Cinram International announces refinancing plan, seeks lender consents

By Angela McDaniels

Tacoma, Wash., Jan. 25 - Cinram International Income Fund is seeking consents from its lenders to execute a refinancing and recapitalization plan, according to a company news release.

A steering committee of lenders, which holds about 50% of the loans and commitments under the company's credit facility, has agreed to support the plan.

The fund anticipates that its subsidiary Cinram International Inc. will proceed with the refinancing and recapitalization as a plan of arrangement in proceedings under the Canada Business Corporations Act.

The key changes to Cinram's capital structure under the proposed transaction include:

• The amendment and extension of Cinram's senior secured credit facility to Dec. 31, 2013;

• A reduction in the $367 million of term debt outstanding under the credit facility. The company plans to pay down $30 million of the term loan and to exchange $90 million of the first-lien debt for $90 million of second-lien debt that is mandatorily exchangeable into equity on Dec. 31, 2011 if not earlier repaid;

• A reduction of commitments under the revolving facility to $35 million from $100 million;

• An option for Cinram to raise new equity proceeds to repay the mandatorily exchangeable secured debt through the end of 2011; and

• The issuance of warrants to acquire 13 million Cinram units.

Lenders that execute and deliver consents by Feb. 10 will receive a consent fee equal to their pro rata share of about $11.2 million in cash, roughly 6.2 million units and, if any portion of the mandatorily exchangeable secured debt has not been repaid by June 30, about 3.65 million additional units.

Goldman Sachs & Co. is acting as financial adviser to the fund for the refinancing.

Cinram is a Toronto-based provider of pre-recorded multimedia products and related logistics services.

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