CALGARY, ALBERTA--(Marketwired - Oct. 17, 2016) - Tervita Corporation ("Tervita" or the "Company") and certain of its affiliates announced today that the Alberta Court of Queen's Bench (the "Court") issued an interim order (the "Interim Order") authorizing, among other things, the holding of the following meetings (collectively, the "Meetings"): (i) a meeting (the "Unsecured Noteholders' Meeting") of holders of the 9.75% senior unsecured notes issued by Tervita due November 2019 and the holders of the 10.875% senior unsecured notes issued by Tervita due February 2018 (collectively, the "Unsecured Notes", and the holders of such Unsecured Notes, the "Unsecured Noteholders"); (ii) a meeting (the "Subordinated Noteholders' Meeting") of holders of the 11.875% senior subordinated notes issued by Tervita due November 2018 (the "Subordinated Notes", and the holders of such Subordinated Notes, the "Subordinated Noteholders"); and (iii) a meeting (the "RSAC Shareholders' Meeting") of holders of Red Sky Acquisition Corp.'s common shares (the "RSAC Shares", and the holders of such RSAC Shares, the "RSAC Shareholders"), in each case, to consider and vote upon a corporate plan of arrangement under the Canada Business Corporation Act (the "Plan of Arrangement") to implement the previously announced proposed recapitalization transaction (the "Recapitalization Transaction").
This marks another significant step forward in the recapitalization process. "In the interim, Tervita's operations remain strong with ample liquidity to maintain our business. We are current with all of our customers, vendors and trade partners, and are excited about how this deal positions us for success once the Recapitalization Transaction is complete," said Chris Synek, CEO and President of Tervita. Following a successful vote, Tervita will move to implement the Plan of Arrangement.
The Meetings are scheduled to be held at the offices of Osler, Hoskin & Harcourt LLP, Suite 2500, TransCanada Tower, 450 - 1st Street SW, Calgary, Alberta T2P 5H1, on November 30, 2016. The Unsecured Noteholders' Meeting is scheduled to begin at 10:00 a.m. (Calgary time), the Subordinated Noteholders' Meeting is scheduled to begin at 10:30 a.m. (Calgary time), and the RSAC Shareholders' Meeting is scheduled to begin at 11:00 a.m. (Calgary time).
Pursuant to the Interim Order, the voting record date for the Meetings is 5:00 pm (Calgary time) on October 14, 2016 (the "Record Date"). Unsecured Noteholders and Subordinated Noteholders as at the Record Date will be entitled to vote on the Plan of Arrangement at the applicable Meeting based on one vote per US$1,000 principal amount of Unsecured Notes or Subordinated Notes, respectively, held as at the Record Date. RSAC Shareholders as at the Record Date will be entitled to vote on the Plan of Arrangement at the RSAC Shareholders' Meeting based on one vote per share held as at the Record Date. The deadline for Unsecured Noteholders, Subordinated Noteholders and RSAC Shareholders to submit their proxies or voting instructions in order to vote on the Plan of Arrangement and other items to be considered at the applicable Meeting is November 28, 2016, at 5:00 p.m. (Calgary time).
To be approved, the Plan of Arrangement requires the affirmative vote of at least 66 2/3% of the votes cast in person or by proxy at each of the Unsecured Noteholders' Meeting and the Subordinated Noteholders' Meeting and, in accordance with the terms of certain unanimous securityholder agreements involving the Company, 53.6% of the votes cast in person or by proxy at the RSAC Shareholders' Meeting. The Company has now entered into support agreements with approximately 74% of the Unsecured Noteholders, approximately 98% of the Subordinated Noteholders, and approximately 69% of the RSAC Shareholders, pursuant to which such parties have agreed to support the Recapitalization Transaction.
The information circular for the Meetings (the "Circular") contains information regarding procedures for voting on the Plan of Arrangement and participating in the New Offering (as defined below), as well as other background and material information regarding the Recapitalization Transaction. The Company expects the mailing of the Circular to begin on or about October 24, 2016. The Circular, the forms of proxies and the New Offering Participation Form (as defined below) will also be available as follows:
- on Tervita's noteholder IntraLinks website; and
- through Kingsdale Shareholder Services by calling at 1-866-851-2484 (toll-free within Canada or the United States) or 1-416-867-2272 (for calls outside of Canada and the United States) or by email at email@example.com.
