Sherritt Provides Important Information and Update on Key Dates for its Transaction to Improve its Capital Structure and Stakeholder Meetings
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES
OR FOR DISSEMINATION IN THE UNITED STATES
Sherritt Provides Important Information and Update on Key Dates for
its Transaction to Improve its Capital Structure and Stakeholder
Meetings
Toronto, ON, June 29, 2020 - Sherritt International Corporation (“Sherritt” or the “Corporation”)
(TSX:S) announced today the filing of an amended version of the plan of arrangement (the “Plan
of Arrangement”) pursuant to which its previously announced transaction to improve its capital
structure (the “ Transaction”), described in the Corporation’s management information circular
dated March 6, 2020 (the “ Information Circular”), is to be implemented in the Corporation’s
proceedings under the Canada Business Corporations Act (the “CBCA”). The amended Plan of
Arrangement reflects the amendments to the terms of the Transaction (the “ Amended Terms”)
announced by the Corporation in its news release on June 10, 2020 (the “ June 10 News
Release”). Sherritt has also filed the revised form of New Second Lien Notes Indenture (as
defined below) and the form of New Junior Notes Indenture (as defined below), in each case also
reflecting the Amended Terms.
In addition, the Corporation also annou nced today the revised date of July 23, 2020 (the
“Meetings Date”) for (i) the previously postponed meeting of Debtholders (as defined below) for
Debtholders to consider and vote on a resolution (the “Debtholders’ Arrangement Resolution”)
to approve the Plan of Arrangement (the “ Debtholders’ Meeting ”), and (ii) the previously
postponed meeting of the holders of the Corporation’s common shares (the “ Shareholders”) to
consider and vote on a resolution (the “Stated Capital Reduction Resolution”) to approve the
reduction of stated capital of the Corporation’s common shares (the “Shareholders’ Meeting”,
and together with the Debtholders’ Meeting, the “Meetings”). The Debtholders’ Meeting will be
held at 10:00 a.m. (Toronto time) and the Shareholders’ Meeting wi ll be held at 11:00 a.m.
(Toronto time) on the Meetings Date. In consideration of COVID-19 and to ensure the health and
welfare of our securityholders, employees and other stakeholders, the Meetings will be held in a
virtual only format.
In aggregate, Noteholders (as defined below) holding approximately $ 100 million of Existing
Notes (as defined below) have entered into support agreements with the Corporation (the
“Support Agreements”), pursuant to which such Noteholders have agreed to vote in favour of
the Plan of Arrangement (the “Supporting Noteholders”). The approximately $ 100 million of
Existing Notes held by the Supporting Noteholders to be voted in favour of the Plan of
Arrangement are in addition to the approximately $230 million of Existing Not es that have been
voted in favour of the Plan of Arrangement as at the end of April 7, 2020.
Debtholders and Shareholders who have already cast their votes in respect of the
Debtholders’ Arrangement Resolution or the Stated Capital Reduction Resolution,
respectively, do not need to re -submit their votes. For Debtholders and Shareholders who
have not cast their votes, or who wish to change their votes, the voting deadline in respect of the
Meetings has been extended to 5:00 p.m. (Toronto time) on July 21, 2020 (the “ Voting
Deadline”).
The early consent date by which Noteholders must vote in favour of the Plan of Arrangement in
order to be eligible to receive Noteholder Early Consent Cash Consideration (as defined below)
as additional consideration for the exchange of their Existing Notes pursuant to the Plan of
Arrangement (subject to the terms and conditions thereof) has been extended to July 13, 2020
(the “Early Consent Date”). Noteholders who previously submitted their votes in favour of the
Plan of Arrangement prior to the previous early consent date of April 7, 2020 do not need to re -
submit their votes in order to be eligible for Noteholder Early Consent Cash Consideration,
provided such Noteholders do not withdraw or change their previously submitted votes and
otherwise comply with the requirements under the Plan of Arrangement.
Amendments to the Transaction and Plan of Arrangement and Filing of Related Documents
The terms of the Transaction announced on February 26, 2020 and key related information are
set out in detail in the Information Circular previously mailed to Debtholders and Shareholders as
at the record date of March 6, 2020 (the “Record Date”) and made available on Sherritt’s SEDAR
profile at www.sedar.com and on Sherritt’s website at www.sherritt.com. In addition, the
Amended Terms are set out in the June 10 News Release.
