HALIFAX, June 26, 2013 /CNW/ - (TSX: CLR, CLR.DB.A):
Closes approximately $350 million in new debt facilities.
New capital structure provides financing for $45 million investment in
new vessel for clam harvesting operations
Reduces overall cost of capital and annual interest costs by 1.75
percentage points to 4.75% or approximately $2.6 million per year
Further enhances liquidity
Allows for early redemption of 7.25% convertible debentures
Today, Clearwater Seafoods Incorporated ("Clearwater") reported that, it
has successfully completed a series of capital markets transactions
that enhances its capital structure.
These transactions include the following changes to its debt structure:
New long term credit facilities including a Canadian $75 million
Revolving Credit Facility, a Canadian $30 million Term Loan A facility,
a Canadian $45 million Delayed Draw Term Loan A facility and a US $200
million Term Loan B facility.
The refinancing of existing debt including:
the redemption of Canadian $44.4 million of 7.25% convertible
debentures, as of July 29, 2013 upon payment of a redemption amount of
$1,000 for each $1,000 principal amount of Debentures plus accrued and
unpaid interest thereon to but excluding the redemption date;
Canadian $69.7 million in existing term debt;.
USD $126.0 million in existing term debt;
the existing asset based revolving credit facility.
BMO Capital, GE Capital Markets, and Rabobank Nederland's Canadian
Branch acted as Joint Lead Arrangers and Joint Bookrunners for the new
credit facilities with BMO, GE Capital Canada, and Rabobank taking
significant positions in the new credit facilities.
Ian Smith, Clearwater's CEO commented "This financing reduces our cost
of capital while at the same time provides us with the opportunity to
invest for future growth."
Mr. Smith continued "The investment of $45 million in a third vessel for
our clam fishery provides Clearwater with a meaningful means of
executing on our growth plan through increasing the volumes we are able
to harvest and sell to our customers."
Mr. Smith concluded "This refinancing and the investment in the clam
vessel will enable the company to continue its strong earnings and
positive cash flow momentum with a lower cost of capital and once fully
operational, additional earnings from the new clam vessel."
Joe Fillmore, Senior Relationship Manager at Bank of Montreal, pointing
at BMO's 8-year relationship with Clearwater commented "Competitive
companies are committed to pursuing strategies to reduce their overall
cost of capital while at the same time staying focused on building
shareholder value over the long-term. With the syndication and food
sector expertise of BMO Capital Markets, we have advised on debt
refinancings when companies like Clearwater are astutely accessing
changes to their capital structures to support future growth."
Kathy Lee, president and CEO, GE Capital, Canada commented "We're
pleased to expand our long relationship with Clearwater as they
continue to grow their business. Our domain expertise in the food
industry and our capital markets capabilities, assisted Clearwater in
successfully executing this transaction."
SUMMARY OF BENEFITS OF THE NEW CAPITAL STRUCTURE AND CLAM VESSEL
The benefits of these transactions include:
Provides financing for strategic investments
The new Delayed Draw Term Loan A facility will be used to fund an
investment in a third vessel for Clearwater's clam business.
This investment, estimated at $45 million will begin once a suitable
hull is sourced and a yard is commissioned to complete the work.
Management is seeking to source a hull in the third quarter of 2013,
complete conversion work over a period of 18 months and enter the new
vessel into service in 2015.
This investment will drive growth in Clearwater's clam business by
expanding access to clam supply by approximately 60% when the customer
distribution chain is fully in place by 2017, at which time Clearwater
expects to earn incremental gross margins of approximately $8 million
The new capital structure also has a number of features that provide
management with greater flexibility including accordions that allow for
the possibility of future borrowing to support the execution of
management's five-year growth plan for the business and funding for
Reduces Clearwater's cost of capital
The new term loan facilities bear interest at BA's + 3.25% for the Term
Loan A and Delayed Draw Term Loan A facilities and US Libor + 3.50%
(with a 1.25% Libor Floor) for the Term Loan B Facility.
The funds from these new facilities will be used to refinance $44.4
million of 7.25% convertible debentures and existing higher cost term
debt including BA's + 4.5% Term Loan A and US Libor + 5.5% (with a
1.25% Libor Floor) Term Loan B senior term debt, reducing the overall
cost of servicing Clearwater's debt.
As a result, Clearwater's weighted average cost of debt is expected to
decrease by approximately 1.75 percentage points to 4.75% per annum
yielding a reduction of annual interest costs that, based on the debt
facilities outstanding at close, approximates $2.6 million per annum.
Further strengthening of Clearwater's liquidity position
The new debt facilities include a revolving loan that unlike the
previous asset backed loan, is not limited by a borrowing base and
provides full availability through the fiscal period of the full amount
of the $75 million facility.
The new revolver, when combined with the liquidity available at closing
of the financing and 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 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.
Finally, although this financing and the related investment in the clam
vessel will result in an increase in total leverage for the next 2
years, management remains committed to a long-term leverage goal of 3x
or lower and expects to return to those levels by 2015.
DETAILS OF NEW DEBT FACILITIES
CDN $75 million Revolving Loan - Can be denominated in both Canadian and US dollars. Matures in June
2018. Bears interest at BA's plus 3.25%. Contains an accordion
provision that, subject to certain conditions, allows Clearwater to
increase the facility by up to Canadian $25 million.
CDN $30 million Term Loan A - Bears interest payable monthly at an annual rate of BA's plus
3.25%. Repayable in quarterly instalments of $150,000 to June 2014,
$225,000 from September 2014 to June 2015, $375,000 from September 2015
to June 2017 and $750,000 from September 2017 to March 2018 with the
balance due at maturity in June 2018.
CDN $45 million Delayed Draw Term Loan A - Bears interest payable monthly at an annual rate of BA's plus
3.25%. Repayable in quarterly instalments of $562,500 with
amortization to begin in the first quarter after the facility has been
fully drawn or closed out with the balance due at maturity in June
US $200 million Term Loan B - repayable in quarterly instalments of 0.25% of the initial loan
amount with the balance due at maturity in June 2019. Bears interest
payable quarterly at an annual rate of US Libor plus 3.50% with a Libor
floor of 1.25%. Contains an accordion provision that, subject to
satisfaction of certain conditions, allows Clearwater to increase the
facility by up to US $100 million.
The Revolving Loan, Term Loan A, Delayed Draw Term Loan A and Term Loan
B facilities are secured on a pari passu basis by a first charge on
marine vessels, licenses and quotas and Clearwater's investments in
certain subsidiaries, accounts receivable, inventory, cash and cash
equivalents subject to certain exceptions.
COMMENTARY REGARDING FORWARD-LOOKING STATEMENTS
This news release may contain forward-looking statements. Such
statements involve known and unknown risks, uncertainties, and other
factors outside of management's control including, but not limited to,
total allowable catch levels, selling prices, weather, exchange 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, Clearwater, (902) 457-2369 or Tyrone Cotie, Treasurer, Clearwater, (902) 457-8181.