ALGOMA CENTRAL CORPORATION Announces $75 million Public Offering of 5.25% Convertible Unsecured Subordinated Debentures

Jun 01, 2017



ST. CATHARINES, ONTARIO (June 1, 2017) Algoma Central Corporation (“Algoma”) announced today that it has entered into an agreement to sell, on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, $75,000,000 principal amount of 5.25% convertible unsecured subordinated debentures (the “Debentures”) at a price of $1,000 per Debenture (the “Offering”). Algoma has also granted the underwriters an over-allotment option to purchase up to an additional $7,500,000 aggregate principal amount of Debentures at the same price exercisable in whole or in part at any time for a period of 30 days following closing.

The Debentures will mature on June 30, 2024 and will bear interest at an annual rate of 5.25% payable semi-annually on the last day of June and December of each year, commencing December 31, 2017. At the holder's option, the Debentures may be converted into common shares of Algoma (“Shares”) at any time prior to the close of business on the earlier of June 30, 2024 and the business day immediately preceding the date specified by Algoma for redemption of the Debentures. The conversion price will be $21.15 per Share (the “Conversion Price”), subject to adjustment in certain circumstances.

The Debentures will not be redeemable before June 30, 2020. On and after June 30, 2020 and prior to June 30, 2022, the Debentures may be redeemed in whole or in part from time to time at Algoma’s option, provided that the volume weighted average trading price of the Shares on the Toronto Stock Exchange during the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of the redemption is given is not less than 125% of the Conversion Price. On and after June 30, 2022 and prior to the maturity date, Algoma may, at its option, redeem the Debentures, in whole or in part, from time to time at par plus accrued and unpaid interest.

Algoma expects to use the net proceeds of the Offering to fund the redemption of its outstanding 6.00% convertible unsecured subordinated debentures due March 2018 (the "Existing Debentures") and for general corporate purposes. Algoma intends to provide formal notice of its intention to redeem the Existing Debentures to the registered holders thereof in accordance with the terms and conditions of the trust indenture governing the Existing Debentures following the closing of the Offering.

The Offering is expected to close on or about June 21, 2017 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange.

A preliminary short-form prospectus will be filed by June 7, 2017 with the securities regulatory authorities in all provinces of Canada. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registrations requirements of such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction.


Algoma Central Corporation operates the largest Canadian flag fleet of dry and liquid bulk carriers on the Great Lakes - St. Lawrence Waterway, including self-unloading dry-bulk carriers, gearless dry bulk carriers and product tankers. Algoma also owns ocean self-unloading vessels operating in international markets. Algoma provides ship management services for other ship owners. The Company is expanding into global dry-bulk markets with investments in businesses specializing in pneumatic cement carrying vessels and in short-sea dry-bulk shipping.


Certain information included in this press release is forward-looking, within the meaning of applicable securities laws. Much of this information can be identified by looking for words such as “believe”, “expects”, “expected”, “will”, “intends”, “projects”, “anticipates”, “estimates”, “continues” or similar words. In particular, this press release includes forward- looking statements pertaining to the proposed timing of completion of the Offering and Algoma’s intention to redeem the Existing Debentures following the closing of the Offering. Algoma believes the expectations reflected in such forward-looking statements are 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.

Forward-looking statements are based on current information and expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to, risks associated with the ability to satisfy regulatory and commercial closing conditions of the Offering, the uncertainty associated with accessing capital markets and the risks related to Algoma’s business, including those identified in Algoma’s Annual Information Form for the fiscal year ended December 31, 2016 on pages 10 to 15.  Reference should be made to this additional information prior to making any investment decision.  Forward looking statements contained in this press release are made as of the date hereof and are subject to change. Algoma assumes no obligation to revise or update forward looking statements to reflect new circumstances, except as required by law.

For further information please contact:

Ken Bloch Soerensen
President and Chief Executive Officer
+1 905-687-7885

  Peter D. Winkley, CPA, CA
  Vice President, Finance and CFO
  +1 905-687-7897