking statements. More particularly, this press release contains statements concerning the size and material terms of the Offering, the characteristics of the Debentures, the closing of the Offering and the anticipated use of the anticipated net proceeds of the Offering as well as statements concerning expectations for the redemption of the Series I Debentures, impact of the repayment of long term indebtedness on Canexus' capital position, expansion of the Bruderheim terminal, cost expectations and timing for completion of the Bruderheim terminal. By their nature, forward looking statements involve a variety of assumptions, known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements including market and general economic conditions, future costs, treatment under governmental regulatory, tax and environmental regimes and the other risks and uncertainties detailed under "Risk Factors" in the Corporation's Annual Information Form filed on the Corporation's SEDAR profile at www.sedar.com. Although Canexus believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because Canexus can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.
The closing of the Offering could be delayed if Canexus is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned. The Offering will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the Offering will not be completed within the anticipated time or at all. The intended use of the net proceeds of the Offering might change if the Board of Directors determines that it would be in the best interests of the Corporation to deploy the proceeds for some other purpose.
Financial outlook information contained in this press release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this press release should not be used for purposes other than for which it is disclosed herein.
The forward looking statements contained in this press release are made as of the date hereof and Canexus undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
President and CEO