Clearwater completes enhancements to capital structure

HALIFAX, June 26, 2013 /CNW/ - (TSX: CLR, CLR.DB.A): 


    --  Closes approximately $350 million in new debt facilities.
    --  New capital structure provides financing for $45 million
        investment in new vessel for clam harvesting operations
    --  Reduces overall cost of capital and annual interest costs by
        1.75 percentage points to 4.75% or approximately $2.6 million
        per year
    --  Further enhances liquidity
    --  Allows for early redemption of 7.25% convertible debentures

Today, Clearwater Seafoods Incorporated ("Clearwater") reported that, it has 
successfully completed a series of capital markets transactions that enhances 
its capital structure.

These transactions include the following changes to its debt structure:

New long term credit facilities including a Canadian $75 million Revolving 
Credit Facility, a Canadian $30 million Term Loan A facility, a Canadian $45 
million Delayed Draw Term Loan A facility and a US $200 million Term Loan B 
facility. 
The refinancing of existing debt including:
            (i)   the redemption of Canadian $44.4 million of 7.25%
                  convertible debentures, as of July 29, 2013 upon
                  payment of a redemption amount of $1,000 for each
                  $1,000 principal amount of Debentures plus accrued
                  and unpaid interest thereon to but excluding the
                  redemption date;
            (ii)  Canadian $69.7 million in existing term debt;.
            (iii) USD $126.0 million in existing term debt;
            (iv)  the existing asset based revolving credit facility.
                   

BMO Capital, GE Capital Markets, and Rabobank Nederland's Canadian Branch 
acted as Joint Lead Arrangers and Joint Bookrunners for the new credit 
facilities with BMO, GE Capital Canada, and Rabobank taking significant 
positions in the new credit facilities.

Ian Smith, Clearwater's CEO commented "This financing reduces our cost of 
capital while at the same time provides us with the opportunity to invest for 
future growth."

Mr. Smith continued "The investment of $45 million in a third vessel for our 
clam fishery provides Clearwater with a meaningful means of executing on our 
growth plan through increasing the volumes we are able to harvest and sell to 
our customers."

Mr. Smith concluded "This refinancing and the investment in the clam vessel 
will enable the company to continue its strong earnings and positive cash flow 
momentum with a lower cost of capital and once fully operational, additional 
earnings from the new clam vessel."

Joe Fillmore, Senior Relationship Manager at Bank of Montreal, pointing at 
BMO's 8-year relationship with Clearwater commented "Competitive companies are 
committed to pursuing strategies to reduce their overall cost of capital while 
at the same time staying focused on building shareholder value over the 
long-term.With the syndication and food sector expertise of BMO Capital 
Markets, we have advised on debt refinancings when companies like Clearwater 
are astutely accessing changes to their capital structures to support future 
growth."

Kathy Lee, president and CEO, GE Capital, Canada commented "We're pleased to 
expand our long relationship with Clearwater as they continue to grow their 
business.Our domain expertise in the food industry and our capital markets 
capabilities, assisted Clearwater in successfully executing this transaction."

SUMMARY OF BENEFITS OF THE NEW CAPITAL STRUCTURE AND CLAM VESSEL INVESTMENT

The benefits of these transactions include:

  1. Provides financing for strategic investments
     The new Delayed Draw Term Loan A facility will be used to fund an
     investment in a third vessel for Clearwater's clam business.
     This investment, estimated at $45 million will begin once a
     suitable hull is sourced and a yard is commissioned to complete
     the work.  Management is seeking to source a hull in the third
     quarter of 2013, complete conversion work over a period of 18
     months and enter the new vessel into service in 2015.
     This investment will drive growth in Clearwater's clam business by
     expanding access to clam supply by approximately 60% when the
     customer distribution chain is fully in place by 2017, at which
     time Clearwater expects to earn incremental gross margins of
     approximately $8 million per year.
     The new capital structure also has a number of features that
     provide management with greater flexibility including accordions
     that allow for the possibility of future borrowing to support the
     execution of management's five-year growth plan for the business
     and funding for accretive acquisitions.

  2. Reduces Clearwater's cost of capital
     The new term loan facilities bear interest at BA's + 3.25% for the
     Term Loan A and Delayed Draw Term Loan A facilities and US Libor +
     3.50% (with a 1.25% Libor Floor) for the Term Loan B Facility.
     The funds from these new facilities will be used to refinance
     $44.4 million of 7.25% convertible debentures and existing higher
     cost term debt including BA's + 4.5% Term Loan A and US Libor +
     5.5% (with a 1.25% Libor Floor) Term Loan B senior term debt,
     reducing the overall cost of servicing Clearwater's debt.
     As a result, Clearwater's weighted average cost of debt is
     expected to decrease by approximately 1.75 percentage points to
     4.75%  per annum yielding a reduction of annual interest costs
     that, based on the debt facilities outstanding at close,
     approximates $2.6 million per annum.

