VANCOUVER, Sept. 30, 2018 /CNW/ - Fortress Global Enterprises Inc. ("Fortress Global" or the "Company") (TSX: FGE) (OTCQX: FTPLF) announced today that it has provided enhanced terms to the amendments to the 7.0% convertible unsecured subordinated debentures of the Company due December 31, 2019 (the "Debentures") (TSX: FGE.DB.A) to be considered at the meeting of holders of Debentures (the "Debentureholders") to be held on October 1, 2018 (the "Meeting").
Based on feedback from Debentureholders, the Company has announced revised terms to the originally proposed amendments. Fortress Global now proposes the following enhanced amendments (the "Revised Amendments") to the Debentures to be considered at the Meeting:
Extending the maturity date of the Debentures from December 31, 2019 to December 31, 2021. Previously, the Company had proposed extending the maturity date of the Debentures to December 31, 2022, rather than December 31, 2021;
Increasing the interest rate of the Debentures from 7.0% per annum to 9.75% per annum, effective January 1, 2019 (being the commencement of the next interest rate accrual period). Previously, the Company had proposed increasing the interest rate to 8.0% per annum, rather than 9.75% per annum; and
Incorporating certain restrictive covenants, including:
restrictions on declaring or paying any dividend or distribution on the Company's common shares, subject to certain exceptions;
restrictions on the incurrence by the Company of any indebtedness senior to the Debentures, subject to certain exceptions;
to not permit any asset sales by the Company or any of its subsidiaries unless 75% of the net cash proceeds exceeding $8.5 million derived from such sale and not otherwise reinvested in the business of the Company are first applied towards the purchase or redemption of the Debentures, subject to certain exceptions; and
restricting the payment of cash consent consideration and soliciting dealer fees in connection with any proposed amendments to the Debentures, (collectively, the "Restrictive Covenants").
The Company has also extended the deadline for Debentureholders that vote in favour of the Revised Amendments at the Meeting to be eligible to receive the consent fee described in the management information circular of Fortress Global dated August 28, 2018 (the "Circular") to the commencement of the Meeting. The consent fee deadline has been extended to allow the Debentureholders an opportunity to consider the revisions to the originally proposed amendments and continue to benefit from being eligible to receive the consent fee.
Chadwick Wasilenkoff, Chairman, Chief Executive Officer and President of Fortress Global, commented: "Over the last several weeks we have had discussions with Debentureholders, and based on their feedback we have decided to provide enhanced terms and have received strong support for the Revised Amendments. We continue to believe that the proposed Debenture amendments would provide Fortress Global with greater financial flexibility and enable us to focus our resources, without disruption, on key strategic, business and operational targets, to the benefit of all Company stakeholders."
If the Revised Amendments are approved by the Debentureholders, they shall become effective on the date that Fortress Global enters into the second supplemental trust indenture in respect of the Debentures and the Revised Amendments.
SUPPORT AGREEMENTS Holders of approximately 31% of the Debentures have signed support agreements pursuant to which they have agreed, among other things, to vote the Debentures beneficially owned or controlled or directed by them, directly or indirectly, FOR the Revised Amendments and all matters related thereto at the Meeting. Such holders include Polar Asset Management Partners Inc., Chou Associates Management Inc., Concise Capital Management, LP and Fulcra Asset Management Inc., who had previously announced on September 21, 2018 that they would be voting against the originally proposed amendments.
EARLY CONSENT FEE Debentureholders now have until the commencement of the Meeting to vote in favour of the extraordinary resolution to approve the Revised Amendments and be eligible to receive a consent fee equal to 2% of the principal amount of Debentures held by such Debentureholders as at the record date for the Meeting. Payment of the consent fee will be conditional upon, among other things, the Revised Amendments being validly approved by Debentureholders and satisfaction of the other conditions precedent described in the Circular.
Debentureholders that do not vote in favour of the Revised Amendments by the new consent deadline will not be eligible to receive the consent fee, but will be bound by the Revised Amendments if they become effective.
BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOUR The Company's board of directors has concluded that the Revised Amendments are in the best interests of the Company and UNANIMOUSLY RECOMMENDS that Debentureholders vote FOR the Revised Amendments.
Details About the Revised Amendments
The record date for determining the Debentureholders entitled to receive notice of and vote at the Meeting remains August 28, 2018. Further information with respect to the originally proposed amendments was previously provided in the Circular, which is available under Fortress Global's profile on SEDAR at www.sedar.com. For the Revised Amendments to be approved, at least 66 2/3% of the outstanding principal amount of the Debentures voted in person or by proxy at the Meeting must be voted FOR the Revised Amendments.
Detailed voting instructions are contained in the Circular and accompanying form of proxy or voting instruction form (the "Proxy"). The Meeting will be held as originally scheduled on October 1, 2018 at 3:00 p.m. (Vancouver time) at the offices of Sangra Moller LLP, 1000 – 925 West Georgia Street, Vancouver, British Columbia.
The Company has determined to waive the proxy cutoff time of 3:00 p.m. (Vancouver time) on September 27, 2018 and will accept Proxies submitted through to the commencement of the Meeting.
Debentureholders who previously voted in favour of the originally proposed amendments do not need to take any action to have their vote counted in favour of the Revised Amendments. Debentureholders who have not voted or wish to change their vote may do so by following the instructions set forth in the Proxy delivered to them. A Debentureholder may revoke a previously voted Proxy in accordance with the instructions provided in the Circular.
The Revised Amendments are subject to the approval of the Toronto Stock Exchange.
For more information, please contact: Fortress Global Enterprises Inc. 604-904-2328 or [email protected]
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Debentureholders may contact the Company's information and proxy solicitation agent, Laurel Hill Advisory Group, at: North American Toll Free Number: 1-877-452-7184 Outside North America: 416-304-0211 (collect) Email: [email protected]
About Fortress Global
Fortress Global operates its dissolving pulp business at the Fortress Specialty Cellulose Mill located in Canada. Fortress Global also operates in the renewable energy generation sector through the Fortress Specialty Cellulose Mill's cogeneration facility, and plans to establish a demonstration plant for the future production of xylitol and other bioproducts.
This press release contains certain forward-looking information that reflects the current views and/or expectations of Fortress Global with respect to its performance, business and future events, including, but not limited to, statements regarding the following: the timing for implementing the proposed Revised Amendments; the expected terms of the Revised Amendments; the anticipated benefits of the proposed amendments to the Company and Debentureholders; and the continued execution of Fortress Global's business plan. The reader is cautioned that forward-looking information is not a guarantee of future performance and involves known and unknown risks, uncertainties, assumptions and other factors which are difficult to predict and that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Forward-looking information is based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the industry and markets in which the Company operates. Assumptions underlying the Company's expectations regarding forward-looking information contained in this news release include, but are not limited to, those with respect to general economic and financial conditions, interest rates, exchange rates, equity and debt markets, business competition, changes in government regulations or in tax laws, acts, and the ability of the Company to obtain approval for the Revised Amendments (including approval from the Toronto Stock Exchange). Investors are cautioned that all forward-looking information involves risks and uncertainties including, without limitation, the following: changes to the Meeting, including anticipated dates; that the Revised Amendments will not be successfully completed for any reason and the risk that, if completed, Fortress Global will not be able to pay the interest and/or repay the principal amount outstanding under the Debentures when due, that the Company or Debentureholders may not realize the anticipated benefits of the Revised Amendments and increases in interest rates; and other risk factors listed from time to time in the Company's public filings. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on statements comprising forward-looking information, which are qualified in their entirety by this cautionary statement. Fortress Global does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking information, except as required by applicable securities law.
SOURCE Fortress Global Enterprises Inc.
For further information: Fortress Global Enterprises Inc., 604-904-2328 or [email protected]; Debentureholders may contact the Company's information and proxy solicitation agent, Laurel Hill Advisory Group, at: North American Toll Free Number: 1-877-452-7184, Outside North America: 416-304-0211 (collect), Email: [email protected]