Clarke announces proposal to amend Debentures

HALIFAX, Nov. 14, 2013 /CNW/ - Clarke Inc. ("Clarke" or the "Company") (TSX: CKI CKI.DB.A) announced today that it intends to seek the approval of the holders ("Debentureholders") of its 6.00% convertible unsecured subordinated debentures due December 31, 2018 (the "Debentures") to amend the terms of the Debentures at a meeting to be held on December 20, 2013 (the "Meeting").

The proposed amendments to the Debentures (the "Proposed Amendments") consist of:

  • INCREASING the interest rate on the Debentures from 6.00% to 6.50%.
  • ELIMINATING the ability of the Debentureholders to convert the Debentures into common shares of the Company.

Clarke believes the Proposed Amendments have the following advantages:

  • Increased interest rate.  Clarke believes that increasing the interest rate on the Debentures from 6.00% to 6.50% represents an attractive opportunity for Debentureholders to generate additional interest income, especially in the current low interest rate environment, and in light of other reinvestment opportunities available.
  • Consent fee.  Debentureholders that vote in favour of the proposed amendments will receive a consent fee of 25 basis points or $2.50 per $1000 principal amount of Debentures and brokers will receive a broker fee of 75 basis points or $7.50 per $1000 principal amount of Debentures.

Clarke has the financial capacity to redeem the Debentures at this time. Clarke believes that doing so would result in Debentureholders losing an attractive and recurring source of income.  Clarke currently has cash availability and marketable securities in excess of $135 million.  Clarke is permitted to draw down on its credit facilities and use the proceeds of such facilities for general corporate purposes, including redemption of the Debentures. The interest rates on such facilities are substantially lower than the proposed increased interest rate on the Debentures.

Clarke continuously evaluates and seeks to optimize the Company's capital structure. Clarke's objective in this regard is to ensure that the Company maintains its flexibility to pursue its investment strategy and to continue to build value for all stakeholders. The proposed amendments to the Debentures achieve these objectives for all stakeholders at all levels of the Company's capital structure.

George Armoyan, CEO of Clarke, stated: "We believe that Clarke's proposal to amend the Debentures represents an attractive opportunity for Debentureholders to remain a financing partner of the Company at an increased interest rate."  Mr. Armoyan added:  "In developing the Proposed Amendments we have incorporated many of the comments made by our Debentureholders as part of our previous Debenture proposal. We believe this is a great opportunity for all of our stakeholders and Clarke."

Consent Fee

The Company will pay a consent fee of $2.50 per $1,000 in respect of such Debentures to Debentureholders, conditional upon, among other things, holders of at least 66⅔% of the principal amount of the Debentures, present or represented by proxy at the Meeting, voting for the Proposed Amendments.  Concurrently with the payment of a consent fee in respect of any Debentures, the Company will also pay a broker fee of $7.50 per $1,000 principal amount of Debentures in respect of such Debentures to brokers that are entitled to receive the fee.

Board Recommendation

The Board of Directors of the Company (the "Board") believes that the Proposed Amendments provide a number of benefits to Clarke, its shareholders and the Debentureholders. The Board UNANIMOUSLY RECOMMENDS that the Debentureholders vote FOR the Amendments.

Further information with respect to the Proposed Amendments will be outlined in a management information circular (the "Circular") expected to be mailed to the Debentureholders in November 2013.

For the Proposed 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 vote in favour of the Proposed Amendments.

Detailed voting instructions will be found in the Circular. The Meeting is scheduled to be held on December 20, 2013 at 10:00 a.m. (Atlantic Daylight Time) at 6009 Quinpool Road, 9th Floor, Halifax, Nova Scotia B3K 5J7.

About Clarke

Halifax-based Clarke invests in a variety of private and publicly-traded businesses and participates actively where necessary to enhance the performance of such businesses and increase its return. Clarke's securities trade on the Toronto Stock Exchange (CKI; CKI.DB.A); for more information about Clarke Inc., please visit our website at www.clarkeinc.com.

Note on Forward-Looking Statements and Risks

This press release may contain or refer to certain forward-looking statements relating, but not limited to, the Company's expectations, intentions, plans and beliefs with respect to the Company.  Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements include, without limitation, those with respect to the future price of securities held by the Company, changes in these securities holdings, changes to the Company's hedging practices, currency fluctuations, requirements for additional capital, changes to government regulations and the timing and possible outcome of pending litigation. Forward-looking statements rely on certain underlying assumptions that, if not realized, can result in such forward-looking statements not being achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements.

With respect to the Company's Investment segment, such risks and uncertainties include, without limitation, the Company's investment strategy, legal and regulatory risks, general market risk, potential lack of diversification in the Company's investments, reliance on certain key executives, interest rates and foreign currency fluctuations and other factors.  With respect to the Company's Freight Transportation segment, such risks and uncertainties include, without limitation, competition, expiry of certain leases, labour relations, the use of third party service providers, dependence on certain personnel, fuel costs, weather conditions, customer relationships, claims, litigation and insurance, government regulation of the transport industry and other factors. With respect to the Company's Commercial Tanks & Home Heating segment, such risks and uncertainties include, without limitation, the costs of housing and major consumer products, energy costs, alternative energy sources, steel costs, product liability claims, foreign exchange risk, and other factors. Other general risks and uncertainties include, without limitation, environmental considerations, use of information technology and information systems, safety issues, concentration of sales among a small number of customers, the seasonality of business cycles for certain segments, commodity market risk, risks associated with investment in derivative instruments and other factors.

Although the Company has attempted to identify important factors that could cause actions, events or results not to be as estimated or intended, there can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Other than as required by applicable Canadian securities laws, the Company does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.

SOURCE: Clarke Inc.

For further information:

Andrew Snelgrove
Chief Financial Officer
Clarke Inc.
Telephone: (902) 442-3987


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