Dye & Durham will offer either cash or new notes for 3.75% convertibles

Chicago, Oct. 20 – Dye & Durham Ltd. plans to start a substantial issuer bid for up to C$95 million face amount of its 3.75% convertible debentures due 2026, according to a press release.

The company will offer either a discounted cash price or an enhanced exchange price, or a combination of the two.

Holders may either exchange their C$1,000 existing convertible for C$750 in cash or C$1,250 principal amount of new 6.5% convertibles due Nov. 1, 2028.

Additionally, the company entered into an agreement with Canaccord Genuity Corp. to issue C$20.4 million of the new 6.5% convertibles on a bought deal basis. There is also a 48-hour over-allotment option for C$5 million.

Proceeds from the bought deal will be used to fund a portion of the cash under the offer.

The bought deal is scheduled to close on Nov. 1.

The company expects to start the tender offer by Oct. 20.

If the tender/exchange offer on the existing convertibles does not close by Dec. 22, the new debentures on the bought deal will mature and will be repaid at par with interest.

The new 6.5% convertibles will be convertible at any time into common shares at a price of C$40.00 per share.

The debentures are redeemable by the company starting Nov. 1, 2026 subject to a 130% hurdle.

The company already has support from holders, with holders of C$78.7 million of the existing debentures agreeing to tender their debentures, with C$43 million of that amount tendered for cash and the balance to be exchanged for new debentures.

There is a cap on the cash payment of C$32.25 million and a cap on the issue of new debentures of C$65 million. Past the cap, tenders will be prorated.

The offer and bought deal will reduce the issuer’s debt by C$10 million.

Formal valuations, as of Oct. 19, put the values of the existing debentures within a range of C$645 to C$715 per debenture and the new debentures within a range of C$600 to C$695 per debenture.

Canaccord has been engaged as the dealer manager for the offer.

Computershare Investor Service Inc. will be the depositary for the offer.

The company offered to purchase up to C$52 million of the same existing 3.75% debentures earlier in the year, but no debentures were purchased under that offer.

Dye & Durham is a provider of cloud-based software and technology solutions for legal and business professionals. The company is based in Vancouver, B.C.

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