In connection with the Amended Terms, the Corporation has made available the following
documents on Sherritt’s SEDAR profile at www.sedar.com and/or on Sherritt’s website
at www.sherritt.com:
the amended Plan of Arrangement and a blackline of the ame nded Plan of Arrangement
to the version included in the Information Circular;
the amended form of new second lien notes indenture (the “ New Second Lien Notes
Indenture”) pursuant to which the new 8.50% second lien notes (the “New Second Lien
Notes”) will be issued to Noteholders by Sherritt as partial consideration in exchange for
the Corporation’s outstanding (i) 8.00% senior unsecured debentures due 2021, (ii) 7.50%
senior unsecured debentures due 2023, and (iii) 7.875% senior unsecured notes due 2025
(collectively, the “Existing Notes”) pursuant to the Plan of Arrangement, and a blackline
of the revised form of New Second Lien Notes Indenture to the version filed by Sherritt on
SEDAR on March 24, 2020; and
the form of new junior notes indenture (the “New Junior Notes Indenture”, and together
with the New Second Lien Notes Indenture, the “Indentures”) pursuant to which the new
10.75% unsecured notes (the “ New Junior Notes ”) will be issued to Noteholders by
Sherritt as additional consideration in exchange for the Existing Notes pursuant to the Plan
of Arrangement.
In addition to the Amended Terms discussed in the June 10 News Release, the Indentures also
reflect, as applicable, that Sherritt’s subsidiary, CNWL Oil (España), S.A., will not be a guarantor
and will be an unrestricted subsidiary pursuant to the terms of the Indentures, and that Sherritt’s
subsidiary, SICOG Oil and Gas Limited (formerly Sherritt International (Cuba) Oil and Gas
Limited), will not deliver security in connection with its guarantee of the New Second Lien Notes.
CNWL Oil (España), S.A. will also not guarantee, and SICOG Oil and Gas Limited will not deliver
security in connection with its guarantee of, Sherritt’s bank facility.
Certain key terms of the New Junior Notes are also set out in a Schedule to this news release.
The summary of t he Amended Terms, the amended terms of the New Second Lien Notes and
the terms of the New Junior Notes described in the June 10 News Release and this news release
is not intended to be complete in and of itself. Debtholders are urged to review in detail t he
amended Plan of Arrangement, the amended form of New Second Lien Notes Indenture and the
form of New Junior Notes Indenture for the detailed terms of the Transaction, the New Second
Lien Notes and the New Junior Notes. The summary information contained in the June 10 News
Release and this news release is qualified in its entirety by reference to the detailed information
contained in the amended Plan of Arrangement, the amended form of New Second Lien Notes
Indenture and the form of New Junior Notes Inde nture made available on Sherritt’s SEDAR
profile and on Sherritt’s website.
Certain Canadian Federal Income Tax Considerations
Debtholders and Shareholders are urged to carefully read the summary of certain Canadian
federal income tax considerations of the Transaction located under the heading “ Certain
Canadian Federal Income Tax Considerations ” in the Information Circular, as supplemented by
the Material Change Report of the Corporation filed on or about the date hereof in connection with
the Amended Terms, and to consult their own tax advisors for advice as to the tax considerations
in respect of the Transaction having regard to their particular circumstances.
Opinions of Paradigm Capital
Paradigm Capital Inc. (“ Paradigm Capital”), an independent financial advisor to the board of
directors of Sherritt (the “ Board of Directors”), has provided updated opinions to the Board of
Directors that: (i) the Noteholders and the CFA Lenders (as defined below), respectively, would
be in a better position, from a financial point of view, under the Transaction, as amended by the
Amended Terms, than if the Corporation were liquidated; and (ii) the Transacti on, as amended
by the Amended Terms, is fair, from a financial point of view, to the Corporation (the “ Updated
Paradigm Capital Opinions”).
The Updated Paradigm Capital Opinions supplement the opinions provided by Paradigm Capital
to the Board of Directo rs dated February 25, 2020, copies of which were included in the
Information Circular. The full text of the Updated Paradigm Capital Opinions which set out, among
other things, the assumptions made, information reviewed and matters considered by Paradigm
Capital in rendering the Updated Paradigm Capital Opinions, as well as the limitations and
qualifications the opinions are subject to, are attached as Schedule D to the Material Change
Report of the Corporation filed on or about the date hereof and have been made available on
Sherritt’s SEDAR profile at www.sedar.com and on Sherritt’s website at www.sherritt.com.
Debtholders are urg ed to read the Updated Paradigm Capital Opinions in their entirety. The
summaries of the Updated Paradigm Capital Opinions in this news release are qualified in their
entirety by reference to the full text of such opinions. The Updated Paradigm Capital Opinions do
not constitute a recommendation to any Debtholder as to how such Debtholder should vote with
respect to the Debtholders’ Arrangement Resolution.
Sherritt and Board of Directors’ Recommendation
Sherritt believes that the Transaction is in the best interests of the Corporation and its
stakeholders considering all current circumstances. Sherritt believes that the Amended Terms
provide additional benefits to the holders of the Existing Notes, are fair and reasonable, and are
in the best interests of the Corporation and its stakeholders in the circumstances. Sherritt and its
Board of Directors recommend that all affected Debtholders vote in favour of the amended Plan
of Arrangement to implement the Transaction.
