TORONTO, June 20, 2024 (GLOBE NEWSWIRE) -- Chemtrade Logistics Income Fund (TSX: CHE.UN) (“Chemtrade” or the “Fund”) today announced its intention to commence a substantial issuer bid (the “Offer”) pursuant to which the Fund will offer to purchase for cancellation up to all of its issued and outstanding 8.50% Convertible Unsecured Subordinated Debentures due September 30, 2025 (the “Debentures”) (CUSIP No. 16387PAK9). As of June 19, 2024, $85,507,000 principal amount of Debentures were issued and outstanding. The purchase price under the Offer is $1,300 in cash per $1,000 principal amount of Debentures (the “Purchase Price”). In addition, holders of Debentures (each, a “Debentureholder”) who tender and do not withdraw their Debentures under the Offer will receive a cash payment in respect of all accrued and unpaid interest on such Debentures up to, but excluding, the date they are taken up by the Fund pursuant to the Offer. The Offer is expected to expire at 5:00 p.m. Eastern time on July 31, 2024, unless extended, varied or terminated by the Fund. The Offer will not be conditional upon any minimum number of Debentures being tendered.
The Debentures are listed and posted for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “CHE.DB.F”. On June 19, 2024, the last full trading day prior to announcement by Chemtrade of the approval by the Board of Trustees (“Board of Trustees”) of the Offer, the closing price of the Debentures was $126.00 per $100 principal amount of Debentures (or $1,260 per $1,000 principal amount of Debentures).
The Purchase Price represents a premium of $3.92 per $100 principal amount of Debentures (or $39.23 per $1,000 principal amount of Debentures) and an approximate 3.1% premium to the volume-weighted average price (“VWAP”) of the Debentures on the TSX for the 30 trading days ending June 19, 2024. The Purchase Price also represents a premium of $7.29 per $100 principal amount of Debentures (or $72.93 per $1,000 principal amount of Debentures) and an approximate 5.9% premium to the VWAP of the Debentures on the TSX for the 12 months ending June 19, 2024.
The Board of Trustees believes that the Offer is an efficient use of the Fund’s financial resources given that the Offer allows Chemtrade to eliminate the potential dilution from any conversion of the Debentures into units of Chemtrade prior to their maturity on September 30, 2025 and to reduce its exposure to convertible instruments. In addition, the Offer will be funded from existing credit facilities and cash on hand, allowing the Fund to further optimize its capital structure by reducing its reliance on convertible debentures.
“The Board’s decision to offer to purchase the Debentures at a premium is consistent with our strategy of optimizing our capital structure,” said Rohit Bhardwaj, Chief Financial Officer. “Since the Debentures are well in-the-money, we are aiming to avoid conversions that may dilute our unitholders, as Chemtrade believes its units remain undervalued. To the extent a portion of these Debentures remains outstanding following the expiry of the Offer, we intend to exercise our early redemption rights at our earliest opportunity. The Debentures may be redeemed by the Fund at a price of $1,000 per Debenture on September 30, 2024, or earlier, in accordance with the terms of the trust indenture governing the Debentures.”
Details of the Offer, including instructions for tendering Debentures to the Offer and the factors considered by the Board of Trustees in making its decision to approve the Offer, will be included in the formal offer to purchase and issuer bid circular and other related documents (the “Offer Documents”), which are expected to be mailed to Debentureholders, filed with applicable Canadian Securities Administrators and made available free of charge on or about June 25, 2024 on SEDAR+ at www.sedarplus.ca and on the Chemtrade’s website at www.chemtradelogistics.com. Debentureholders should carefully read the Offer Documents prior to making a decision with respect to the Offer. The Offer will not be conditional on any minimum number of Debentures being tendered but will be subject to various other conditions that are typical for a transaction of this nature.
PricewaterhouseCoopers LLP (“PwC”) was engaged by the Board of Trustees to prepare and deliver a formal valuation (the “Valuation”) of the fair market value of the Debentures in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions. The Valuation was delivered to Chemtrade on June 19, 2024. A copy of the Valuation of PwC will be included in the Offer Documents.
Desjardins Capital Markets is acting as dealer manager (“Dealer Manager”) and financial advisor to the Fund in connection with the Offer.
Any questions or requests for information may be directed to Computershare Investor Services Inc., as the depositary for the Offer (the “Depositary”), at 1-800-564-6253 (Toll Free).
