Chemtrade Logistics Income Fund added C$40 million in term debt to its existing credit facility to help back its Chemtrade Pulp Chemicals affiliate's C$117.3 million acquisition of the B.C. Chemicals (BCC) business of Canadian Forest Products. The credit facility, which includes both U.S. and Canadian dollar tranches, has been incrementally increased as the company has made more acquisitions, explained Victor Wells, v.p., finance and cfo.
The Toronto-based company has $39 million in U.S. dollar-denominated term loans that were put in place in 2001, when Chemtrade started, and in December of last year in order to back Chemtrade's acquisition of the North American sodium hydrosulphite operations and assets of Clariant International for $62 million. The company also has a C$10 million revolver and a $6.5 million revolver that are in place for general corporate purposes.
Wells said the company decided to use bank debt in the transaction to complement Chemtrade's split between equity and debt. The add-on bank loan made sense with the structure of the company's balance sheet, he explained. In addition to the C$40 million add-on, Chemtrade also completed an offering of 5.86 million in subscription receipts priced at 143/4% per receipt and totaling about C$86.4 million. The proceeds from this transaction, along with the new term debt, funded the acquisition, Wells stated. CIBC World Markets, Bank of Nova Scotia and Royal Bank of Canada are providing the credit facility, which is secured by various assets of the company, Wells noted. He declined to give pricing details for the credit. Chemtrade operates diversified businesses that provide industrial chemicals and services to customers in North America and worldwide. The company supplies chemicals from marketing services agreements and its own production facilities.