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WINNIPEG, Manitoba, June 06, 2018 (GLOBE NEWSWIRE) -- Exchange Income Corporation (TSX:EIF) (the “Corporation”) announced today that it has reached an agreement with a syndicate of underwriters co-led by National Bank Financial Inc., Laurentian Bank Securities Inc. and CIBC Capital Markets, and including Cormark Securities Inc., Raymond James Ltd., RBC Capital Markets, Scotiabank, TD Securities Inc., BMO Capital Markets, Canaccord Genuity Corp., and Wellington-Altus Private Wealth Inc. (the “Underwriters”), pursuant to which the Corporation will issue on a “bought deal” basis, subject to regulatory approval, $70,000,000 aggregate principal amount of convertible unsecured subordinated debentures (the “Debentures”) at a price of $1,000 per principal amount of Debentures (the “Offering”). The Corporation has granted to the Underwriters an over-allotment option to purchase up to an additional $10,500,000 aggregate principal amount of Debentures at the same price, exercisable in whole or in part at any time for a period of up to 30 days following closing of the Offering, to cover over-allotments. The Corporation intends to use the net proceeds from the Offering to fund the redemption of certain debentures as set forth below and to reduce indebtedness under the credit facility of the Corporation. The Debentures will bear interest from the date of closing at 5.35% per annum, payable semi-annually in arrears on June 30 and December 31 each year commencing December 31, 2018. The Debentures will each have a maturity date of June 30, 2025 (the “Maturity Date”).
The Debentures will be convertible at the holder’s option at any time prior to the close of business on the earlier of the Maturity Date and the business day immediately preceding the date specified by the Corporation for redemption of the Debentures into common shares of the Corporation (“Common Shares”) at a conversion price of approximately $49.00 per Common Share, being a conversion rate of 20.4082 Common Shares for each $1,000 principal amount of Debentures, subject to adjustment as provided in the indenture governing the Debentures.
The Corporation also announced that it will issue a notice of redemption to the holders of its currently outstanding 7 year 5.35% convertible senior unsecured debentures maturing on March 31, 2020 (the "2013 Debentures"). The Corporation has had the right to redeem the 2013 Debentures since March 31, 2018, and subject to all necessary approvals, will redeem all issued and outstanding 2013 Debentures following the closing of the Offering on a date to be determined by the Corporation (the "Redemption Date"). Holders of the 2013 Debentures will have the option to convert the 2013 Debentures into Common Shares prior to the Redemption Date at a price of $41.60 per share. The 2013 Debentures are redeemable at a redemption price equal to their principal amount, plus accrued and unpaid interest thereon up to, but excluding, the Redemption Date. As of the close of business on June 5, 2018, there was approximately $65 million principal amount of 2013 Debentures issued and outstanding.
The Corporation intends to use the net proceeds of the Offering to fund the redemption of the 2013 Debentures, as required, and to repay indebtedness under its credit facility. The redemption of the 2013 Debentures is not conditional upon the completion of the Offering.
Closing of the Offering is expected to occur on or about June 26, 2018. The Offering is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange of the listing of the Debentures and the Common Shares to be issued upon conversion of the Debentures. The Debentures will be offered in each of the provinces of Canada by way of a short form prospectus, and by way of private placement in the United States to Qualified Institutional Buyers pursuant to Rule 144A.