Clarke details proposal to amend 6% convertible debentures due 2018

By Jennifer Chiou

New York, Dec. 2 - Clarke Inc. clarified in a press release its proposal to amend its C$62 million of 6% convertible subordinated debentures due Dec. 31, 2018, stating that one advantage of consenting to the amendments is to avoid redemption of the securities.

The company previously announced that it will hold a Dec. 20 meeting at which it will ask holders to approve increasing the interest rate to 6.5% and eliminating the holders' ability to convert the securities into Clarke common shares.

Clarke reiterated that it has the financial capacity to redeem the debentures at this time. It has cash availability and marketable securities in excess of C$150 million and expects to generate further net cash proceeds in excess of C$85 million through the sale of its freight division by the end of 2013.

The company also pointed out that the interest rates on the cash available through its credit facilities are substantially lower than the proposed increased interest rate on the debentures.

Clarke said it believes that redeeming the debentures now would result in holders losing a premium trading security and a recurring source of future income.

The company is offering holders a consent fee of C$2.50 per C$1,000 principal amount and brokers a fee of C$7.50 per C$1,000 principal amount.

"We believe that Clarke's proposal to amend the debentures represents an attractive opportunity for debentureholders to remain a financing partner of the company at an increased interest rate," chief executive officer George Armoyan said in a prior release.

The company needs consents from holders of at least 66 2/3% of the bonds.

At the end of October, the company said that it might use proceeds from the sale of some businesses to redeem all or part of its convertible debentures.

Halifax, N.S.-based Clarke is a diversified group with businesses in freight transportation, shipping, real estate and information technology.

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