RONA INC.
TSX : RON

RONA INC.

February 01, 2011 10:05 ET

RONA Announces $125 Million Offering of Cumulative Rate Reset Preferred Shares

BOUCHERVILLE, QUEBEC--(Marketwire - Feb. 1, 2011) -

NOT FOR DISTRIBUTION INTO THE UNITED STATES OR TO UNITED STATES WIRE SERVICES

RONA inc. ("RONA" or the "Company") (TSX:RON), Canada's largest distributor and retailer of hardware, renovation and gardening products, today announced that it has entered into an agreement with a syndicate of underwriters led by National Bank Financial Inc. and BMO Capital Markets, acting as joint bookrunners, under which the underwriters have agreed to purchase, on a bought-deal basis, 5,000,000 Cumulative 5-Year Rate Reset Series 6 Class A Preferred Shares (the "Series 6 Class A Preferred Shares") at a price of $25.00 per share for aggregate gross proceeds to RONA of $125,000,000.

The Series 6 Class A Preferred Shares will pay fixed cumulative dividends of $1.3125 per share per annum, yielding 5.25% per annum, payable quarterly on the last business day of March, June, September and December of each year, as and when declared by the Board of Directors of RONA, for the initial five year period ending March 31, 2016. The dividend rate will be reset on March 31, 2016 and every five years thereafter at a rate equal to the sum of the then current five-year Government of Canada bond yield plus 2.65%.

The Series 6 Class A Preferred Shares will be redeemable in whole or in part by RONA, at its option, on March 31, 2016, and on March 31 of every fifth year thereafter in accordance with their terms, at a cash redemption price per share of $25.00 together with all accrued and unpaid dividends.

Holders of Series 6 Class A Preferred Shares will have the right, at their option, to convert their shares into Cumulative Floating Rate Series 7 Class A Preferred Shares (the "Series 7 Class A Preferred Shares"), subject to certain conditions and RONA's right to redeem the Series 6 Class A Preferred Shares as described above, on March 31, 2016 and on March 31 of every fifth year thereafter. Holders of the Series 7 Class A Preferred Shares will be entitled to receive cumulative quarterly floating dividends at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 2.65%, as and when declared by the Board of Directors of RONA.

Holders of the Series 7 Class A Preferred Shares may convert their Series 7 Class A Preferred Shares into Series 6 Class A Preferred Shares, subject to certain conditions and RONA's right to redeem the Series 7 Class A Preferred Shares as described below, on March 31, 2021 and on March 31 every five years thereafter.

The Series 7 Class A Preferred Shares will be redeemable in whole or in part by RONA, at its option, at a cash redemption price per share of $25.00 together with all accrued and unpaid dividends in the case of redemptions on March 31, 2021 and on March 31 every five years thereafter or $25.50 together with all accrued and unpaid dividends in the case of redemptions on any other date after March 31, 2016.

The Company has also granted the underwriters an option (the "Over-Allotment Option") to purchase up to an additional 750,000 Series 6 Class A Preferred Shares, on the same terms and conditions as the offering, exercisable any time, in whole or in part, until the date that is 30 days from the closing date of the offering. If the Over-Allotment Option is exercised in full, the total gross proceeds to RONA will be $143,750,000.

This offering will further strengthen RONA's balance sheet, diversify its sources of financing and increase its financial flexibility in order to continue to execute the Company's strategic plan. The net proceeds of the offering will be used by RONA to reduce indebtedness, contribute to the funding of future acquisitions, capital projects and for general corporate purposes.

The Series 6 Class A Preferred Shares will be offered for sale to the public in each of the provinces of Canada pursuant to a short form prospectus to be filed with Canadian securities regulatory authorities in all Canadian provinces.

Standard & Poor's, a division of the McGraw Hill Companies, Inc. ("S&P"), has assigned a rating of P-3 for the Series 6 Class A Preferred Shares and DBRS Limited ("DBRS") has assigned a rating of Pfd-3 for the Series 6 Class A Preferred Shares.

The offering is scheduled to close on or about February 22, 2011, subject to certain conditions, including Toronto Stock Exchange and other customary regulatory approvals, as well as other conditions set forth in the underwriting agreement.

The Series 6 Class A Preferred Shares have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons, absent registration or an applicable exemption from registration requirements. This News Release does not constitute an offer to sell or the solicitation of an offer to buy any security, and shall not constitute an offer, solicitation, or sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

FORWARD-LOOKING STATEMENTS

This News Release includes "forward-looking statements" that involve risks and uncertainties. All statements other than statements of historical facts included in this News Release, including statements regarding the prospects of the industry and prospects, plans, financial position and business strategy of the Company, may constitute forward-looking statements within the meaning of the Canadian securities legislation and regulations. Investors and others are cautioned that undue reliance should not be placed on any forward-looking statements. The forward-looking statements in this News Release reflect the Company's expectations as at February 1, 2011, and are subject to change after this date. The Company expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by the applicable securities laws. For more information on the risks, uncertainties and assumptions that would cause the Company's actual results to differ from current expectations, please also refer to the Company's public filings available at www.sedar.com and www.rona.ca. In particular, further details and descriptions of these and other factors are disclosed in the MD&A under the "Risks and uncertainties" section and in the "Risk factors" section of the Company's current Annual Information Form.

About RONA

RONA is the largest Canadian distributor and retailer of hardware, home renovation and gardening products. RONA operates a network of more than 950 corporate, franchise and affiliate stores of various sizes and formats. With more than 30,000 employees working under its family of banners in every region of Canada and more than 17 million square feet of retail space, the RONA store network generates over $6 billion in annual retail sales. Visit www.rona.ca.

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