Arctic Glacier Income Fund
TSX : AG.UN

Arctic Glacier Income Fund

June 30, 2011 17:03 ET

Arctic Glacier to Issue Units to Satisfy Convertible Debenture Maturity

WINNIPEG, MANITOBA--(Marketwire - June 30, 2011) - Arctic Glacier Income Fund (TSX:AG.UN) ("the Fund") today announced that it has given notice to the holders (the "Debenture holders") of its 6.50% extendible convertible unsecured subordinated debentures (the "Debentures") that it will satisfy its obligations to repay the principal amount of the Debentures on the maturity date of July 31, 2011 by issuing trust units ("Units") of the Fund to Debenture holders in lieu of cash, in accordance with the terms of the trust indenture for the Debentures (the "Indenture"). There are currently C$90.6 million principal amount of Debentures outstanding. Any accrued and unpaid interest thereon will be paid in cash.

Over the past several months, the Fund, under the supervision of a special committee of the board of trustees, has conducted a comprehensive review of financing and strategic alternatives available to the Fund. While the review is still ongoing, it is unlikely that a transaction will be completed prior to the maturity date of the Debentures. As a result, the Board has elected to satisfy the Fund's obligations to repay the principal amount of the Debentures through the issuance of Units to Debenture holders.

"To date, our review of financing and strategic alternatives has been extensive, and we have considered a wide range of options," said Gary Filmon, Chairman of the special committee. "The special committee gave careful consideration to different alternatives that were brought forward, and engaged in advanced discussions and negotiations with third parties. In all cases, both the special committee and board of trustees considered the impact on unitholder value in the near term and over the longer term. The review is ongoing, and we continue to consider alternatives with the objective of enhancing unitholder value."

The Fund believes that satisfying its obligation to repay the principal amount of the Debentures in this manner has a number of benefits, including:

  • Reduction of financial leverage by extinguishing C$90.6 million of interest-bearing debt, resulting in an improved balance sheet
  • Reduction of annual cash interest expense by C$5.9 million per year, enhancing cash flow and providing funds for further debt reduction or reinvestment
  • Provides management with flexibility to focus on improving profitability and growth initiatives

Keith McMahon, President and CEO of Arctic Glacier Inc., the Fund's operating company, added, "Given that it is unlikely that the execution of a satisfactory alternative from the review process will be completed prior to the maturity date of the Debentures, the Fund has elected, as provided for in the terms of the Indenture, to satisfy its obligation to repay the Debentures by issuing Units to Debenture holders. By doing so, we have improved the Fund's financial profile by eliminating debt on the balance sheet and reducing the cash interest burden on the company. While the review is ongoing, the company continues to focus on manufacturing premium quality product, delivered with the high level of service that our customers have come to expect from Arctic Glacier."

The number of Units to be issued to Debenture holders will be determined by dividing the principal amount of the Debentures outstanding by 95% of the volume-weighted average trading price per Unit for the Units on the Toronto Stock Exchange (the "TSX") for the 20 consecutive trading days ending five days prior to the date of maturity (the "Current Market Price"). Based on the maturity date of July 31, 2011, the 20-day period commenced on and included June 27, 2011 and will end on and include July 25, 2011. Units will be issued and delivered to Debenture holders on August 2, 2011, the first business day after the maturity date. The Units will be freely-tradable in Canada and will not be subject to any resale restrictions under applicable Canadian securities legislation or the rules of the TSX. The Fund will not issue fractional Units on maturity but instead will satisfy fractional interest by a cash payment equal to the Current Market Price of any fractional interest.

The issuance of the Units is subject to receipt of all necessary regulatory approvals, including the approval of the TSX.

About Arctic Glacier

Arctic Glacier Income Fund, through its operating company, Arctic Glacier Inc., is a leading producer, marketer and distributor of high-quality packaged ice in North America, primarily under the brand name of Arctic Glacier® Premium Ice. Arctic Glacier operates 39 production plants and 48 distribution facilities across Canada and the northeast, central and western United States servicing more than 75,000 retail locations.

Arctic Glacier Income Fund trust units are listed on the Toronto Stock Exchange under the trading symbol AG.UN. There are 39.0 million trust units outstanding.

Forward-Looking Information

This news release contains statements that constitute forward-looking information within the meaning of applicable securities legislation. This forward-looking information includes, without limitation, statements regarding the issuance and delivery of the Units, the timing thereof and the potential benefits to the Fund thereof. Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this news release, which assumptions are based on management analysis of historical trends, current conditions and expected future developments pertaining to the Fund and the industry in which it operates. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by the Fund and described in the forward-looking information contained in this news release. Undue reliance should not be placed on forward-looking information, which are not a guarantee of performance and are subject to a number of risks and uncertainties. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Forward-looking information is based on the estimates and opinions of the Fund's management at the time the information is released and the Fund disclaims any intent or obligation to update publicly and such forward-looking information, whether as a result of new information, future events or otherwise, other than as expressly requested by applicable securities laws.

The Toronto Stock Exchange does not approve or disapprove of the adequacy or accuracy of this release.

Contact Information

  • Arctic Glacier Income Fund
    Keith McMahon
    President & CEO
    Toll free investor relations phone: 1-888-573-9237

    Arctic Glacier Income Fund
    Doug Bailey
    Chief Financial Officer
    Toll free investor relations phone: 1-888-573-9237
    www.arcticglacier.com