Sherritt International ups maximum it will pay in tender offer to C$80.4 million; offer ends

By Mary-Katherine Stinson

Lexington, Ky., Dec. 1 – Sherritt International Corp. announced it will pay C$80,368,365 in its modified Dutch auction tender offer for its outstanding 8½% senior second-lien secured notes due in 2026 and its fixed-price tender offer to purchase its 10¾% unsecured PIK option notes due in 2029, according to a news release.

The original offer was capped at a total consideration of C$50 million.

Sherritt declined to extend the offer, and it expired at 5 p.m. ET on Nov. 30.

The company said it will pay the following consideration for the notes:

• A total of C$79,497,900 for C$88,331,000 principal amount of 8½% senior second-lien secured notes (Cusip: 823901AM5) tendered and accepted for purchase at C$900 per C$1,000 of principal; and

• A total of C$870,465 for C$1,582,664 principal amount of 10¾% unsecured PIK option notes (Cusip: 823901AN3) tendered and accepted for purchase at C$550 per C$1,000 of principal.

The consideration includes the initial participation consideration of C$30 per C$1,000 of principal amount of notes.

Overall, C$89,913,664 of principal from both series of notes will be purchased.

In addition, Sherritt will pay a total of C$720,000 in accrued interest to holders whose 2026 notes are purchased by Sherritt in the secured notes Dutch auction.

As previously reported, Sherritt announced on Nov. 14 it had entered into support agreements with two significant noteholders, who agreed to tender C$30 million of secured notes at the amended maximum secured notes bid price pursuant to the secured notes Dutch auction offer by the initial expiration date. If not all of the supporting noteholders’ tendered notes were purchased due to proration, Sherritt had agreed to purchase the remaining amount of the notes at the amended maximum secured notes bid price plus the initial participation consideration amount plus all accrued interest by no later than Dec. 23.

The company reported that the obligations under the support agreements with the two supporting noteholders have been satisfied with the increased maximum consideration amount.

Settlement will be Dec. 5.

Background

Sherritt’s original offer was amended on Nov. 14 to increase the maximum bid price to C$870 from C$820 per C$1,000 principal amount of secured notes. The amendment stipulated that the secured notes clearing price as defined in the purchase offer is deemed to be the amended maximum secured notes bid price.

Originally, the company was offering a maximum cash consideration per C$1,000 principal amount of the 2026 notes of C$850, inclusive of a C$30 initial participation premium. Holders of those notes had the option of specifying either the minimum amount they are willing to receive for each C$1,000 principal amount or accept the clearing price determined by Sherritt.

With the amendment, the secured notes clearing price was adjusted to C$870, the amended maximum secured notes bid price.

As a result of the amendments, 2026 noteholders were required to re-tender their notes to participate in the Dutch auction. The 2029 notes had acceptance priority over the 2026 notes. Noteholders who had previously tendered their 2029 notes did not need to retender.

Extension

The offer was extended to Nov. 30 from Nov. 16 and the extended expiration date was pushed back to 5 p.m. ET on Dec. 8 from Dec. 1. However, since Sherritt exercised the initial secured notes purchase option, the offers were not ultimately extended to Dec. 8.

Sherritt plans to fund the transaction using available cash.

There were C$309.6 million of the 2026 notes (Cusip: 823901AM5) and C$72.4 million of the 2029 notes (Cusip: 823901AN3) outstanding. The company made a similar offer to purchase up to C$50 million of the same notes in May.

National Bank Financial Markets (416 869-8635 or NBF.CapitalMarkets@nbc.ca) is acting as dealer manager, and Kingsdale Advisors (800 749-9052 or contactus@kingsdaleadvisors.com) is acting as depositary and information agent.

Sherritt is a Toronto-based miner and refiner of natural resources.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.