Dorel Industries Inc. announced that it has closed its previously-announced bought-deal public offering of extendible convertible unsecured subordinated debentures due Nov. 30, 2019 in an aggregate principal amount of US$105 million. The debentures have been approved for listing on the Toronto Stock Exchange and will commence trading today under the symbol “DII.DB.U”.
The Debentures were sold to a syndicate of underwriters co-led by RBC Capital Markets and BMO Capital Markets, acting as joint book-runners, and including CIBC World Markets Inc., TD Securities Inc., Desjardins Securities Inc., HSBC Securities (Canada) Inc. and BNP Paribas (Canada) Securities Inc.
The Debentures are direct, subordinated, unsecured obligations of Dorel and rank equally with one another and with all other existing and future unsecured indebtedness of Dorel (other than Senior Indebtedness, as that term is defined in the trust indenture governing the Debentures). The Debentures bear interest at a rate of 5.50 percent per annum, payable in US dollars semi-annually on May 31 and November 30 each year, commencing on May 31, 2015. The Debentures are convertible after the Initial Maturity Date (as referred to below) at the holder’s option into Dorel Class B Subordinate Voting Shares at a conversion price of US$46.75 per share, representing a conversion rate of 21.3904 Dorel shares per US$1,000 principal amount of Debentures.
Dorel intends to use the net proceeds of the Offering to fund part of the acquisition price of its previously-announced proposed acquisition of the juvenile business of Hong Kong-based Lerado Group, a juvenile product manufacturer in China specializing in the design and manufacture of a wide range of infant and juvenile products.
Dorel has granted the underwriters an option to purchase up to an additional US$15 million aggregate principal amount of Debentures, on the same terms and conditions, exercisable in whole or in part at any time not later than the earlier of the 30th day from today and the occurrence of a Termination Event, as referred to below.
The maturity date of the Debentures will initially be the date upon which a Termination Event (as defined below) occurs, which will be no later than December 31, 2014 (the “Initial Maturity Date”). If the Lerado Acquisition is completed prior to the occurrence of a Termination Event, the maturity date of the Debentures will be automatically extended to November 30, 2019. If a Termination Event occurs, the Debentures will mature on the Initial Maturity Date and Dorel will repay to holders the aggregate principal amount of outstanding Debentures together with accrued and unpaid interest thereon up to, but excluding, the Initial Maturity Date. In the circumstance where Dorel has not completed the Lerado Acquisition, the term “Termination Event” means the occurrence of either (i) 5:00 p.m. (Montreal time) on December 31, 2014; or (ii) 5:00 p.m. (Montreal time) on the third business day following the date of an announcement by Dorel to the public by way of press release that the agreement relating to the Lerado Acquisition has been terminated or that Dorel does not intend to proceed with the Lerado Acquisition.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
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