Clearwater Seafood announces refinancing of senior debt facilities

February 7, 2011 10:18

Clearwater Seafoods Limited Partnership, which is 54.27% owned by Clearwater Seafoods Income Fund, announced that it has successfully completed a refinancing of its senior debt facilities, reports with reference to Clearwater Seafoods. 

This refinancing will increase Clearwater's' Senior Term Credit Facility from Canadian $51.5 million to Canadian $70 million, extend the maturity date of its existing Asset Backed Revolving Loan and create a new US $45 million Second Lien Senior Credit Facility  

GE Capital Markets, Inc. and GE Capital Markets (Canada) Ltd acted as sole Lead Arranger for the ABL, Senior Notes and Second Lien Facility. GE Capital in Canada is the Agent for the ABL and Senior Notes. Prospect Capital is agent for the Second Lien Facility.

The proceeds of this refinancing will be used to repay and cancel Icelandic Krona denominated debt facilities and provide working capital for ongoing corporate needs. 

This refinancing provides a number of substantial benefits to Clearwater including:

Funding for capital expenditures plan - this refinancing provides Clearwater up to Canadian $10 million to fund a substantial refit program for its vessels in 2011 during the off-peak harvest time of the year, which should have a positive impact on harvest costs in 2011 and allow Clearwater to sell one factory vessel in 2011.

Removes exposure to Icelandic Krona debt - as part of the refinancing all ISK denominated debt will be settled removing exposure to the Icelandic Krona and CPI in Iceland. 

Increases operational liquidity - the completion of this transaction will result in excess of $18 million being applied to reduce amounts owing on Clearwater's ABL  providing Clearwater with greater flexibility in funding day-to-day operations.

Increases financial flexibility - provisions in the new lending agreements provide greater covenant flexibility and adjust the timing of certain cash flow sweeps providing Clearwater with greater financial flexibility.

Provides capacity to expand hedging program - In conjunction with this financing, Clearwater will expand its hedging program allowing it to enter into approximately CDN $125 to $150 million of forward contracts.  This will enable Clearwater to hedge approximately 50% to 60% of its annual net exposure. 

Removes all near-term debt maturities - With this refinancing, Clearwater has no material debt maturities until 2013.  However, the loan agreements give Clearwater the flexibility to prepay the Senior Notes and, after the Senior Notes are repaid, repay the Second Lien Facility provided certain conditions are met and the nominal break fees are paid.

Improvements obtained with no increase in annual cash interest costs - the companies new Senior Notes and ABL facilities carry lower interest rates which will offset higher interest rates on the Second Lien Facility resulting in no material additional cash interest costs.

Mr. Ian Smith, CEO of Clearwater commented "This refinancing results in a substantial improvement in our capital structure which will allow our management team to focus on growing our business and creating long-term value for our unitholders.

Ellis Gaston, Managing Director of Corporate Finance Canada at GE Capital, added "Structuring expertise and industry knowledge allows GE to customize financing solutions to help customers meet their business objectives.   As their longstanding lender, we understand Clearwater's business strategy and are pleased to provide them with the capital and flexibility they need to grow."

Richard Carratu, Managing Director in New York, commented "Prospect Capital Corporation  is pleased to have the opportunity to provide Clearwater Seafoods a $45,000,000 Second Lien Facility and to be part of the Company's strategy going forward."

About Clearwater

Clearwater is recognized for its consistent quality, wide diversity and reliable delivery of premium seafood, including scallops, lobster, clams, coldwater shrimp, crab and ground fish.

Since its founding in 1976, Clearwater has invested in science, people, technology, resource ownership and resource management to preserve and grow its seafood resource. This commitment has allowed it to remain a leader in the global seafood market.

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