CALGARY, AB--(Marketwired - June 30, 2016) - Canexus Corporation (TSX: CUS) ("Canexus" or the "Company") announced today that the October 5, 2015 arrangement agreement (the "Arrangement Agreement") by which all the issued and outstanding common shares of Canexus would have been acquired by Superior Plus Corp. ("Superior") has been terminated by Superior.
Superior terminated the Arrangement Agreement after they failed to obtain Federal Trade Commission (FTC) approval and declined to provide certain reasonable protections necessary for Canexus to extend the Arrangement Agreement beyond the outside date of June 29, 2016. These protections were necessary for Canexus, in good faith, to incur the significant additional cost and risks associated with protracted, expensive and highly uncertain litigation against the FTC in Washington, DC.
"Canexus was prepared to give Superior additional time to pursue legal action, provided that it was on terms that were not disadvantageous to our shareholders," said Arthur Korpach, Chair of the Special Committee to the Board of Directors. "Turning to litigation significantly increased the risk profile of the Arrangement Agreement. If Superior had been willing to provide enhanced financial security and operational flexibility to Canexus in the event that legal proceedings were unsuccessful, we would have persevered. In the absence of those reasonable protections, our Board and management determined that the interests of Canexus and its shareholders would be best served by continuing to execute our current strategy."
"While we are disappointed by today's outcome, Canexus has a strong business and a clear plan to create shareholder value by reducing costs, improving EBITDA, paying down debt, exploring opportunistic asset sales and remaining disciplined and focused on efficient capital allocation," said Doug Wonnacott, Canexus' President and CEO. "Our business performance has improved over the last year and we continue to see solid results from our North American Sodium Chlorate and Brazil business units. With continued financial discipline and a focus on executing our Business Improvement Plan, Canexus is well-positioned to create value going forward."
In March 2015, Canexus introduced a Business Improvement Plan (BIP) designed to increase cash flow and strengthen the Company's balance sheet. Through the end of Q1 2016, the company has improved cash operating profit by $12.9 million, lowered working capital by $12 million, eliminated $8.3 million of SG&A costs, and reduced debt by approximately 10%. The Company remains focused on executing the BIP and driving additional performance gains.
Canexus is in compliance with all bank covenants and will continue to work with its lead banks to negotiate an amended and extended credit facility to ensure adequate liquidity to continue to execute its business strategy.
Under the terms of the Arrangement Agreement, a deal termination fee of $25 million is payable by Superior to Canexus, which Canexus will use for further debt reduction. Canexus vigorously disagrees with any contention in relation to a breach of the Arrangement Agreement by the Company and will take all necessary steps to recover the deal termination fee.
Mr. Wonnacott added, "We thank our employees and shareholders who supported the proposed transaction and we look forward to working together to grow Canexus' business. For our customers, we remain focused on meeting your needs and providing reliable service."
Canexus will host an investor and analyst conference call on July 5, 2016 at 9:00 AM MST to discuss forward strategy and business improvement. The call will be hosted by Doug Wonnacott, President and Chief Executive Officer, and Canexus management. Following the call there will be a question and answer session for analysts and institutional investors.
To access the call, please dial 416-340-2216 or 1-866-223-7781. A webcast is available at http://www.gowebcasting.com/7713 or on our website at www.canexus.ca.
A replay of the conference call will be available until end of day on July 12, 2016. To access the replay, please dial 905-694-9451 or 1-800-408-3053, followed by passcode 4649962.
Canexus produces sodium chlorate and chlor-alkali products largely for the pulp and paper and water treatment industries. Our four plants in Canada and two at one site in Brazil are reliable, low-cost, strategically located facilities that capitalize on competitive electricity costs and transportation infrastructure to minimize production and delivery costs. Canexus targets opportunities to maximize shareholder returns and delivers high-quality products to its customers and is committed to Responsible Care® through safe operating practices. Canexus' common shares (CUS) and debentures Series IV - CUS.DB.B; Series V - CUS.DB.C; Series VI - CUS.DB.D) trade on the Toronto Stock Exchange. More information about Canexus is available at www.canexus.ca.
This news release contains forward-looking statements and information relating to expected future events and financial and operating results of the Corporation and its subsidiaries, including with respect to: the strength of Canexus' business, the effectiveness of Canexus' plan in creating shareholder value, expectations for improved EBITDA, the ability of Canexus to pay down debt, the potential for asset sales, the efficiency of Canexus' capital allocation, the ability for the BIP to create value, the ability to obtain an amended facility and the liquidity provided thereby and the receipt from Superior of and the application by Canexus of, the break fee. The use of the words "expects", "anticipates", "continue", "estimates", "projects", "should", "believe", "plans", "intends", "may", "will" or similar expressions are intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements for a variety of reasons, including market and general economic conditions, future costs, treatment under governmental regulatory, tax and environmental regimes and the other risks and uncertainties detailed under "Risk Factors" in the Corporation's Annual Information Form filed on the Corporation's SEDAR profile at www.sedar.com. Management believes the expectations reflected in these forward-looking statements are currently reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Due to the potential impact of these factors, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. Any financial outlook information contained in this news release about prospective results of operations, financial position or cash flows is based on assumptions about future events, including economic conditions and proposed courses of action, based on Management's assessment of the relevant information currently available. Readers are cautioned that such financial outlook information contained in this news release should not be used for purposes other than those for which it is disclosed herein.