Brampton Brick Limited
TSX : BBL.A

Brampton Brick Limited

February 26, 2010 16:34 ET

Brampton Brick Announces Closing of Subordinated Debenture Financing

BRAMPTON, ONTARIO--(Marketwire - Feb. 26, 2010) - Brampton Brick Limited (TSX:BBL.A) reported today that it has completed the $9.0 million subordinated secured debenture financing previously announced on February 9, 2010. The debentures have a three year term and are secured by a second ranking security interest in the Company's real estate and production equipment utilized in the Masonry Products and Landscape Products business segments in Ontario.

The rate of interest for the debentures is fixed at 10%. The Company also paid an up-front fee of 2% to subscribers. Proceeds of the new financing will be utilized for general corporate purposes.

In connection with this transaction, parties, including a Director of the Company, holding an indirect interest in approximately $1.1 million of the proceeds of the $3.0 million promissory note payable, which was due but not paid on December 7, 2009, have subscribed for an equal or greater principal amount of the debenture issue. The remaining parties, holding an indirect interest in approximately $1.9 million, and who include a Director of the Company, have been issued a new unsecured promissory note with identical terms and conditions as the existing promissory note, except that the new promissory note will be due and payable in full on September 30, 2010.

Substantially all of the debentures were acquired by insiders or by persons associated with or related to them. Both the debenture issuance and the $1.9 million loan transaction are "related party transactions" for the purposes of Ontario Securities Commission Rule 61-501 and Policy Q-27 of the Autorité des marches financiers du Québec. However, because the fair market value of the subject matter of, and the consideration for, the transactions is less than 25% of the market capitalization of the Company, the transactions are exempt from the formal valuation and minority approval requirements of the Rule and the Policy.

The Board of Directors established a committee of independent directors (the "Independent Committee") to consider the parameters of the debenture issuance to determine whether or not it was fair to the Company and the shareholders as a whole.

The Independent Committee conducted a detailed review of the terms and conditions of the debentures in relation to the current market for such transactions and also reviewed the Company's financial forecasts to determine the effect of the new financing on its future operations and financial position, with particular reference to the financial covenants given to its existing term lender and its expected borrowing requirements and the terms thereof under its operating loan agreement.

The Independent Committee concluded that the interest rate and all other terms and conditions of the debentures were fair and formally recommended to the Board of Directors of the Company that it proceed with the transaction.

Based in part on this recommendation and its own review of the terms and conditions of the debentures, the Company's Board of Directors determined that the issuance thereof was in the best interests of, and fair to, the Company, and approved the transaction. The Board of Directors also approved the issuance of the new $1.9 million unsecured promissory note, which is at an interest rate below that of the debentures. Those directors who had a conflict of interest in connection with either of the transactions declared their interests in the transaction in question and abstained from voting.

Certain statements contained herein constitute "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors, including, but not limited to, those identified under "Risks and Uncertainties" in the Company's 2008 Annual Report, which may cause actual results, performance or achievements of the Company to be materially different from any future result, performance or achievements expressed or implied by such forward-looking statements.

Brampton Brick is Canada's second largest manufacturer of clay brick, serving markets in Ontario, Quebec and the Northeast and Midwestern United States from its brick manufacturing plants located in Brampton, Ontario and near Terre Haute, Indiana. To complement the clay brick product line, the Company also manufactures a range of concrete masonry products, including stone veneer products marketed under the Stoneworkstrade name and concrete window sills. Concrete interlocking paving stones, retaining walls, garden walls and enviro products are manufactured in Markham, Milton and Brampton, Ontario and Wixom, Michigan. These products are sold to markets in Ontario, Quebec, Michigan, New York, Pennsylvania, Ohio, Kentucky, Illinois and Indiana under the Oakstrade name. Products are used for residential construction and for industrial, commercial, and institutional building projects. The Company also holds a 50% joint-venture interest in Universal Resource Recovery Inc. which operates a waste composting facility in Welland, Ontario.

Contact Information

  • Brampton Brick Limited
    Jeffrey G. Kerbel
    President and Chief Executive Officer
    905-840-1011
    or
    Brampton Brick Limited
    Kenneth J. Mondor
    Vice-President, Finance and Chief Financial Officer
    905-840-1011
    905-840-1535 (FAX)
    investor.relations@bramptonbrick.com