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OAK BROOK, IL, Nov. 13 /CNW/ - Primary Energy Recycling Corporation (TSX: PRI) (the "Company") is pleased to announce the closing of its previously announced US$105 million secured term loan facility (the "New Credit Facility"). The Company has also completed the conversion of subscription receipts into common shares issued in connection with the Company's previously announced rights offering. The proceeds of the New Credit Facility together with the proceeds from the rights offering have been applied to fully retire the Company's outstanding US$131 million term loan.
A total of approximately 96 million subscription receipts were issued in connection with the Company's rights offering. Concurrently with the refinancing of the existing term loan, each subscription receipt was automatically exchanged for one common share of the Company. The common shares issued in exchange for such subscription receipts have been listed and posted for trading on the Toronto Stock Exchange under the symbol "PRI". With the conversion of the subscription receipts into common shares, a total of 134,118,561 common shares of the Company will be outstanding.
The New Credit Facility will have a five-year term and accrue interest at an interest rate equal to, at the Borrower's option, an adjusted LIBO Rate (subject to a 2.0% minimum) plus 4.5% or an alternate base rate (subject to a 3.0% minimum) plus 3.5%. The loan is subject to 0.25% quarterly scheduled amortization payment and quarterly mandatory prepayments of 100% of the Borrower's excess cash flow. The New Credit Facility will be guaranteed by the Borrower's direct parent Primary Energy Recycling Holdings LLC and the Borrower's wholly-owned subsidiaries (collectively, the "Guarantors") and secured by a pledge of substantially all of the Borrower's and Guarantors' real and personal property. The New Credit Facility also contains financial covenants, measured quarterly beginning on March 31, 2010, requiring the Borrower to meet certain maximum leverage and minimum fixed charge coverage ratios, as well as other covenants. Including fees the cost of borrowing for the Company is approximately 6.9% based on current LIBOR. The New Credit Facility has received preliminary credit ratings of BB+ from S&P and Ba1 from Moody's. On a pro-forma basis the loan is expected to be fully repaid in approximately 3 years.
"This final step brings us to the end of long road that began 16 months ago. Through this tumultuous time of recession, stock market drops, bank failures, credit market upheaval and steel industry contraction we developed an intricate plan to install a conservative capital structure for the Company which improves future flexibility. We will be focusing on contract renewals, performance improvement and strategy development in the near term, all with the intent of restoring shareholder value. I want to thank our investors, lenders, advisors and our customers for making this day possible," said Michel Lavigne, Chairman of the Board.
The material changes to the Company as a part of the restructuring are as
- New US$105 million, 5 year, credit facility.
- 134,118,561 publicly held common shares of the Company.
- 22,388,491 common membership interests of Primary Energy Recycling
Holdings LLC ("Primary Energy") held by EPCOR USA Holdings LLC to
maintain its pro rata interest (14.3%).
- All shareholders effectively hold the same securities and there are
no longer any subordinated notes outstanding.
- The Company has a new CEO and a dedicated executive management team
that reports to the Board of Directors.
- The management agreement with EPCOR USA Ventures LLC has a
termination provision that could be used to enable the Company to be
- The Company will have approximately US$13.5 million of cash on hand
to apply to new opportunities in addition to US$5 million of working
- Dividends on the common shares will not be declared until the New
Credit Facility is retired. Deleveraging value due to the expected
loan amortization accrues to shareholders in lieu of dividends.
The Company would like to remind investors who participated in the additional subscription privilege that they should consult with their brokers or other intermediaries through which they exercised rights to determine their allotment of subscription receipts and return of funds, if any.
When used in this news release, the words "anticipate", "expect", "project", "believe", "estimate", "forecast" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited to, the risk factors discussed in the Company's public filings available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and, except as required by applicable securities laws, the Company assumes no obligation to update or revise them to reflect new events or circumstances.
About Primary Energy Recycling Corporation
The Company owns a majority interest in Primary Energy. Primary Energy, headquartered in Oak Brook, Illinois, indirectly owns and operates four recycled energy projects and a 50 per cent interest in a pulverized coal facility (collectively, the "Projects"). The Projects have a combined electrical generating capacity of 283 megawatts and a combined steam generating capacity of 1.8 MMlbs/hour. Primary Energy creates value for its customers by capturing and recycling waste energy from industrial and electric generation processes and converting it into reliable and economical electricity and thermal energy for its customers' use. For more information, please see www.primaryenergyrecycling.com.
SOURCE Primary Energy Recycling Corporation
For further information: For further information: V. Michael Alverson, Chief Financial Officer, Primary Energy Recycling Corporation, (630) 371-0639, firstname.lastname@example.org