Chemtrade starts exchange offer for former Canexus convertibles

New York, July 14 – Chemtrade Logistics Income Fund announced exchange offers for the 6% convertible unsecured subordinated series V debentures due Dec. 31, 2020 and the 6.5% convertible unsecured subordinated series VI debentures due Dec. 31, 2021, both issued by Chemtrade Electrochem Inc., formerly Canexus Corp.

In each case Chemtrade Logistics is offering an equal principle amount of new debentures.

For the series V debentures, the new convertibles will have a coupon of 5.5% instead of 6% but the same maturity date. The hard call date will be Dec. 31, 2019 instead of Dec. 31, 2018. The new debentures will be convertible at a conversion price of C$28.00, or approximately 36 Chemtrade units per C$1,000 principal amount versus the current consideration of shares redeemable for a fixed cash amount of C$145 per C$1,000 principal amount.

For the series VI debentures, the new convertibles will have a coupon of 5.75% instead of 6.5% but the same maturity date. The hard call date will be Dec. 31, 2020 instead of Dec. 31, 2019. The new debentures will be convertible at a conversion price of C$28.00, or approximately 36 Chemtrade units per C$1,000 principal amount versus the current consideration of shares redeemable for a fixed cash amount of C$254 per C$1,000 principal amount.

In addition to the consideration, Chemtrade will pay accrued interest in cash.

The offer will run until 5 p.m. ET on Aug. 10.

Chemtrade said the exchange is part of its strategy of having a simplified capital structure and reducing administrative inefficiencies, including, among other things, by implementing simplified accounting and financial reporting procedures, and concentrating the public debt securities of the fund and its subsidiary into a single issuer.

Chemtrade said that the benefits to holders of the offer include the later hard call date, which means holders of the series V debentures will receive cumulative additional coupon payments of C$47.50 per C$1,000 principal amount while holders of the series VI debentures will receive cumulative additional coupon payments of C$38.75 per C$1,000 principal amount.

In addition, the new debentures will be listed for trading on the TSX, giving greater liquidity.

The exchanged debentures will rank equally with Chemtrade’s other listed subordinated unsecured convertible debt securities, providing holders with structural enhancement while paying a higher coupon than the other convertibles.

Chemtrade also said that the conversion option will be more attractive than the current fixed cash payments.

Completion of the exchanges is subject to at least 25% of each series of debenture being tendered.

D.F. King Canada (800 301-3998 or inquiries@dfking.com) is information agent.

Chemtrade is a Toronto-based provider of industrial chemicals and services.

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