All of the Debentures are held in book-entry form through the facilities of CDS Clearing and Depository Services Inc. If you hold Debentures through a broker, dealer, commercial bank, trust company or other nominee, you must contact such broker, dealer, commercial bank, trust company or other nominee if you wish to tender Debentures pursuant to the Offer. You should check with such broker, dealer, commercial bank, trust company or other nominee to determine whether they will charge you a fee for tendering Debentures on your behalf. You should also confirm with the broker, dealer, bank, trust company or other nominee any deadlines by which you must provide your tender or deposit instructions, because the relevant deadline set by such nominee may be earlier than the deadlines set forth herein.
The Board of Trustees has authorized the making of the Offer. However, none of Chemtrade, the Board of Trustees, the Dealer Manager, the Depositary, PwC or any of their respective affiliates, makes any recommendation to any Debentureholder as to whether to deposit or refrain from depositing all or a portion of their Debentures under the Offer. Debentureholders must make their own decisions as to whether to deposit or refrain from depositing their Debentures, and, if tendered, the amount of their Debentures to deposit. Debentureholders are strongly urged to review and evaluate carefully all information in the Offer and Circular, to consult their own financial, tax and legal advisors, and to make their own decisions as to whether to deposit Debentures under the Offer and, if so, what principal amount of Debentures to deposit.
In connection with today’s announcement, the automatic securities purchase plan that Chemtrade previously entered into with its designated broker in connection with its normal course issuer bid for units was automatically terminated in accordance with its terms. Chemtrade intends to renew and enter into a new automatic securities purchase plan with its designated broker, that will allow for purchases of units during certain pre-determined blackout periods, subject to certain parameters as to price and number of units, provided that such new automatic purchase plan will only be effective and purchases of units can only commence after the termination or expiry of the Offer. The Fund will suspend further purchases of units pursuant to its existing normal course issuer bid until after the expiry of the Offer or the date of termination of the Offer.
AboutChemtrade
Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world. Chemtrade is one of North America’s largest suppliers of sulphuric acid, spent acid processing services, inorganic coagulants for water treatment, sodium chlorate, sodium nitrite and sodium hydrosulphite. Chemtrade is also the largest producer of high purity sulphuric acid for the semiconductor industry in North America. Chemtrade is a leading regional supplier of sulphur, chlor-alkali products, and zinc oxide. Additionally, Chemtrade provides industrial services such as processing by-products and waste streams.
Caution Regarding Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking statements within the meaning of certain securities laws, including the Securities Act (Ontario). Forward-looking statements can be generally identified by the use of words such as “anticipate”, “continue”, “estimate”, “expect”, “expected”, “intend”, “may”, “will”, “project”, “plan”, “should”, “believe” and similar expressions. Specifically, forward-looking statements in this news release include statements relating to the Offer and the terms thereof, including the maximum principal amount of Debentures that Chemtrade may purchase under the Offer; the expiration time and expected timing for the take up and payment for the Debentures; the sources and availability of funding for the Offer; the Fund’s intentions to enter into a new automatic securities purchase plan and expected commencement date; certain strategic and financial benefits that may result from the completion of the Offer; and the ability of Chemtrade to complete the transactions described herein.
Forward-looking statements in this news release describe the expectations of the Fund and its subsidiaries as of the date hereof. These statements are based on assumptions and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including without limitation the risks and uncertainties detailed under the “Risk Factors” section of the Fund’s latest Annual Information Form and the “Risks and Uncertainties” section of the Fund’s most recent Management’s Discussion & Analysis.
Although the Fund believes the expectations reflected in these forward-looking statements and the assumptions upon which they are based are reasonable, no assurance can be given that actual results will be consistent with such forward-looking statements, and they should not be unduly relied upon. With respect to the forward-looking statements contained in this news release, the Fund has made assumptions regarding: there being no significant disruptions affecting the operations of the Fund and its subsidiaries.
Except as required by law, the Fund does not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement.
Further information can be found in the disclosure documents filed by Chemtrade Logistics Income Fund with the securities regulatory authorities, available at www.sedarplus.ca.
For further information:
Rohit Bhardwaj
Chief Financial Officer
Tel: (416) 496-4177
Ryan Paull
Senior Manager, Corporate Development
Tel: (973) 515-1831
