Bullboard - Stock Discussion Forum Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures T.CHE.DB.H

Primary Symbol: T.CHE.DB.E Alternate Symbol(s): CGIFF | T.CHE.UN | T.CHE.DB.G

Chemicals Basic Materials

Chemtrade Logistics Income Fund is a Canada-based company that operates a diversified business providing industrial chemicals and services to customers in North America and around the world. The Company's segments include Sulphur and Water Chemicals (SWC), and Electrochemicals (EC). SWC segment markets, removes and/or produces merchant, Regen and sulphuric acid, sodium hydrosulphite, elemental... see more

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TSX:CHE.DB.E - Post Discussion

Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures > RBC

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Post by retiredcf on Jun 20, 2024 8:35am

RBC

June 20, 2024

Chemtrade Logistics Income Fund
Quick take: Announces SIB for all of its convertible debt maturing on September 30, 2025

TSX: CHE.UN | CAD 8.88 | Outperform | Price Target CAD 12.00

Sentiment: Neutral

Our Take

We believe the announcement is consistent with management's previous comments last month that they intend to retire or force the conversion of their September 2025 convertible debt tranche at its earliest opportunity, which would further reduce leverage (management's guidance is for debt to remain below 2.0x LTM EBITDA in 2024).

Details

Chemtrade announced its intention to commence a substantial issuer bid to purchase and cancel up to all of its issued and outstanding 8.5% convertible unsecured subordinated debentures maturing on September 30, 2025. We note that the convertible debt is in-the-money with a conversion price of $7.35/unit. The company indicated that $85.5 million principal amount of the September 2025 convertible debt is currently outstanding.

The purchase price under the offer is $1,300 in cash per $1,000 principal amount (plus accrued and unpaid interest), and management expects the offer to expire at 5:00pm ET on July 31, 2024 (unless extended, varied or terminated by Chemtrade). The offer is at a modest premium over the last closing price for the convertible debt of $126 per $100 principal amount (or $1,260 per $1,000 principal amount). To the extent a portion of the convertible debt remains outstanding following the expiry of the offer, the company intends to exercise its early redemption rights at the earliest opportunity (the September 2025 convertible debt may be redeemed by Chemtrade at a price of $1,000 per $1,000 principal outstanding on September 30, 2024, or earlier, in accordance with the terms of the trust indenture governing the debt).

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