HALIFAX, June 6, 2012 /CNW/ - (TSX: CLR CLR.DB.B CLR.DB.A):
Closes approximately $265 million in new debt facilities.
Redeems $43.4 million aggregate principal amount of 10.5% convertible
New capital structure sets stage to execute growth plan
Reduces overall cost of capital and annual interest costs
Significantly strengthens liquidity
Today, Clearwater Seafoods Incorporated ("Clearwater") reported that, it
has successfully completed a series of capital market transactions that
will substantially improve its capital structure.
These transactions include the following changes to its debt structure:
New long term credit facilities including a Canadian $65 million Asset
Based Revolving Credit Facility ("ABL"), Canadian $75 million Term Loan
A facility and US $125 million Term Loan B facility.
The payout of several existing debt facilities including:
the redemption of Canadian $43.4 million of 10.5% convertible
debentures, ("Debentures") as of July 10, 2012 (the "Redemption
Price"), upon payment of a redemption amount of $1,002.88 for each
$1,000 principal amount of Debentures plus accrued and unpaid interest
thereon to but excluding the Redemption Date, being $2.88 per $1,000
US $54.5 million of 12% second lien debt;
Canadian $74.2 million in existing senior term notes with the remaining
funds, after payment of expenses to be used to pay down the balance on
the existing asset based revolving credit facility.
GE Capital Markets, BMO Capital Markets and Rabobank's Nederland
Canadian Branch acted as Joint Lead Arrangers and Joint Bookrunners for
the new credit facilities with GE Capital in Canada, BMO and Rabobank
taking significant positions in the new credit facilities.
Holders of the Debentures may elect to convert the Debentures into
common shares of the Corporation ("Common Shares") at any time prior to
5:00 p.m. (Eastern) on July 9, 2012 at a conversion price of $3.25 per
Ian Smith, Clearwater's CEO commented "Consistent with our goal of
increasing shareholder value, these financings build on our
relationship with lenders to reduce our interest costs by about $4.6
million annually, strengthen our liquidity and provide us with the
capital structure necessary to execute our growth plans while further
reducing overall leverage."
Mr. Smith continued "The Company's continuing strong earnings momentum
as well as the $453 million independent valuation of our quotas by
TriNav Fisheries Consultants Inc. combined with the positive ratings
issued by Moody's and Standard and Poors all contributed to our ability
to complete this transaction on such favourable terms in the United
States and Canadian credit markets."
Ellis Gaston, Managing Director of Corporate Finance Canada at GE
Capital, added "We are pleased to build on our long relationship with
Clearwater and contribute, using our food industry expertise and
capital markets resources, to this transaction."
OVERVIEW OF BENEFITS OF THE NEW CAPITAL STRUCTURE
The benefits of these improvements to the capital structure are
1. Further strengthening of Clearwater's liquidity position
At closing there was in excess of $20 million in availability on the
asset based revolving credit facility which, when combined with
expected strong cash flows in the last half of the year, is expected to
result in an ongoing strong liquidity position.
The low amortization rate on the Term Loan A and B facilities and lower
interest rates on the new debt facilities reduces Clearwater's annual
required payments to service its debt, thus supporting the generation
of stronger free cash flows and liquidity.
The new facilities contain accordion features that will allow Clearwater
to expand the facilities, subject to satisfaction of certain
conditions. The additional funding will provide Clearwater with the
ability to pay out future maturing debt facilities, including the 7.25%
convertible debentures maturing in 2014, prior to or at their maturity,
maintaining strong liquidity on an ongoing basis.
2. Reduction in Clearwater's cost of capital
The new term loan facilities bear interest at BA's + 4.5% for the Term
Loan A facility and US Libor + 5.5% (with a 1.25% Libor Floor) for the
Term Loan B Facility. The funds from these new facilities will be used
to repay US $54.5 million of 12% second lien debt and Canadian $43.4
million of 10.5% convertible debentures and Canadian $74.2 million in
existing senior term debt, reducing the overall cost of servicing
As a result, Clearwater's weighted average cost of debt is expected to
decrease by approximately 2% per annum yielding a reduction of annual
interest costs that, based on the debt facilities outstanding at close,
approximates $4.6 million per annum.