Any questions or requests for further information regarding voting at the Meetings or participation in the New Offering should be directed to Kingsdale Shareholder Services at 1-866-851-2484 or 1-416-867-2272, or by e-mail at firstname.lastname@example.org.
Key Elements of the Recapitalization Transaction
Pursuant to the Plan of Arrangement, the Recapitalization Transaction contemplates the following:
- the creation of new classes of common shares and preferred shares of Tervita, which shares shall have substantially similar rights and vote together on an as-converted basis as a single class except that if any shareholder would have beneficial or legal ownership of more than 49.90% of the voting power of Tervita, such shareholder will be required to hold non-voting common or preferred shares in excess of that threshold;
- the issuance of new preferred shares to those eligible Unsecured Noteholders that have elected to participate in the new investment offering for an aggregate dollar amount of up to $372 million (the "New Offering"), as described in greater detail below (which amount may be reduced, such that Tervita's cash balance is $75 million on the effective date of the Recapitalization Transaction (the "Effective Date"));
- the issuance of new preferred shares in consideration for the exchange and transfer of Tervita's secured term loan debt due 2018 and 8.00% and 9.00% senior secured notes due 2018 (collectively, the "Secured Debt") held by the sponsors of the Recapitalization Transaction (the "Plan Sponsors") as of September 14, 2016, plus accrued and unpaid interest thereon to and including the Effective Date;
- holders of the Secured Debt as of the Effective Date other than the Plan Sponsors will receive cash for the principal amount outstanding, plus accrued and unpaid interest thereon to and including the Effective Date (without any early redemption payment or similar payments);
- in consideration for the exchange and transfer of the Unsecured Notes, (i) Unsecured Noteholders as of the Effective Date will receive new common shares that in the aggregate will represent 2.0% of pro forma equity, and (ii) Unsecured Noteholders who execute support agreements with Tervita on or before the Early Consent Date (as defined below), will receive new common shares that in the aggregate will represent 0.5% of pro forma equity (the "Early Consent Shares");
- in consideration for the exchange and transfer of the Subordinated Notes, (i) Subordinated Noteholders as of the Effective Date will receive $20 million cash in the aggregate, and (ii) Subordinated Noteholders who execute support agreements with Tervita on or before the October 14, 2016, will receive $5 million cash in the aggregate;
- the exchange of all equity of Tervita existing prior to the Effective Date for 20% of the net proceeds from a certain litigation matter involving Tervita, after deduction of all costs associated with that litigation;
- new debt in the amount of $475 million and the reinstatement or replacement of Tervita's revolving credit facility, each on terms acceptable to Tervita and the Plan Sponsors;
- the adoption by Tervita of new constating and corporate governance documents, including a unanimous shareholders agreement; and
- assuming an Effective Date of December 31, 2016, and a $372 million New Offering, Tervita's pro forma equity will be as follows:
- New Investment: 48.8%,
- Plan Sponsor's Secured Debt conversion: 48.7%, and
- Unsecured Noteholders: 2.5%.
Eligible Unsecured Noteholders as of the Record Date will have the right, but not the obligation, to participate in the New Offering on a pro rata basis based on their holdings of the Unsecured Notes. Eligible Unsecured Noteholders wishing to participate in the New Offering must complete and deliverer the participation form accompanying the Circular (the "New Offering Participation Form"), medallion/stamp guaranteed, to Tervita at c/o Osler, Hoskin & Harcourt LLP, Suite 2500, TransCanada Tower, 450 - 1st Street S.W., Calgary, Alberta T2P 5H1 (Attention: Justin Sherman) by no later than 5:00 p.m. (Calgary time) on November 28, 2016. Tervita and the Plan Sponsors entered into a backstop commitment letter pursuant to which, among other things, each Plan Sponsor agreed to backstop the funding of the New Offering on a pro rata basis.
