Sherritt Announces Modified Dutch Auction to Purchase Secured Notes and Fixed Price Tender Offer to Purchase Junior Notes for Aggregate $50 Million
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OR FOR DISSEMINATION IN THE UNITED STATES
Sherritt Announces Modified Dutch Auction to Purchase Secured
Notes and Fixed Price Tender Offer to Purchase Junior Notes for
Aggregate $50 Million
TORONTO, May 11, 2022 – Sherritt International Corporation (“Sherritt” or the “Corporation”)
(TSX:S), a world leader in the mining and hydrometallurgical refining of nickel and cobalt f rom
lateritic ores, announced today the commencement of offers to purchase (i) its outstanding 8.50%
senior second lien secured notes due 2026 (the “Secured Notes”) pursuant to a modified Dutch
auction process (the “Secured Notes Dutch Auction”) and (ii) its outstanding 10.75% unsecured
PIK option notes due 2029 (the “ Junior Notes”, and collectively with the Secured Notes, the
“Notes”) pursuant to a fixed price tender offer process (the “ Junior Notes Fixed Price Tender
Offer” and, together with the Secured Notes Dutch Auction, the “ Offers” or the “ Transaction”)
for aggregate cash consideration of up to $50 million (the “Maximum Consideration Amount”),
exclusive of accrued and unpaid interest on the purchased Secured Notes.
Sherritt intends to finance the Transaction from its available cash. Sherritt may increase or
decrease the Maximum Consideration Amount at any time prior to the Extended Expiration
Payment Date (as defined below) in its sole discretion , and may use its available cash and/or
seek to raise additional funds in order to increase the Maximum Consideration Amount. All
amounts are in Canadian currency unless otherwise noted.
“The principal purpose of the Transaction is for Sherritt to reduce its outstanding debt and provide
near-term liquidity to our noteholders which may not be available otherwise. Sherritt’s
performance in 2021 and the first quarter of 2022, coupled with expected cash flows, provides an
opportunity for Sherritt to pursue its growth strategy, in cluding the expansion at the Moa Joint
Venture, while also continuing its efforts to reduce debt to achieve balance sheet strength,” said
Leon Binedell, President and CEO of Sherritt. “We remain committed to generating value for and
acting in the best interests of our stakeholders.”
Consideration under the Offers
The following table sets out the Notes and certain payment terms under the Offers , which are
discussed further below:
Notes CUSIP
Number
Principal
Amount
Outstanding
Transaction
Process
Maximum Cash
Consideration
per $1,000
principal amount
Maximum Cash
Consideration per
$1,000 principal amount,
including the Initial
Participation
Consideration Amount
Secured
Notes
823901AM5 $350.5 million Modified Dutch
Auction
$820(1) $850(1)
Junior
Notes
823901AN3 $87.0 million Fixed Price
Tender Offer
$520 $550
(1) Based on the Maximum Secured Notes Bid Price , and subject to determining the Clearing Price (as defined
below) pursuant to the Secured Notes Dutch Auction process.
Secured Notes
The Secured Notes will be priced per $1,000 of principal amount of Secured Notes as determined
by a modified Dutch Auction process whereby holders may specify either the minimum purchase
price they are willing to receive for each $1,000 of principal amount of their Secured Notes (a “Bid
Price”) or accept the purchase price for the Secured Notes determined by Sherritt pursuant to the
terms of the Secured Notes Dutch Auction (the “Clearing Price”), as described in the Purchase
Offer (as defined below), plus, where applicable, the Initial Participation Consideration Amount of
$30 per $1,000 of principal amount of Secured Notes. Bid Prices specified for the Secured Notes
must be less than or equal to $ 820 per $1,000 of principal amount of Secured Notes (the
“Maximum Secured Notes Bid Price”). Bid Prices in excess of the Maximum Secured Notes
Bid Price will not be accepted or used for the purposes of determining the Clearing Price. If none
of the holders that tender Secured Notes pursuant to the Secured Notes Dutch Auction specify a
Bid Price, the Clearing Price will be the Maximum Secured Notes Bid Price . Holders whose
Secured Notes are purchased by Sherritt pursuant to the Secured Notes Dutch Auction will also
be entitled to be paid in cash any accrued and unpaid interest from the last interest payment date
up to, but not including, the applicable Payment Date (as defined below).
Junior Notes
The purchase price for the Junior Notes pursuant to the Junior Notes Fixed Price Tender Offer is
a fixed price of $ 520 per $1,000 of principal amount of Junior Notes (the “Junior Notes Fixed
Price”) plus, where applicable, the Initial Participation Consideration Amount of $30 per $1,000
of principal amount of Junior Notes. The purchase price for the Junior Notes pursuant to the
Junior Notes Fixed Price Tender Offer determined by the Company takes into account all accrued
interest from the last interest payment date as part of the overall purchase price. Accrued interest
in respect of the Junior Notes will not be paid in respect of any Junior Notes purchased by Sherritt
pursuant to the Junior Notes Fixed Price Tender Offer. Junior Notes that are validly tendered and
not withdrawn will have priority in acceptance over Secured Notes validly tendered and not
withdrawn as discussed in further detail below.