3. Provides a solid capital structure to allow management to continue to
build shareholder value
The new capital structure has a number of features that will support the
execution of management's five-year growth plan for the business
Ability to fund capital expenditures required to maintain and grow the
Ability to shield the business from short-term fluctuations in exchange
rates and interest rates through hedging facilities.
The ability to use excess free cash flows to pay down debt facilities,
through the application of excess cash flow sweep provisions,
supporting Clearwater's goals of reducing leverage to 3.0X EBITDA and
generating increased levels of free cash flows, through reduced
DETAILS OF NEW DEBT FACILITIES
Asset based loan - Based on up to 90% of eligible receivables and up to 75% of eligible
inventory to a maximum of Canadian $65 million. Can be denominated in
both Canadian and US dollars. Matures in June 2017. Bears interest
at BA's plus 2.5%. Secured by a first charge on accounts receivable,
inventory, cash and cash equivalents subject to certain exceptions, as
well as a second charge on marine vessels, licenses and quotas and
Clearwater's investments in certain subsidiaries. Contains an
accordion provision that, subject to certain conditions, allows
Clearwater to expand the facility by up to Canadian $20 million.
Term Loan A - Canadian $75 million, repayable in quarterly instalments of $468,750
to June 2015, $1,406,250 from September 2015 to June 2016 and
$2,343,750 from September 2016 to March 2017 with the balance due at
maturity in June 2017. Bears interest payable monthly at an annual
rate of BA's plus 4.5%. Contains an accordion provision that, subject
to satisfaction of certain conditions, allows Clearwater to expand the
facility by up to Canadian $25 million.
Term Loan B - US$125 million, repayable in quarterly instalments of 0.25% of the
initial loan amount with the balance due at maturity in June 2018.
Bears interest payable monthly at an annual rate of US Libor plus 5.5%
with a Libor floor of 1.25%. Contains an accordion provision that,
subject to satisfaction of certain conditions, allows Clearwater to
expand the facility by up to US $60 million, without further approvals
from existing lenders.
Both the Term Loan A and Term Loan B facilities are secured by a first
charge on marine vessels, licenses and quotas and Clearwater's
investments in certain subsidiaries and a second charge on accounts
receivable, inventory, cash and cash equivalents subject to certain
COMMENTARY REGARDING FORWARD-LOOKING STATEMENTS
This news release may contain forward-looking statements, including,
without limitation, with respect to the refinancing, cash flows,
liquidity and cost of capital. Such statements involve known and
unknown risks, uncertainties, and other factors outside management's
control including, but not limited to, total allowable catch levels,
selling prices, weather, exchange rates, interest rates, fuel and other
input costs that could cause actual results to differ materially from
those expressed in the forward-looking statements. Clearwater does not
undertake any obligation to publicly revise these forward-looking
statements to reflect subsequent events or circumstances other than as
required under applicable securities laws.
Clearwater is one of North America's largest vertically integrated
seafood companies and the largest holder of shellfish licenses and
quotas in Canada. It is recognized globally for its superior quality,
food safety, diversity of species and reliable worldwide delivery of
premium wild, eco-certified seafood, including scallops, lobster,
clams, coldwater shrimp, crab and groundfish.
Since its founding in 1976, Clearwater has invested in science, people
and technological innovation as well as resource ownership and
management to sustain and grow its seafood resource. This commitment
has allowed it to remain a leader in the global seafood market and in
sustainable seafood excellence.
SOURCE CLEARWATER SEAFOODS INCORPORATED
For further information:
Robert Wight, Chief Financial Officer, (902) 457-2369; Tyrone Cotie, Treasurer, (902) 457-8181.