Early Consent Date Change and Noteholder Call
As previously announced, Unsecured Noteholders that have executed a support agreement with Tervita on or before October 14, 2016, will, as additional consideration, receive their pro rata share of the Early Consent Shares. Although Unsecured Noteholders holding approximately 74% of Unsecured Notes have already committed to support the Plan of Arrangement, in order to provide additional Unsecured Noteholders with time to receive their pro rata share of Early Consent Shares, Tervita and the Plan Sponsors have agreed to extend the early consent date from October 14, 2016 to October 21, 2016 (the "Early Consent Date"). Accordingly, all Unsecured Noteholders that execute and deliver a joinder agreement to the unsecured noteholder support agreement, which can be found on the noteholder IntraLinks website, on or prior to October 21, 2016, shall be entitled to their pro rata share of the Early Consent Shares.
In addition, Tervita will be hosting a conference call with the Unsecured Noteholders on October 19, 2016, at 3 p.m. Eastern Time to discuss the Recapitalization Transaction and answer any questions. Dial-in details for the Unsecured Noteholder conference call will be posted on the noteholder IntraLinks website.
Court Approval and Implementation
If the Plan of Arrangement is approved by the requisite majorities at the Meetings, the Company will attend a hearing before the Court currently scheduled for December 6, 2016, or such other date as may be set by the Court, to seek Court approval of the Plan of Arrangement. If the approvals of the requisite majorities at the Meetings and of the Court are obtained, any other required approvals are obtained, and the other conditions to completion of the Recapitalization Transaction are satisfied or waived, it is expected that the Recapitalization Transaction will be completed on or about the end of December 2016.
This press release is not an offer of securities for sale, or a solicitation of an offer to buy these securities, in the United States or in any jurisdiction where the offer or sale is not permitted. The new common shares, the new preferred shares and the other securities described in this release have not been registered under the U.S. Securities Act of 1933, as amended, or any U.S. state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933.
Tervita's legal advisors in connection with the Recapitalization Transaction are Osler, Hoskin & Harcourt LLP and Fasken Martineau DuMoulin LLP and its financial advisor is Barclays Capital Inc.
The Plan Sponsors' legal advisors in connection with the Recapitalization Transaction are Bennett Jones LLP and Davis Polk & Wardwell LLP, and its financial advisors are Moelis & Company LLC and Peters & Co. Limited.
Dollar values contained herein are expressed in Canadian currency.
Tervita has operated in Canada for almost 40 years and is a leading environmental solutions provider. Our integrated earth, water, waste and resource solutions deliver safe and efficient results through all phases of a project by minimizing impact and maximizing returns™. Our dedicated employees are trusted sustainability partners to oil and gas, construction, mining, government and communities. Safety is our highest priority: it influences our actions and shapes our culture.
Additional information about Tervita is available at www.tervita.com.
Reader Advisory Regarding Forward-Looking Statements
This news release contains certain "forward-looking statements" or "forward-looking information" (collectively referred to herein as "forward-looking statements"). Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or are events or conditions that "will", "would", "may", "could" or "should" occur or be achieved. This news release contains forward-looking statements, pertaining to, among other things, the following: the ability of the Company to reach an agreement with its lenders to restructure or recapitalize its long-term debt, the Company's liquidity and ability to meet payment obligations and the timing of meeting such payment obligations, the Company's intentions for the future of its business operations, prospects, long-term strategy and the Company's commitment to its employees, suppliers and customers. Statements regarding future growth, capital expenditures and development plans are subject to all of the risks and uncertainties that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks include, but are not limited to, general economic conditions, inflation or lack of availability of goods and services, environmental risks, customer risks, regulatory changes and certain other known and unknown risks.
Although Tervita believes that the material factors, expectations and assumptions expressed in such forward-looking statements are reasonable based on information available to it on the date such statements were made, no assurances can be given as to future results, levels of activity and achievements and such statements are not guarantees of future performance. Tervita's actual results may differ materially from those expressed or implied in forward-looking statements and readers should not place undue importance or reliance on the forward-looking statements. Statements including forward-looking statements are made as of the date they are given and, except as required by applicable laws, Tervita disclaims any intention or obligation to publically update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.