Additional Initial Participation Consideration
Holders of Notes that validly tender and do not withdraw their Notes prior to 5:00 p.m. (Toronto
time) on June 1, 2022 (the “Initial Expiration Date”), as such date and time may be extended or
earlier terminated by Sherritt , and whose Notes are purchased by Sherr itt pursuant to the
applicable Offer, will be entitled to additional cash consideration of $ 30 per $1,000 of principal
amount of purchased Notes (the “Initial Participation Consideration Amount”), payable on the
applicable Payment Date.
Timeline and Process for the Offers; Priority of Notes Purchases
The Offers will be open for tender commencing as of 9:00 a.m. (Toronto time) on May 12, 2022,
and will expire at 5:00 p.m. (Toronto time) on the Initial Expiration Date, unless the Offers are
extended by Sherritt to 5:00 p.m. on June 15, 2022 (the “ Extended Expiration Date ”, and
together with the Initial Expiration Date, the “Expiration Dates” and each an “Expiration Date”),
as such date and time may be extended or earlier terminated by Sherritt as described in the
Purchase Offer (as defined below).
Junior Notes validly tendered and not withdrawn prior to 5:00 p.m. (Toronto time) on the Initial
Expiration Date will have priority in acceptance over Secured Notes validly tendered and not
withdrawn prior to the Initial Expiration Date. Pursuant to the Transaction, Sherritt will purchase
any Junior Notes validly tendered pursuant to the Junior Notes Fixed Price Tender Offer and not
withdrawn prior to 5:00 p.m. (Toronto time) on the Initial Expiration Date (the “Initial Junior Notes
Purchase”), subject to the terms and conditions set forth in the Purchase Offer, and then have
the option to purchase Secured Notes validly tendered and not withdrawn pursuant to the Secured
Notes Dutch Auction prior to 5:00 p.m. (Toronto time) on the Initial Expiration Date (the “Initial
Expiration Secured Notes Purchase Option ”), subject to (i) Sherritt’s satisfaction with the
Clearing Price for such Secured Notes , (ii) the Maximum Consideration Amount (taking into
account the Initial Junior Notes Purchase) and (iii) the terms and conditi ons set forth in the
Purchase Offer. The settlement date for any Notes purchased by Sherritt pursuant to the Initial
Junior Notes Purchase and/or the Initial Expiration Secured Notes Purchase Option will be the
date that is three business days after the Initial Expiration Date (the “Initial Expiration Payment
Date”).
If Sherritt exercises the Initial Expiration Secured Notes Purchase Option, the Transaction shall
not be extended past the Initial Expiration Date to the Extended Expiration Date. If Sherritt does
not exercise the Initial Expiration Secured Notes Purchase Option, Sherritt can extend the Offers
past the Initial Expiration Date to the Extended Expiration Date, as may be further extended or
earlier terminated by Sherritt as described in the Purchase Offer.
Any additional Junior Notes validly tendered and not withdrawn prior to 5:00 p.m. (Toronto time)
on the Extended Expiration Date will have priority in acceptance over Secured Notes validly
tendered and not withdrawn prior to 5:00 p.m. (Toronto time) on the Extended Expiration Date
(including, for clarity, any Secured Notes that may have been validly tendered prior to the Initial
Expiration Date and not withdrawn). Pursuant to the Transaction, if the Offers are extended by
Sherritt to the Extended Expiration Date, Sherritt will purchase any additional Junior Notes validly
tendered and not withdrawn pursuant to the Junior Notes Fixed Price Tender Offer prior to 5:00
p.m. (Toronto time) on the Extended Expiration Date (the “Additional Junior Notes Purchase”),
subject to the terms and conditions set forth in the Purchase Offer , and then have the option to
acquire Secured Notes validly tendered and not withdrawn pursuant to the Secured Notes Dutch
Auction prior to 5:00 p.m. (Toronto time) on the Extended Expiration Date (the “ Subsequent
Secured Notes Purchase Option ”), subject to (i) Sherritt’s satisfaction with the Clearing Price
for such Secured Notes, (ii) the Maximum Consideration Amount (taking into account the Initial
Junior Notes Purchase and Additional Junior Notes Purchase) and (iii) the terms and conditions
set forth in the Purchase Offer. The settlement date for any Notes purchased by Sherritt pursuant
to the Additional Junior Notes Purchase and the Subsequent Secured Notes Purchase Option will
be the date that is three business days after the Extended Expiration Date (the “ Extended
Expiration Payment Date”, and together with the Initial Expiration Payment Date, the “Payment
Dates” and each a “Payment Date”).
Junior Notes and, if Sherritt exercises the Initial Expiration Secured Notes Purchase Option,
Secured Notes that in each case are tendered prior to 5:00 p.m. (Toronto time) on the Initial
Expiration Date may be withdrawn at any time prior to 5:00 p.m. (Toronto time) on the Initial
Expiration Date, but not afterwards unless otherwise required by law. If Sherritt does not exercise
the Initial Expiration Secured Notes Purchase Option, Junior Notes tendered after 5:00 p.m.
