Tervita noteholders approve proposed recapitalization plan at meetings

By Angela McDaniels

Tacoma, Wash., Nov. 30 – Tervita Corp.’s proposed recapitalization plan was approved by its noteholders at meetings held on Nov. 30, according to a company news release.

The company plans to implement the plan by way of a corporate plan of arrangement under the Canada Business Corporations Act.

At the meetings, 100% of the votes cast by unsecured noteholders, representing about 90% of the outstanding 9¾% senior unsecured notes due November 2019 and 10 7/8% senior unsecured notes due February 2018, and 100% of the votes cast by the subordinated noteholders, representing about 92.5% of the outstanding 11 7/8% senior subordinated notes due November 2018, were voted in favor of the plan, as were 100% of the votes cast by holders of Red Sky Acquisition Corp.'s common shares.

“Although there are a few steps left in the process, we are optimistic that we can complete the recapitalization prior to year-end, emerging as a much stronger company with a bright future. With this transaction we will have reduced our debt substantially and have the requisite capital to pursue profitable growth opportunities in 2017 and beyond,” president and chief executive officer Chris Synek said in the news release.

The company will attend a hearing before the Alberta Court of Queen's Bench currently scheduled for Dec. 6 to seek a final order of the court approving the plan of arrangement.

If the approval of the court is obtained and the other conditions to completion are satisfied or waived, the company expects to complete the recapitalization transaction in December.

Recapitalization terms

As previously reported, the key elements of the recapitalization transaction include the following:

• The creation of a new class of common shares and a new class of preferred shares of Tervita;

• The issuance of 48.36 million of the new preferred shares in consideration for an investment of up to C$372 million, the value of which will be adjusted to ensure that Tervita has cash equal to no less than C$75 million immediately after the implementation of the recapitalization;

• The issuance of 47.28 million of the new preferred shares in consideration for the exchange of the secured debt held by the transaction sponsors;

• Secured debt held by other parties will be repaid in full;

• Unsecured noteholders will receive 80% of the new common shares of Tervita;

• Unsecured noteholders that executed the support agreement by Oct. 14 will also receive 20% of the new common shares as additional consideration;

• Subordinated noteholders will receive a C$20 million payment. Subordinated noteholders that executed a support agreement by Oct. 14 will receive a share of an additional C$5 million;

• Total debt will be reduced by roughly C$2 billion and annual cash interest expense reduced by about C$200 million;

• All existing Tervita equity will be exchanged for 20% of the net proceeds from litigation after specified deductions; and

• The company will issue C$475 million of new debt and reinstate or replace its revolver.

Tervita and the plan sponsors entered into a backstop commitment letter related to the funding of the new share offering.

Tervita’s legal advisers in connection with the recapitalization are Osler, Hoskin & Harcourt LLP and Fasken Martineau DuMoulin LLP, and its financial adviser is Barclays.

Tervita is a Calgary, Alta.-based environmental management company for the oil and gas industry.

© 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.