MONTREAL, April 8 /CNW Telbec/ - MEGA Brands Inc. (TSX: MB) ("MEGA Brands" or the "Corporation") announced today that the Toronto Stock Exchange (the "TSX") has accepted its Notice of Debt Substantial Issuer Bid to purchase up
to $20,000,000 in principal amount of its issued and outstanding 10%
senior secured debentures due March 31, 2015 (the "Debentures") at a price of $1,060.00 (plus any accrued but unpaid interest) per
$1,000.00 principal amount of Debentures (the "Offer"). Currently there is $141,722,000 in principal amount of Debentures
The Offer is being made through the facilities of the TSX and will be
open for acceptance on May 13, 2011 from 10:00 a.m. EDT to 12:00 p.m.
EDT. Holders of the Debentures ("Debentureholders") who wish to accept the Offer must ask their investment adviser,
investment dealer, bank, trust company or other nominee to effect the
transaction for them during such period.
Fairfax Financial Holdings has indicated its intention to tender to the
Offer $20,000,000 in principal amount of the $28,204,000 in principal
amount of Debentures that it currently holds. If greater than
$20,000,000 in principal amount of Debentures are tendered to the
Offer, the Corporation will purchase from each Debentureholder who has
tendered to the offer a proportion of the principal amount of
Debentures tendered by such Debentureholder, which proportion shall be
equal to the fraction obtained by dividing $20,000,000 by the aggregate
principal amount of all Debentures tendered to the Offer.
The Offer will provide liquidity to the Debentureholders. As further
interest payments will not be required on those Debentures that are
retired by the Corporation, this offer should also benefit shareholders
of the Corporation. In addition, the management of the Corporation
believes that retiring Debentures will allow for more efficient
treasury management, while improving the Corporation's liquidity and
its overall financial position.
A copy of the Notice of Debt Substantial Issuer Bid is available through
GMP Securities, L.P., the dealer manager, by contacting Kim Ritchie at
The Corporation also announced today that it intends to seek the
approval of the holders of Debentures, to amend the terms of the trust
indenture governing the Debentures (the "Debenture Indenture") at a meeting of Debentureholders to be held on May 6, 2011 (the "Meeting"). The proposed amendments include amendments to (i) permit the
Corporation and its subsidiaries to incur additional indebtedness under
the Corporation's asset based credit agreement and additional revolving
facilities up to an aggregate additional principal amount equal to 50%
of the aggregate principal amount of Debentures that the Corporation
purchases from time to time under the Debenture Indenture, provided
that the aggregate principal amount of indebtedness under such asset
based credit agreement may not exceed US$100 million at any time; (ii)
provide the Corporation and its subsidiaries with an ability to dispose
of Accounts (as such term is defined in the Debenture Indenture), the
account debtors of which are located in Canada or the United States of
America, subject to certain limitations on the amount of Accounts
disposed of each year, and provide for the release of the security in
favour of the Debentureholders over such Accounts in the event of any
such disposition; (iii) increase the limit on acquisitions of real
property from US$2,000,000 to US$5,000,000; and (iv) increase the
amount of permitted investments from US$1,000,000 to US$5,000,000.
The Corporation expects that these amendments will provide it with
increased flexibility, thus allowing it to align its capital structure
more closely with the inherent seasonality of its business and the
corresponding fluctuations in working capital requirements throughout
The Corporation's board of directors has recommended that
Debentureholders vote for the proposed amendments. In addition, Fairfax
Financial Holdings Limited and directors and officers of the
Corporation, who hold in the aggregate approximately 26% of the issued
and outstanding Debentures, have indicated that they are in favour of
the proposed amendments.
Further information with respect to the proposed amendments as well as
voting instructions will be outlined in a management information
circular (the "Circular") expected to be mailed to the Debentureholders around April 15, 2011.
For the amendments to be approved, at least 66 2/3% of the principal
amount of the Debentures voted (either in person at the Meeting or by
proxy) must be FOR votes and the Corporation must receive all other
applicable regulatory or other consents. Debentureholders may vote FOR
the proposed amendments either by: (1) voting in person at the Meeting
or (2) submitting their proxy. Detailed voting instructions will be
found in the Circular. The Meeting is scheduled to be held at the
offices of Osler, Hoskin & Harcourt LLP, 1000 De La Gauchetière Street
West, Suite 2100, Montreal, Quebec on May 6, 2011 at 10:00 a.m.
(Eastern Standard Time).
About MEGA Brands
MEGA Brands Inc. is a trusted family of leading global brands in
construction toys, games & puzzles, arts & crafts and stationery. They
offer engaging creative experiences for children and families through
innovative, well-designed, affordable and high-quality products. Visit http://www.megabrands.com for more information.
The MEGA logo, Mega Bloks, Rose Art, MEGA Games, MEGA Puzzles and Board
Dudes are trademarks of MEGA Brands Inc. or its affiliates.
All statements in this press release that do not directly and
exclusively relate to historical facts constitute "forward-looking
information" within the meaning of applicable Canadian securities laws.
These statements represent the Corporation's intentions, plans,
expectations and beliefs. Readers are cautioned not to place undue
reliance on these forward-looking statements. Forward-looking
information and statements are based on a number of assumptions and
involve risks, uncertainties and other factors that could cause actual
results to differ materially from those expressed or implied by them,
including, but not limited to risks, assumptions and uncertainties
described in the Corporation's MD&A for the year ended December 31,
2010, which is available at www.sedar.com. The Corporation disclaims any intention or obligation to publicly
update or revise any forward-looking information, whether as a result
of new information, future events or otherwise, other than as required
by applicable law.
SOURCE MEGA BRANDS INC.
For further information:
Chief Financial Officer
Tel: (514) 333-5555 ext. 2283