Chemtrade announces $175M debenture bought deal

Chemtrade close $175M convertible unsecured subordinated debentures offering led by BMO Capital Markets.

Toronto (pcJ News Briefs) – Chemtrade Logistics Income Fund (TSX: CHE.UN) intends to close a bought deal offering of $175 million principal amount of convertible unsecured subordinated debentures, at a price of $1,000 per debenture, with an interest rate of 4.75% per annum, payable semi-annually on the last day of May and November commencing on November 30, 2017. The debentures will mature on May 31, 2024.

The offering is being made through a syndicate of underwriters led by BMO Capital Markets.

The Fund has granted the underwriters the option to purchase up to $26.25 million principal amount of additional debentures at a price of $1,000 per debenture to cover over-allotments, exercisable in whole or in part any time up to 30 days following closing of the offering.

The debentures will be convertible at the holder’s option into fully paid and non-assessable freely tradeable units of the Fund at the option of the holder at a conversion price of $26.70 per unit. The Debentures will not be redeemable before May 31, 2020. On or after May 31, 2020 and prior to May 31, 2022, the debentures may be redeemed in whole or in part from time to time at the option of the Fund at par plus accrued and unpaid interest, provided that the weighted average trading price of the units on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days preceding the date on which notice of redemption is given is not less than 125% of the Conversion Price. On or after May 31, 2022, the debentures may be redeemed at the option of the Fund at any time at par plus accrued and unpaid interest.

Net proceeds will be used to repay indebtedness under its credit facility and will be used by the Fund to fund acceptances of the previously announced Change of Control Offers for the Chemtrade Electrochem Inc. (formerly Canexus Corporation), and for general trust purposes.

Chemtrade is one of North America’s largest suppliers of sulphuric acid, spent acid processing services, inorganic coagulants for water treatment, sodium chlorate, sodium nitrite, sodium hydrosulphite and phosphorus pentasulphide. Chemtrade is a leading regional supplier of sulphur, chlor-alkali products, liquid sulphur dioxide, potassium chloride, and zinc oxide. Additionally, Chemtrade provides industrial services such as processing by-products and waste streams.

photo credit: Chemtrade