Aston Hill Announces Partial Redemption and Proposal to Amend Convertible Debentures
24 Sep, 2015, 09:05 ET
TORONTO, Sept. 24, 2015 /CNW/ - Aston Hill Financial Inc. ("Aston Hill" or the "Company") announces that it is seeking the approval of holders of its 6.00% extendible convertible unsecured subordinated debentures due July 31, 2016 (the "Debentures") to amend the terms of the Debentures (the "Proposed Amendments") outstanding pursuant a trust indenture dated July 27, 2011 (the "Trust Indenture"). A meeting of the holders of the Debentures is scheduled to be held on October 29, 2015 (the "Meeting") to consider the Proposed Amendments.
The Proposed Amendments will:
- extend the maturity date of the Debentures from July 31, 2016 to January 31, 2019;
- reduce the conversion price for the Debentures from $2.55 per share to $0.65 per share;
- increase the interest rate payable on the Debentures from 6.00% to 6.50% per annum; and
- other than with respect to the partial redemption described below, restrict the Company from exercising its right to redeem any Debentures until July 31, 2017.
Benefits of the Debenture Amendments
Management and the Board of Directors of the Company (the "Board") believe that the Proposed Amendments provide a number of benefits, which include:
- Reduction of the conversion price of the Debentures from $2.55 per share to $0.65 per share, which will, in the Board's view, and combined with the extended time to maturity, provide a much higher probability that the common shares of the Company will rise above the conversion price, and will provide holders of the Debentures with an increased opportunity to benefit more directly from an increase in value of the Corporation's equity.
- An increase in the interest rate on the Debentures to 6.50%, representing an attractive yield, particularly in the current low-interest rate environment and in light of other reinvestment opportunities available.
- The extension of the maturity date from July 31, 2016 to January 31, 2019, together with a restriction on redemptions until July 31, 2017 (other than the Partial Redemption), affording holders of the Debentures a longer period of time during which to receive interest at a favourable rate.
Management and the Board believe that the Proposed Amendments are in the best interests of securityholders, and an important step in restructuring, enhancing and strengthening the Company's balance sheet and providing the Company additional time to execute its business plan. The Board has unanimously recommended that holders of the Debentures vote for or consent to the Proposed Amendments.
Reasons for the Debenture Amendments
The Board and management believe the recent corporate reorganization has presented the Company the opportunity to drive significant profitability and growth in its proprietary products. The Proposed Amendments are a critical component of being able to achieve this growth as it will afford the Company the opportunity to execute its strategic business plan and increase marketing and sales efforts rather than focusing on recapitalization initiatives. The Proposed Amendments also provide the Corporation more time to execute its sales and marketing strategies specifically focused on Ben Cheng1, as it is anticipated that he will be able to begin managing investment funds exclusively for Aston Hill for the first time beginning in late November 2015.
Further information is included in the management information circular of the Company to be filed on SEDAR (www.sedar.com) under the section titled "Background to and Reasons for the Debenture Amendments".
In conjunction with the Proposed Amendments, Aston Hill intends to exercise its right to redeem an aggregate principal amount of approximately $6 million Debentures in cash on a pro rata basis in accordance with the terms of the Trust Indenture (the "Partial Redemption"). Upon redemption, Aston Hill will pay holders of the Debentures $1,000 plus accrued and unpaid interest thereon up to, but excluding, the redemption date for each $1,000 principal amount of Debentures redeemed.
For the Proposed Amendments to be adopted, holders of not less than 66⅔% of the principal amount of the Debentures present or represented by proxy at the Debentureholder Meeting must vote in favour of, or holders of not less than 66⅔% of the principal amount of the Debentures outstanding must consent in writing to, the Proposed Amendments. There are currently approximately $40 million principal amount of Debentures outstanding, to be reduced to approximately $34 million principal amount following the Partial Redemption. The Debentures trade on the TSX under the symbol "AHF.DB" and the Proposed Amendments are subject to the approval of the TSX.
Aston Hill Financial Inc. (TSX: AHF) is a diversified asset management company with a suite of retail mutual funds, closed end funds, hedge funds and segregated institutional funds. Aston Hill Financial has offices in Toronto and Halifax.
1Ben Cheng does not act as a portfolio manager for the investment funds named in this document. See www.astonhill.ca for details.
This news release contains certain "forward-looking statements" within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.
SOURCE Aston Hill Financial Inc.
For further information: Please contact: Peter Anderson, Interim Chief Executive Officer, Aston Hill Financial Inc., (416) 583-2300, [email protected]; Ben Cheng, President & Chief Investment Officer, Aston Hill Financial Inc., (416) 583-2300, [email protected]
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