Sherritt Announces Second Modified Dutch Auction to Purchase Secured Notes and Fixed Price Tender Offer to Purchase Junior Notes in 2022 for Aggregate $50 Million
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OR FOR DISSEMINATION IN THE UNITED STATES
Sherritt Announces Second Modified Dutch Auction to Purchase
Secured Notes and Fixed Price Tender Offer to Purchase Junior
Notes in 2022 for Aggregate $50 Million
TORONTO, November 2 , 2022 – Sherritt International Corporation (“ Sherritt” or the
“Corporation”) (TSX:S), a world leader in the mining and hydrometallurgical refining of nickel and
cobalt from 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 p rocess (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. The Transaction is on the same terms and conditions as the Notes purchase transaction
completed by Sherritt in June 2022.
Sherritt intends to finance the Transaction from its av ailable cash and from its availability under
its syndicated revolving-term credit facility . 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. All amounts are in Canadian currency unless otherwise noted.
“Sherritt is very pleased to offer our noteholders a second opportunity this year for near term
liquidity which may not be available otherwise,” said Leon Binedell, President and CEO of Sherritt.
“We completed our successful Notes purchase transaction in June 2022, which resulted in the
reduction of the aggregate principal amount of our outstanding Notes by almost $60 million, and
a reduction in our annual interest expense by approximately $5.5 million. With our strong results
in 2022 to date, alongside expected cash flows, we have a further opportunity to reduce our debt
while also remaining committed to advancing our growth strategy, including our announced
expansion plans at the Moa Joint Venture. The June transaction together with today’s announced
transaction provide our noteholders with liquidity options to receive cash sooner for their Sherritt
Notes. Sherritt remains 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 $ 309.6 million Modified
Dutch Auction
$820(1) $850(1)
Junior
Notes
823901AN3 $ 72.4 million Fixed Price
Tender Offer
$520 $550
(1) Based on the Maximum Secured Notes Bid Price (as defined below), 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
(as defined below) of $30 per $1,000 of principal amount of Secured Notes. Bid Prices specified
for the Secured Notes mu st 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 Sherritt 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 prio r to 5:00 p.m. (Toronto
time) on November 16, 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 November 3,
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 December 1, 2022 (the “ Extended Expiration Date”,
and together with the Initial Expiration Date, the “ Expiration Dates” and each a n “Expiration
Date”), as such date and time may be extended or earlier terminated by Sherritt as described in
the Purchase Offer.
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 conditions 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 withdraw n 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 November 2 , 202 2 (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 laws. 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 earlier 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 1-800-749-9197) 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 thereof.
About Sherritt
Headquartered in Toronto, Sherritt is a world leader in using hydrometallurgical processes 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:
Lucy Chitilian, Director, Investor Relations
Telephone: (416) 935-2457
Toll-free: 1 (800) 704-6698
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”, “s hould”, “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 deadlines, 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 i nterest. 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 results 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 three and nine
months ended September 30, 2022, 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.