  3. Further strengthening of Clearwater's liquidity position
     The new debt facilities include a revolving loan that unlike the
     previous asset backed loan, is not limited by a borrowing base and
     provides full availability through the fiscal period of the full
     amount of the $75 million facility.
     The new revolver, when combined with the liquidity available at
     closing of the financing and expected strong cash flows in the
     last half of the year, is expected to result in an ongoing strong
     liquidity position.
     The low amortization rate on the term loan facilities and lower
     interest rates on the new debt facilities reduces Clearwater's
     annual required payments to service its debt, thus supporting the
     generation of stronger free cash flows and liquidity.
     Finally, although this financing and the related investment in the
     clam vessel will result in an increase in total leverage for the
     next 2 years, management remains committed to a long-term leverage
     goal of 3x or lower and expects to return to those levels by 2015.

DETAILS OF NEW DEBT FACILITIES

CDN $75 million Revolving Loan - Can be denominated in both Canadian and US 
dollars.Matures in June 2018.Bears interest at BA's plus 3.25%.Contains 
an accordion provision that, subject to certain conditions, allows Clearwater 
to increase the facility by up to Canadian $25 million.

CDN $30 million Term Loan A - Bears interest payable monthly at an annual rate 
of BA's plus 3.25%.Repayable in quarterly instalments of $150,000 to June 
2014, $225,000 from September 2014 to June 2015, $375,000 from September 2015 
to June 2017 and $750,000 from September 2017 to March 2018 with the balance 
due at maturity in June 2018.

CDN $45 million Delayed Draw Term Loan A - Bears interest payable monthly at 
an annual rate of BA's plus 3.25%.Repayable in quarterly instalments of 
$562,500 with amortization to begin in the first quarter after the facility 
has been fully drawn or closed out with the balance due at maturity in June 
2018.

US $200 million Term Loan B - repayable in quarterly instalments of 0.25% of 
the initial loan amount with the balance due at maturity in June 2019.Bears 
interest payable quarterly at an annual rate of US Libor plus 3.50% with a 
Libor floor of 1.25%.Contains an accordion provision that, subject to 
satisfaction of certain conditions, allows Clearwater to increase the facility 
by up to US $100 million.

The Revolving Loan, Term Loan A, Delayed Draw Term Loan A and Term Loan B 
facilities are secured on a pari passu basis by a first charge on marine 
vessels, licenses and quotas and Clearwater's investments in certain 
subsidiaries, accounts receivable, inventory, cash and cash equivalents 
subject to certain exceptions.

COMMENTARY REGARDING FORWARD-LOOKING STATEMENTS

This news release may contain forward-looking statements. Such statements 
involve known and unknown risks, uncertainties, and other factors outside of 
management's control including, but not limited to, total allowable catch 
levels, selling prices, weather, exchange rates, fuel and other input costs 
that could cause actual results to differ materially from those expressed in 
the forward-looking statements. Clearwater does not undertake any obligation 
to publicly revise these forward-looking statements to reflect subsequent 
events or circumstances other than as required under applicable securities 
laws.

ABOUT CLEARWATER

Clearwater is one of North America's largest vertically integrated seafood 
companies and the largest holder of shellfish licenses and quotas in Canada. 
It is recognized globally for its superior quality, food safety, diversity of 
species and reliable worldwide delivery of premium wild, eco-certified 
seafood, including scallops, lobster, clams, coldwater shrimp, crab and 
groundfish.

Since its founding in 1976, Clearwater has invested in science, people and 
technological innovation as well as resource ownership and management to 
sustain and grow its seafood resource. This commitment has allowed it to 
remain a leader in the global seafood market and in sustainable seafood 
excellence.





Robert Wight, Chief Financial Officer, Clearwater, (902) 457-2369 or  Tyrone 
Cotie, Treasurer, Clearwater, (902) 457-8181.

SOURCE: Clearwater Seafoods Incorporated

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/June2013/26/c2812.html

CO: Clearwater Seafoods Incorporated
ST: Nova Scotia
NI: FBR FOD FIN FIN MNA 

-0- Jun/26/2013 16:48 GMT


 
Press spacebar to pause and continue. Press esc to stop.