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
-- 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
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
(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
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
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
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
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
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
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
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
Robert Wight, Chief Financial Officer, Clearwater, (902) 457-2369 or Tyrone
Cotie, Treasurer, Clearwater, (902) 457-8181.
SOURCE: Clearwater Seafoods Incorporated
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CO: Clearwater Seafoods Incorporated
ST: Nova Scotia
NI: FBR FOD FIN FIN MNA
-0- Jun/26/2013 16:48 GMT
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