$100m Bought Deal at $10.35 per share
Superior Plus Corp. ("Superior") (TSX:SPB) announced today that it has entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and JP Morgan Securities Canada Inc., under which the underwriters have agreed to purchase from Superior and sell to the public 9,662,000 common shares of Superior (the "Common Shares") at price of $10.35 per share (the "Offer Price") for gross proceeds of $100 million (the "Offering"). Superior has granted the underwriters an option to purchase, in whole or in part, up to an additional 1,449,300 Common Shares at the Offer Price to cover over-allotments, if any, for a period of 30 days following the closing of the Offering (the "Over-Allotment Option"). Gross proceeds will be $115 million if the Over-Allotment Option is exercised in full.
Proceeds from the Offering will be used to reduce indebtedness and for general corporate purposes.
https://web.tmxmoney.com/article.php?newsid=78514165&qm_symbol=SPB
I have owned SPB in the past and although it was a bit of a roller-coaster adventure in the end I did well.
Recently I have been considering re-entering SPB. The new management has made good progress improving the operation of the business and getting the debt under control.
This proposed acquisition of Canexus has put a new interesting spin on things.
It’s a big acquisition, more than $1b including the debt.
They said in the NR that they would finance the Canexus debt with New Debt and Equity. I suspect that this Bought Deal is the beginning of that process. It won’t be the last.
They have also said that it will take several months for the deal to close. There is always the possibility of another company making an offer for Canexus but I doubt that will happen.
I wouldn’t expect much in the way of SPB share price appreciation until the deal is completed and the debt is refinanced.
The Canexus assets are very good and if Superior Plus can get this done without excessive dilution the result could be a much bigger better company.
The Bought Deal share price of $10.35 looks like a reasonable re-entry price for me. As long as they can maintain the current dividend I will be paid well to wait for the acquisition to be digested and the benefits to be realised. At this point I am “thinking” about it. I booked a substantial CUS loss a few months ago due to the NATO fiasco which makes me a bit wary of anything to do with Canexus. That said we are supposed to use our brains not our emotions when making investment decisions.
As Always; Do Your Own Due Diligence; It’s Your Money !!