Chemtrade: Minimum not met in exchange for old Canexus convertibles

By Wendy Van Sickle

Columbus, Ohio, Aug. 23 – Chemtrade Logistics Income Fund said it will not accept any notes tendered under the exchange offers for two series of debentures issued by Chemtrade Electrochem Inc., formerly Canexus Corp., after the minimum exchange condition was not met.

The debentures include 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.

The offers opened on July 14 and ran until 5 p.m. ET on Aug. 23, after having been extended from 5 p.m. ET on Aug. 10.

A total of C$19,475,000 series V debentures and C$12,576,000 series VI debentures were tendered under the offers, which did not meet the minimum of at least 25% of the principal amount of each series that had to be tendered in order for the exchange to proceed.

All debentures tendered under the offers will be returned, according to a press release.

Chemtrade had on Aug. 11 amended the series V offer and the series VI offer to make the offer to debentureholders “in any jurisdiction, other than the United States and any jurisdiction in which the making or acceptance of such offer would not be in compliance with the laws of such jurisdiction.” according to a previous company update.

The company offered an equal principal amount of new debentures for each series.

For the series V debentures, the new convertibles were to have a coupon of 5.5% instead of 6% but the same maturity date. The hard call date was to be Dec. 31, 2019 instead of Dec. 31, 2018. The new debentures would have been 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 would have had a coupon of 5.75% instead of 6.5% but the same maturity date. The hard call date was to be Dec. 31, 2020 instead of Dec. 31, 2019. The new debentures would have been 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, Chemtrade offered to pay accrued interest in cash.

Chemtrade said the exchange was 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 included the later hard call date, which meant holders of the series V debentures would receive cumulative additional coupon payments of C$47.50 per C$1,000 principal amount while holders of the series VI debentures would receive cumulative additional coupon payments of C$38.75 per C$1,000 principal amount.

In addition, the new debentures would have been listed for trading on the TSX, giving greater liquidity.

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

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

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