HALIFAX, Dec. 2, 2013 /CNW/ - Clarke Inc. ("Clarke" or the "Company") (TSX: CKI CKI.DB.A) is providing the following clarification regarding the recently announced proposed amendments (the "Proposed Amendments") to its 6.00% convertible unsecured subordinated debentures due December 31, 2018 (the "Debentures").
Clarke continuously evaluates and seeks to optimize the Company's capital structure for the benefit of all its stakeholders.
Clarke currently has cash availability and marketable securities in excess of $150 million and expects to generate further net cash proceeds in excess of $85 million through the sale of its freight division by the end of the current calendar year. This provides the Company with the financial capacity to redeem all of the $62 million of Debentures outstanding at any time as permitted under the terms of the indenture at a price equal to the principal amount and all accrued and unpaid interest thereon to but excluding the date of redemption. The interest rates on the cash available to Clarke through its credit facilities are substantially lower than the proposed increased interest rate on the Debentures contemplated by the Proposed Amendments.
Clarke believes that redeeming the Debentures now would result in Debentureholders losing a premium trading security in the market today and an attractive and recurring source of future income.
The advantages to the Debentureholders of the proposed amendments include the following:
- 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 which is attractive 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.
- Avoid Redemption. Avoid redemption of the Debentures and losing an attractive and recurring source of income.
The details of the proposed amendment are outlined in the management information circular (the "Circular") that was mailed to Debentureholders on November 26, 2013. The Circular also includes the voting details for the upcoming meeting of Debentureholders to consider the Proposed Amendments.
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:
Chief Financial Officer
Telephone: (902) 442-3987