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Sherritt’s logo pictured during their annual general meeting in Toronto, May 24, 2007.J.P. Moczulski/Reuters

On Bay Street, complicated transactions are said to having a lot of "moving parts." The complex restructuring Sherritt International Corp. just pulled off should be the textbook definition of this phrase.

To fully appreciate the complexity, you need to know the history. Sherritt sold its coal business for nearly $1-billion earlier this year, giving the company some cash to repay its debt and to strike any acquisitions, should it so choose.

Despite the new financial flexibility, bond rating agency DBRS Ltd. downgraded Sherritt following the deal. Adding even more trouble, the company's existing bond indentures dictated that Sherritt could only do certain things with the money, such as strike new acquisitions. If the funds went unused, the company would have been forced to redeem its bonds or repay outstanding bank debt.

Sherritt, though, only wanted to repay some debt, and keep the rest of the proceeds on its balance sheet. To do that, it needed the consent of its noteholders. So in September the company initiated a complex restructuring that not only amended the indentures, but also repurchased some existing bonds and refinanced an outstanding debt issue.

In all, Sherritt launched a tender for $400-million worth of bonds, spread out over two issues, amended its bond indentures so that all of its bonds now have the same covenant package, and sold $250-milllion worth of new bonds that come due in 2022, using the proceeds to repurchase debt that comes due next year.

It wasn't easy, especially because the refinancing couldn't be completed until the tender offers expired, meaning the entire operation took a full month – a time frame no one likes when commodity prices are plunging.

But Sherritt pulled it off, with the help of National Bank Financial Inc. and Scotia Capital Inc. Sherritt now has a lower debt burden, more manageable maturity sizes over the next seven years and no chance of defaulting on any bonds that come due next year. If only commodity prices weren't in the tank.

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