Conglomerate Superior Plus raised $60-million late Monday in a convertible debenture offering, the latest sign of life from a corner of the capital markets that went dead during the credit crunch.
Superior recently acquired an American insulation manufacturer for $135-million (U.S.), continuing expansion in construction-related industries. To pay for this purchase, the company tapped the convertible market in a bought deal led by TD Securities and Scotia Capital.
These bonds are closer to equity than debt. They pay 7.5 per cent interest and can be flipped into Superior stock at a conversion price of $13.10 per share.
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Convertible debentures appeal to the hedge fund crowd. During the credit crunch, hedge funds were forced to pull in their horns, and the convertible debenture market underperformed, and was all but dead.
In recent months, convertible debentures made a comeback, in part as a way to play an economic recovery, while earning income. A number of Canadian resource companies sold these securities.
Superior's core business is a monopoly on propane sales in much of the country. It acquired companies that make dry wall and chemicals. The company used to be structured as an income trust.