Canexus Debentures
Due to the very fair offer (8.5 x Trailing EBITDA) that Superior Plus has made for Canexus the Conversion/Redemption clauses in the Indentures are basically redundant. What is relevant are the “Change of Control” clauses.
Superior Plus is required to make the Debenture Holders offers based on the “Change of Control” clauses.
There are 4 Debentures outstanding CUS.DB.A, B, C and D.
The “Change of Control” clauses in the applicable Indentures are not all the same.
CUS.DB.A matures on Dec 31 2015. I suspect that will simply be redeemed at face value c/w accrued interest on Dec 31. I don’t have a copy of the Indenture handy but if the “Change of Control” clause is in effect it won’t be for less.
CUS.DB.B which I do have a copy of the Indenture (Prospectus) if I am understanding it correctly requires Superior Plus to offer 101% of face value c/w accrued interest.
CUS.DB.C I don’t have a copy of the Indenture Handy but whatever the “Change of Control” clause is it won’t be for less that face value c/w accrued interest.
CUS.DB.D I do have a copy of the Indenture. There are some “Make Whole” terms in the “Change of Control” clause. I don’t understand how they work or what the result is but you can be confident that it is not less than face value c/w accrued interest.
I would suggest that anybody holding CUS Debentures get a copy of the relevant Indenture (Prospectus) and you should be able to understand what Superior Plus is required to offer.
At one point I was considering buying some Debentures when they were trading at a nice discount but didn’t.
Anybody that bought the Debentures particularly B, C, and D when they were trading at a nice discount made a GOOD investment!
As Always; Do Your Own Due Diligence; It’s Your Money !!
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FYI
CUS.DB.B
Change of Control of the Fund
Within 30 days following the occurrence of a change of control of the Fund involving the acquisition of voting control or direction over 66% or more of the Fund Units by any person or group of persons acting jointly or in concert, other than pursuant to any transaction undertaken as a consequence of the SIFT Rules in which a new parent entity is established, created, or adopted for, or in replacement of, the Fund and there is no change in the ultimate ownership of the business of the Fund (a “Change of Control”), the Fund will be required to make an offer in writing to purchase all of the Series IV Debentures then outstanding (the “Debenture Offer”), at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest (the “Debenture Offer Price”); provided that at the option of the Fund on not more than 60 days and not less than 30 days prior notice and only if such Change of Control occurs before December 31, 2016, it shall be entitled to redeem the Series IV Debentures upon the deposit with the Debenture Trustee on the redemption date specified in such notice an amount per Series IV Debenture equal to the greater of: (a) 101% of the principal amount thereof; and (b) the Canada Yield Price, together in each case with accrued and unpaid interest thereon to the redemption date (the “Change of Control Redemption”).
The term “Canada Yield Price” means, for purposes of the Change of Control Redemption, the price which will provide a yield to maturity on a Series IV Debenture equal to the average of the mid-market yields to maturity calculated by two investment dealers selected by the Fund on the business day preceding the day on which notice of the Change of Control Redemption is given, of a Government of Canada bond if issued with the same term to maturity (as calculated from the date specified for redemption in the Change of Control Redemption notice), plus 0.75%.
The Indenture will contain notification and repurchase provisions requiring the Fund to give written notice to the Debenture Trustee of the occurrence of a Change of Control within 30 days of such event together with the Debenture Offer. The Debenture Trustee will thereafter promptly mail to each Debenture holder a notice of the Change of Control together with a copy of the Debenture Offer to repurchase all the outstanding Series IV Debentures.
If 90% or more of the aggregate principal amount of the Series IV Debentures outstanding on the date of the giving of notice of the Change of Control have been tendered to the Fund pursuant to the Debenture Offer, the Fund will have the right and obligation to redeem all the remaining Series IV Debentures at the Debenture Offer Price. Notice of such redemption must be given by the Fund to the Debenture Trustee within 10 days following the expiry of the Debenture Offer, and as soon as possible thereafter, by the Debenture Trustee to the Debenture holders of the Series IV Debentures not tendered pursuant to the Debenture Offer.
CUS.DB.D
Change of Control of the Corporation
Within 30 days following the occurrence of a change of control of the Corporation involving the acquisition by any person or group of persons acting jointly or in concert (within the meaning of Multilateral Instrument 62-104 – Take-Over Bids and Issuer Bids) of voting control or direction over 50% or more of the Common Shares or the sale or other transfer of all or substantially all of the consolidated assets of the Corporation, excluding in either case an acquisition, merger, reorganization, amalgamation, arrangement, combination or other similar transaction if the holders of voting securities of the Corporation immediately prior to such transaction hold securities representing at least 50% of the voting control or direction in the Corporation or the successor entity upon completion of the transaction (a “Change of Control”), the Corporation will be required to make an offer in writing to purchase all of the Series VI Debentures then outstanding (the “Debenture Offer”), at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest up to, but excluding, the date of acquisition by the Corporation or a related party of such Series VI Debentures (the “Debenture Offer Price”).
The Indenture will contain notification and repurchase provisions requiring the Corporation to give written notice to the Debenture Trustee of the occurrence of a Change of Control within 30 days of such event together with the Debenture Offer. The Debenture Trustee will thereafter promptly mail to each Debentureholder a notice of the Change of Control together with a copy of the Debenture Offer to repurchase all the outstanding Series VI Debentures.
