Clarke fails to get needed votes for 6% convertibles; meeting canceled

By Susanna Moon

Chicago, Jan. 6 - Clarke Inc. said it lacked the needed votes to pass the proposal to amend its C$62 million of 6% convertible subordinated debentures due Dec. 31, 2018.

The company obtained votes from holders of a majority of the notes but lacked the two-thirds needed under the note terms, according to a company press release.

As a result, Clarke decided to cancel the meeting set for Jan. 10.

The company said on Dec. 19 that it was giving holders more time to vote for the proposal to amend the notes because it had failed so far to obtain the needed two-thirds threshold.

The meeting was pushed back from Dec. 20. Holders needed to cast their votes must by Jan. 8.

The company sought approval to raise the interest rate to 6.5% and eliminate the holders' ability to convert the securities into Clarke common shares.

The company offered holders a consent fee of C$2.50 per C$1,000 principal amount and brokers a fee of C$7.50 per C$1,000 principal amount.

At the end of October, the company said that it could use proceeds from the sale of some businesses to redeem all or part of its convertibles.

Clarke noted in a press release on Dec. 2 that one advantage of consenting to the amendments is to avoid redemption of the notes.

At the time, the company reiterated that it had the financial capacity to redeem the debentures, with cash availability and marketable securities of more than C$150 million, and expected to generate proceeds of more than C$85 million through the sale of its freight division by the end of 2013.

The company also pointed out that the interest rates on the cash available through its credit facilities are substantially lower than the proposed increased interest rate on the debentures.

Clarke said it believed that redeeming the debentures would result in holders losing a premium trading security and a recurring source of future income.

"We believe that Clarke;s proposal to amend the debentures represents an attractive opportunity for debentureholders to remain a financing partner of the company at an increased interest rate," chief executive officer George Armoyan said in a previous release.

Halifax, N.S.-based Clarke is a diversified group with businesses in freight transportation, shipping, real estate and information technology.

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