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OAK BROOK, IL, Oct. 23 /CNW/ Primary Energy Recycling Corporation (TSX: PRI) (the "Company") is pleased to announce today that its principal operating subsidiary, Primary Energy Operations LLC (the "Borrower") has signed a secured term loan facility ("New Credit Facility"). The New Credit Facility provides the Borrower with commitments to borrow up to US$105 million of loans, subject to satisfaction of customary conditions, in a single borrowing concurrent with the closing of the Company's previously announced rights offering. Credit Suisse Securities (USA) LLC acted as sole lead arranger for the loan.
The Borrower intends to use the net proceeds of the New Credit Facility, together with the rights offering proceeds of US$50 million, after deducting transaction costs and expenses, to repay in full the outstanding loans under the Borrower's existing US$131 million term loan facility, to fund a six-month debt service reserve under the New Credit Facility and for general corporate purposes.
The New Credit Facility will have a five-year term and accrue interest at an interest rate equal to, at the Borrower's option, an adjusted LIBO Rate (subject to a 2.0% minimum) plus 4.5% or an alternate base rate (subject to a 3.0% minimum) plus 3.5%. The loan is subject to 0.25% quarterly scheduled amortization payment and quarterly mandatory prepayments of 100% of the Borrower's excess cash flow. The New Credit Facility will be guaranteed by the Borrower's direct parent Primary Energy Recycling Holdings LLC and the Borrower's wholly-owned subsidiaries (collectively, the "Guarantors") and secured by a pledge of substantially all of the Borrower's and Guarantors' real and personal property. The New Credit Facility also contains financial covenants, measured quarterly beginning on March 31, 2010, requiring the Borrower to meet certain maximum leverage and minimum fixed charge coverage ratios.
"Today's New Credit Facility signing marks another significant achievement for the Company, allowing the repayment of its existing indebtedness in full upon the closing of the rights offering in November. The closing of the loan and rights offering, taken in conjunction with the subordinated debt conversion on August 24, 2009, will leave the Company with a strong, de-levered balance sheet. The 100% cash sweep provision of the loan is expected to create rapid amortization of the loan with the accompanying further de-leverage" said CEO John Prunkl.
As previously announced, the Company's shareholders of record resident in Canada and the United States as of the close of business (Toronto time) on October 13, 2009 received one right for each common share held. Each right entitles the holder thereof to acquire 2.532717 common share subscription receipts of the Company at a subscription price of US$0.52 per subscription receipt. Rights not exercised on or before 4:00 p.m. (Toronto time) on November 11, 2009 will be void and have no value. Shareholders wishing to exercise rights must provide instructions and payment to their securities broker, dealer or other intermediary through which they hold shares sufficiently in advance of the expiry time to permit the proper exercise of their rights. The rights are listed and posted for trading on the Toronto Stock Exchange and will remain posted until the close of trading on November 10, 2009.
On release of the rights offering proceeds to the Company, each subscription receipt will be automatically exchanged for one common share of the Company. If a shareholder does not exercise his/her rights, a shareholder's percentage interest in the Company will be substantially diluted by approximately 70% upon the exchange of subscription receipts into common shares.
"The Company is making excellent progress toward restructuring. The next major initiative includes renegotiating the contracts with the site hosts and extending their term. The combination of the restructuring and renegotiating contracts puts us well on the way to restoring shareholder value" said Mr. Michel Lavigne, Chair of the Board of Directors.
This press release is not an offer to sell or the solicitation of an offer to buy rights, subscription receipts or common shares. Such securities may not be offered or sold in the United States absent registration under the United States Securities Act of 1933, as amended, or an applicable exemption from the registration requirements.
A copy of the Company's short form prospectus can be found on www.primaryenergy.com or on www.sedar.com.
When used in this news release, the words "anticipate", "expect", "project", "believe", "estimate", "forecast" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to the completion of the rights offering, the refinancing of the term loan and the other risk factors discussed in the Company's public filings available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and, except as required by applicable securities laws, the Company assumes no obligation to update or revise them to reflect new events or circumstances.
About Primary Energy Recycling Corporation
The Company owns a majority interest in Primary Energy Recycling Holdings LLC ("Primary Energy"). Primary Energy, headquartered in Oak Brook, Illinois, indirectly owns and operates four recycled energy projects and a 50 per cent interest in a pulverized coal facility (collectively, the "Projects"). The Projects have a combined electrical generating capacity of 283 megawatts and a combined steam generating capacity of 1.8 MMlbs/hour. Primary Energy creates value for its customers by capturing and recycling waste energy from industrial and electric generation processes and converting it into reliable and economical electricity and thermal energy for its customers' use. For more information, please see www.primaryenergyrecycling.com.
SOURCE Primary Energy Recycling Corporation
For further information: For further information: V. Michael Alverson, Chief Financial Officer, Primary Energy Recycling Corporation, (630) 371-0639, email@example.com