Successful Tender of 70.5% of Debentures Reduces The Brick's Cost of Borrowing
EDMONTON, April 10, 2012 /CNW/ - The Brick Ltd. (TSX: BRK) ("The Brick") announced today the results of its previously announced offer to purchase, for cash, any and all of the $110,138,000 principal amount outstanding of its 12% Senior Secured Debentures due May 30, 2014 (CUSIP Nos. 107879AA6 / 107879AB4) (the "Debentures"). The terms and conditions of the Debenture Tender are set out in The Brick's Offer to Purchase dated March 12, 2012 (the "Offer"). The Offer expired at 11:59 p.m. (Eastern Time) on April 9, 2012 (the "Expiration Time").
The Brick received valid tenders of $77,305,000 aggregate principal amount of Debentures pursuant to the Offer on or prior to the Expiration Time. Payment for these Debentures is expected to be made on April 12, 2012 in an amount equal to $88,127,700 representing $1,140 per $1,000 principal amount of such Debentures plus $2,592,364 of accrued and unpaid interest. The aggregate consideration for all accepted Debentures is $90,720,064.
"We are pleased to have received this response from our Debenture Holders" commented Vi Konkle, President and CEO of The Brick. "By accepting the tender of over 70 percent of the debentures, we have lowered our cost of borrowing and have made one further step in reducing The Brick's overall cost structure", continued Ms. Konkle.
"The Brick expects to fund the purchase of the Debentures entirely with cash on hand and will not be drawing on its $100-million asset-based credit facility.
After taking into consideration the payment of the 14% early repurchase premium, the completion of this Offer will result in over $8.5 million in interest savings to Debenture maturity on May 30, 2014." added Ken Grondin, The Brick's Chief Financial Officer and President, Financial Operations. "With a strong cash position, increased flexibility from the reduced debenture covenants and The Brick's new five year asset based credit facility we previously announced, The Brick is well positioned to continue to strengthen its business and increase shareholder value", continued Mr. Grondin.
As a result of the completion of this tender of Debentures, in combination with the buyback of $9.861 million Debentures announced on December 9, 2011 and the normal course issuer bid which commenced on December 22, 2011, The Brick will be left with $32,520,000 Debentures outstanding from the $120,000,000 Debentures originally issued in May 2009.
As previously disclosed, pursuant to support agreements (the "Support Agreements") entered between The Brick and a subsidiary of Fairfax Financial Holdings Limited (such subsidiary, "Fairfax") and William H. Comrie ("Comrie" and, together with Fairfax, the "Supporting Entities"), the Supporting Entities consented to certain amendments to the indenture governing the Debentures which would delete or modify many of the covenants and events of default under the indenture governing the Debentures (the "Debenture Amendments"). The Debenture Amendments will become effective once The Brick takes up and pays for Debentures. The Supporting Entities tendered all of their outstanding Debentures pursuant to the Offer.
The Brick retained Scotia Capital Inc. to act as Dealer Manager for the Offer. Computershare Trust Company of Canada acted as the Depositary for the Offer and Georgeson acted as the Information Agent for the Offer. Copies of the Offer for Purchase and the supplemental indenture giving effect to the Debenture Amendments are available electronically on The Brick's website (www.thebrick.com) and under the System for Electronic Document Analysis and Retrieval (SEDAR) System (www.sedar.com).
About The Brick
The Brick, together with its subsidiaries, is one of Canada's largest volume retailers of household furniture, mattresses, appliances and home electronics, operating under four banners: The Brick, United Furniture Warehouse, The Brick Mattress Store, and Urban Brick. In addition, through its corporate sales division, The Brick services the subdivision, condominium, hospitality and high-rise builder market. The Brick's retail and franchise operations are located in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Prince Edward Island, Nova Scotia, New Brunswick, the Northwest Territory and Yukon.
This news release contains "forward-looking statements" within the meaning of applicable Canadian securities laws, including (but not limited to) statements about The Brick's consolidated sales and operating revenue, consolidated EBITDA, consolidated net loss, sales and operating revenue in the financial services and retail segments, same store sales growth and goodwill and indefinite life intangible asset impairment charges, the financial flexibility and capital resources necessary to manage the business in the current economic environment, and similar statements concerning anticipated future events, results, circumstances, performance or expectations, that reflect management's current expectations and are based on information currently available to management of The Brick and its subsidiaries. The words "may", "will", "should", "believe", "expect", "plan", "anticipate", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms, or other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters, identify forward-looking matters. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of The Brick to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. The Brick undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable law.
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