HALIFAX, July 17, 2012 /CNW/ - Clarke Inc. ("Clarke") (TSX: CKI CKI.DB.A), in response to investor inquiries, is providing additional information and clarification regarding the proposed amendments to its 6.0% convertible debentures of which there is $63 million outstanding and mature on December 31, 2013 (the "Current Debentures") which was announced by press release on June 19, 2012.
As a matter of good corporate governance, Clarke continuously evaluates and seeks to optimise the company's capital structure. Clarke's objective in this regard is to ensure that Clarke maintains its flexibility to pursue its investment strategy and to continue to build value for all its various securityholders. The proposed amendment to the Current Debentures achieves these objectives and Clarke is providing clarification in response to some investor inquiries.
Clarke currently has committed credit facilities and marketable securities in excess of $125 million. Clarke is permitted to draw down on its credit facilities and use the proceeds of such facilities for general corporate purposes, including to redeem the Current Debentures. The interest rates on such facilities are substantially lower than the interest rate on the Current Debentures.
George Armoyan, CEO of Clarke, stated: "Some of our debentureholders have inquired as to why Clarke is pursuing these amendments." Mr. Armoyan added: "While Clarke is currently able to borrow funds at a substantially lower cost than under its existing debentures, these debentures do give the company increased flexibility to execute on its investment strategy. Rather than using available credit facilities or raising new capital to redeem our existing debentures, we wanted to reach out to our existing debentureholders and invite them to remain a financing partner of Clarke for another five years at an attractive interest rate. We also decided to offer a consent fee to those debentures that vote in favour of the debenture amendments and continue to support Clarke in its business initiatives."
The advantages of the proposed amendments include the following:
- Clarke believes that the 6.0% interest rate on the Current Debentures represents an attractive yield, especially in the current low interest rate environment and in light of other reinvestment opportunities available.
- Clarke has committed credit facilities and marketable securities in excess of $125 million. Clarke is permitted to draw down on its facilities and use the proceeds to redeem the Current Debentures. Doing so would result in the holders of the Current Debentures losing an attractive and recurring source of income.
- Holders of the Current Debentures that vote in favour of the proposed amendments will receive a consent fee of 60 basis points or $6 per $1,000 principal amount of Current Debentures. Financial advisors of debentureholders that vote in favour of the proposed amendments will receive a consent fee of 40 basis points or $4 per $1,000 principal amount of Current Debentures.
Accordingly, Clarke encourages holders of the Current Debentures to vote in favour of the proposed amendments. Holders of the Current Debentures can vote in favour of the proposed amendments by internet or by telephone or by contacting their brokers or investment advisors on or before July 23, 2012.
Further information with respect to the proposed amendments is outlined in a management information circular which has been mailed to the holders of the Current Debentures and is available under Clarke's profile on SEDAR at www.sedar.com or www.clarkeinc.com.
Halifax-based Clarke invests in a variety of private and publicly-traded businesses and participates actively where necessary to enhance performance and increase 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, Clarke's expectations, intentions, plans and beliefs with respect to Clarke. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "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, statements relating to Clarke's beliefs regarding the benefits of the proposed amendments to the Current Debentures, Clarke's ability to redeem all or part of the Current Debentures and the effects of any such redemption on the holders of the Current Debentures, and the potential uses of Clarke's credit facility. 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 to be materially different from the results expressed or implied by such forward-looking statements and there can be no assurance that such statements will prove to be accurate. Other than as required by applicable Canadian securities laws, Clarke does not intend to 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.
For further information:
Chief Financial Officer, Clarke Inc.
Telephone: (902) 442-3000