(Toronto time) on the Initial Expiration Date and prior to 5:00 p.m. (Toronto time) on the Extended
Expiration Date, and Secured Notes tendered at any time prior to 5:00 p.m. (Toronto time) on the
Extended Expiration Date, may be withdrawn at any time prior to 5:00 p.m. (Toronto time) on the
Extended Expiration Date, but not afterwards unless otherwise required by law. Sherritt reserves
the right, but is under no obligation, to amend the Maximum Consideration Amount at any time in
its sole discretion (including, for certainty, after an Expiration Date and prior to the applicable
Payment Date) without extending withdrawal rights.
The Transaction is subject to certain terms and conditions described in Sherritt’s Offer to
Purchase dated May 11, 2021 (the “Purchase Offer”). The above dates and times are subject,
where applicable, to the right of Sherritt to extend, reopen, amend and/or terminate the Offers,
subject to applicable la ws. Sherritt may amend the Maximum Secured Notes Bid Price and/or
the Junior Notes Fixed Price in its sole discretion, provided that if at the time of any such
amendment there are fewer than three business days until the applicable expiration date for the
Offers, Sherritt will extend the Offers so that at least three business days remain until the
applicable expiration date. Holders should be aware that their broker, dealer, commercial bank,
trust company or other intermediary will establish their own ear lier deadlines for participation in,
or withdrawal from, the Offers.
National Bank Financial Markets ([email protected] or (416) 869-8635) is acting as
dealer manager, Kingsdale Advisors ([email protected] or 1-800-749-9052) is
acting as depositary and as information agent, and Goodmans LLP is acting as Sherritt’s legal
advisor in connection with the Transaction . A copy of the Purchase Offer may be obtained by
contacting National Bank Financial Markets or Kingsdale Advisors at the above contact
information.
The Offers are made only by and pursuant to the terms of the Purchase Offer and the information
in this news release is qualified by r eference to the Purchase Offer. None of Sherritt, National
Bank Financial Markets or Kingsdale Advisors make any recommendations as to whether holders
should tender or withhold their Notes pursuant to the Offers. Sherritt may amend, extend or
terminate either Offer in its sole discretion and subject to applicable law.
This news release does not constitute a notice of redemption under the redemption provisions of
the indentures governing the Notes, nor does it constitute or form part of any offer or invitation to
purchase or sell , or any solicitation of any offer to purchase or sell, the Notes or any other
securities in any other country, nor shall it or any part of it, or the fact of its release, form the basis
of, or be relied on or in connection with, any contract therefor.
About Sherritt
Sherritt is a world leader in using hydrometallurgical process to mine and refine nickel and cobalt
– metals essential for an electric future. Its Technologies Group creates innovative, proprietary
solutions for natural resource -based industries around the world to improve environmental
performance and increase economic value. Sherritt has embarked on a multi -pronged growth
strategy focused on expanding nickel and cobalt production by up to 20% from 2021 and
extending the life of mine at Moa beyond 2040. The Corporation is also the largest independent
energy producer in Cuba. Sherritt’s common shares are listed on the Toronto Stock Exchange
under the symbol “S”.
For more information, please contact:
Mark Preston, Investor Relations
Telephone: 416-935-2406
Email: [email protected]
www.sherritt.com
Forward-Looking Statements
Certain statements and other information included in this press release constitute “forward-looking
information” or “forward -looking statements” (collectively, “forward -looking statements”) under
applicable securities laws (such statements are often accompanied by words such as “anticipate”,
“forecast”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend” or other similar words).
All statements in this press release, other than those relating to historical information, are forward-
looking statements, including, but not limited to the principal amount of any Secured Notes and
/or Junior Notes to be purchased under the Offers; the dead lines, determination dates and
settlement dates specified herein in regard to the Offers; increasing, decreasing or eliminating the
Maximum Consideration Amount; and the payment of accrued and unpaid interest. Forward -
looking statements in this press release are subject to a number of assumptions, risks and
uncertainties, many of which are beyond our control, which could cause actual resu lts to differ
materially from such forward-looking statements. The key risks and uncertainties are set forth in
the Purchase Offer and in the Corporation’s reports filed with the Canadian securities regulatory
authorities, including without limitation the “Risk Factors” section of the Annual Information Form
of the Corporation dated March 24, 2022 for the year ended December 31, 2021 and the
“Managing Risk” sections of the Corporation’s Management’s Discussion and Analysis for the first
three months ended March 31, 2022 and the year ended December 31, 2021, all of which are
available on SEDAR at www.sedar.com. As such, undue reliance should not be placed on these
forward-looking statements.
The forward-looking information and statements contained in this press release are made as of
the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral
or written forward-looking information or statements, whether as a result of new information, future
events or otherwise, except as required by applicable securities laws. The forward -looking
information and statements contained herein are expressly qualified in their entirety by this
cautionary statement.