Fortress gets OK to extend 7% convertibles to 2021, up rate to 9.75%

By Susanna Moon

Chicago, Oct. 2 – Fortress Global Enterprises Inc. said it secured the needed approval to amend its 7% convertible unsecured subordinated debentures due Dec. 31, 2019 at a meeting held Monday.

Specifically, holders of more than 90% of the notes voted in favor of the extraordinary resolution, with more than 75% of the debentures represented, according to the results announced Tuesday.

The debentures will be renamed the 9.75% convertible unsecured debentures, the company added.

“Today's approval of the debenture amendments represents an important step in providing the company with enhanced financial flexibility to enable management to focus their efforts on creating additional value for all stakeholders,” Chadwick Wasilenkoff, chairman, chief executive officer and president of Fortress Global, said in the press release.

The company said on Oct. 1 that it had enhanced the terms to the proposed amendments based on holder feedback, which included extending the maturity to Dec. 31, 2021 and raising the coupon to 9.75%, effective Jan. 1, 2019.

Originally, on Aug. 28, the company had said that it sought to extend the maturity by three years to Dec. 31, 2022 and to increase the coupon to 8%.

Fortress also will incorporate the following restrictive covenants:

• Restrictions on declaring or paying any dividend or distribution on the company's common shares;

• Restrictions on the incurrence of debt senior to the debentures;

• Restrictions on any asset sales by the company or any of its subsidiaries unless 75% of the net cash proceeds exceeding $8.5 million derived from the sale and not otherwise reinvested in the business of the company are first applied toward the purchase or redemption of the debentures; and

• Restricting the payment of cash consent amount and soliciting dealer fees in connection with any proposed amendments to the debentures.

Also, the consent fee of 2% was extended to holders who gave their consents by the beginning of the meeting.

Originally, only holders who consented to the amendments by the early deadline of 8 p.m. ET on Sept. 24 would have received 2% in cash.

For the amendments to be approved, holders of at least 66 2/3% of the principal amount of the debentures represented had to vote for the amendments.

Raymond James Ltd. is the dealer manager for the consent solicitation. Laurel Hill Advisory Group (877 452-7184, 416 304-0211 or assistance@laurelhill.com) is the information and proxy solicitation agent.

Fortress operates a dissolving pulp business at the Fortress Specialty Cellulose Mill and also operates in the renewable energy generation sector through the Fortress Specialty Cellulose Mill's cogeneration facility. The company plans to establish a demonstration plant for the future production of xylitol and other bioproducts. It is based in North Vancouver, B.C.

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