If 90% or more of the aggregate principal amount of the Series VI Debentures outstanding on the date of the giving of notice of the Change of Control have been tendered to the Corporation pursuant to the Debenture Offer, the Corporation will have the right and obligation to redeem all the remaining Series VI Debentures at the Debenture Offer Price. Notice of such redemption must be given by the Corporation to the Debenture Trustee within 10 days following the expiry of the Debenture Offer, and as soon as possible thereafter, by the Debenture Trustee to the Debenture holders of the Series VI Debentures not tendered pursuant to the Debenture Offer.
Cash Change of Control
In addition to the requirement for the Corporation to make a Debenture Offer in the event of a Change of Control occurring prior to the Series VI Debenture Maturity Date, if a Change of Control occurs on or before December 31, 2019 in which 10% or more of the consideration for the Common Shares in the transaction or transactions constituting a Change of Control consists of:
(a) cash, other than cash payments for fractional Common Shares and cash payments made in respect of dissenter's appraisal rights;
(b) equity securities that are not traded or intended to be traded immediately following such transactions on a recognized stock exchange; or
(c) other property that is not traded or intended to be traded immediately following such transaction on a recognized stock exchange,
then subject to regulatory approvals, during the period beginning 10 days before the anticipated effective date of the Change of Control and ending 30 days after the date the Debenture Offer is delivered, holders of Series VI Debentures will be entitled to convert their Series VI Debentures, subject to certain limitations, and receive, in addition to the number of Common Shares (or cash or other property or securities in substitution therefor) they would otherwise be entitled to receive as set forth under “– Conversion Privilege” above, an additional number of Common Shares (or cash or other property or securities in substitution therefor) per $1,000 principal amount of Series VI Debentures as set forth below (in each case, a “Make Whole Premium”).
The number of additional Common Shares per $1,000 principal amount of Series VI Debentures constituting the Make Whole Premium will be determined by reference to the table below and is based on the date on which the Change of Control becomes effective (the “Effective Date”) and the price (the “Share Price”) paid per Common Share in the transaction constituting the Change of Control. If holders of Common Shares receive (or are entitled and able in all circumstances to receive) only cash in the transaction, the Share Price shall be the cash amount paid per Common Share. Otherwise, the Share Price shall be equal to the Current Market Price of the Common Shares on the day immediately preceding the Effective Date.
The following table shows what the Make Whole Premium would be for each hypothetical Share Price and Effective Date set forth below, expressed as additional Common Shares per $1,000 principal amount of Series VI Debentures. For the avoidance of doubt, the Corporation shall not be obliged to pay the Make Whole Premium otherwise than by issuance of the applicable number of Common Shares (or cash or other property or securities in substitution therefor) upon conversion, subject to the provision relating to adjustment of the Conversion Price in certain circumstances and following the completion of certain types of transactions described under “Conversion Privilege” above.
Make Whole Premium Upon a Change of Control
(Number of Additional Common Shares per $1,000 Series VI Debenture)
Common Share Price ($)
Effective Date $4.75 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 $9.00 $10.00 $11.00 $12.00
3-Jun-14 56.680 51.332 40.475 32.178 25.551 18.099 13.584 11.455 6.421 3.135 1.153 0.167
31-Dec-14 56.680 50.782 39.847 31.220 24.365 17.299 12.745 10.559 5.263 2.187 0.655 0.116
31-Dec-15 56.680 50.138 38.620 29.352 22.155 16.559 12.225 8.909 2.839 0.583 0.000 0.000
31-Dec-16 56.680 47.798 35.698 26.093 18.642 12.886 8.528 5.366 0.349 0.000 0.000 0.000
31-Dec-17 56.680 46.154 32.211 22.062 14.583 8.950 4.721 1.628 0.070 0.000 0.000 0.000
31-Dec-18 56.680 46.154 27.972 13.847 7.015 2.939 0.796 0.013 0.000 0.000 0.000 0.000
31-Dec-19 56.680 46.154 27.972 12.821 1.622 1.651 0.337 0.000 0.000 0.000 0.000 0.000
The actual Share Price and Effective Date may not be set forth in the table, in which case:
(a) if the actual Share Price on the Effective Date is between two Share Prices in the table or the actual Effective Date is between two Effective Dates in the table, the Make Whole Premium will be determined by a straight-line interpolation between the Make Whole Premiums set forth for the two Share Prices and the two Effective Dates in the table based on a 365-day year, as applicable;
(b) if the Share Price on the Effective Date exceeds $12.00 per Common Share, subject to adjustment as described below, the Make Whole Premium will be zero; and
(c) if the Share Price on the Effective Date is less than $4.75 per Common Share, subject to adjustment as described below, the Make Whole Premium will be zero.
The Share Prices set forth in the table above will be adjusted as of any date on which the Conversion Price of the Series VI Debentures is adjusted. The adjusted Share Prices will equal the Share Prices applicable immediately preceding such adjustment multiplied by a fraction, the denominator of which is the Conversion Price immediately preceding the adjustment giving rise to the Share Price adjustment and the numerator of which is the Conversion Price as so adjusted. The number of additional Common Shares set forth in the table above will be adjusted in the same manner as the Conversion Price as set forth above under “– Conversion Privilege”, other than by operation of an adjustment to the Conversion Price by adding the Make Whole Premium as described above.
** There is no point in anybody asking me to Translate and or Debate the content of the above “Change of Control” terms. I don’t understand the “Make Whole” stuff. I don’t own the Debentures so I am not interested in spending the time required to understand them fully.