Court Approval and Implementation
If the Plan of Arrangement is approved by the requisite majority at the Debtholders’ Meeting,
Sherritt and its subsidiary, 11722573 Canada Ltd. (collectively the “ Applicants”), will attend a
hearing before the Ontario Superior Court of Justice (Commercial List) (the “Court”) on July 29,
2020 at 9:00 a.m., or on such other date as may be approved by the Court, to seek Court approval
of the Plan of Arrangement.
Completion of the Transaction pursuant to the Plan of Arrangement will be subject to, among
other things, approval of the Plan of Arrangement by the requisite majority of the Debtholders at
the Debtholders’ Meeting, approval of the Plan of Arrangement by the Court and the satisfaction
or waiver of the other applicable conditions precedent to the Plan of Arrangement. If all requisite
approvals are obtained and the other conditions to completion of the Transaction are satisfied or
waived, it is expected that the Transaction will be completed at the end of August 2020. Upon
implementation, the Plan of Arrangement would bind all Debtholders of the Corporation.
As part of the Court approval of the Plan of Arrangement, the Applicants expect to seek a
permanent waiver of potential defaults resulting from the commencement of the CBCA
proceedings or the steps or transactions related to the CBCA proceedings or Transaction, on the
terms set forth in the Plan of Arrangement.
Extension of the Early Consent Date
In connection with the amendments to the Plan of Arrangement, and in order to provide holders
of the Existing Notes (“Noteholders”) with additional time to become entitled to receive early
consent cash consideration in an amount equal to 3% of the principal amount of the Existing
Notes voted in favour of the Plan of Arrangement by the Early Consent Date a nd held by such
Noteholders on the implementation date of the Plan of Arrangement (the “ Noteholder Early
Consent Cash Consideration ”) as additional consideration for the exchange of their Existing
Notes pursuant to the Plan of Arrangement, the Corporation is extending the Early Consent Date
to July 13, 2020. Noteholders must vote in favour of the Plan of Arrangement before 5:00 p.m.
(Toronto time) on the Early Consent Date, and otherwise comply with the requirements under the
Plan of Arrangement, in order to be eligible to receive Noteholder Early Consent Cash
Consideration pursuant to the Plan of Arrangement. Noteholders who previously submitted their
votes in favour of the Plan of Arrangement prior to the previous early consent date of April 7, 2020
will not be required to re -submit their votes in order to be eligible for Noteholder Early Consent
Cash Consideration, provided such Noteholders do not withdraw or change their previously
submitted votes and otherwise comply with the requirements under the Plan of Arrangement.
Further information regarding the Noteholder Early Consent Cash Consideration is also set out in
the Information Circular. Noteholders with questions regarding early consent matters are
reminded that they may contact Kingsdale Advisors, th e Corporation’s proxy, information and
exchange agent (the “Proxy, Information and Exchange Agent”), by telephone at 1 -800-749-
9197 or 416-867-2272, or by email at [email protected].
Meetings
On April 8, 2020, Sherritt announced that, in connection with ongoing discussions with key
stakeholders in respect of the Transaction, it had postponed the Meetings. The Debtholders’
Meeting will now be held at 10:00 a.m. Toronto time) on July 23, 2020 and the Shareholders’
Meeting will now be held at 11:00 a.m. (Toronto time) on July 23, 2020.
The Debtholders’ Meeting is being held for Debtholders to consider and vote upon the
Debtholders’ Arrangement Resolution, and the Shareholders’ Meeting is being held for
Shareholders to consider and vote upon the Stated Capital Reduction Resolution. As described
in the Information Circular, the reduction of stated capital of the Corporation’s common shares to
$575 million (the “Stated Capital Reduction”) is a preliminary step to the implementation of the
Transaction.
All Noteholders and holders of the Corporation’s Ambatovy Joint Venture partner loans (the “CFA
Lenders” and, collectively with the Noteholders, the “ Debtholders”) will vote as one class in
respect of the Plan of Arrangement at the Debtholders’ Meeting. The aggregate principal amount
of debt held by all Debtholders entitled to vote on the Plan of Arrangement as o ne class at the
Debtholders’ Meeting is approximately $733 million.
Procedures for Voting Before the Meetings, and for Attending and Voting at the Meetings
On March 24, 2020, the Corporation announced that due to the impact of COVID-19 and the need
to ensure the health and welfare of our securityholders, employees and other stakeholders, the
Meetings would be held in a virtual only format whereby parties may attend and participate in the
Meetings via live audio webcast.
Set out below are the procedures to be followed to vote before, vote at and attend each Meeting.
The procedures outlined below supersede the procedures set out in the Corporation’s
news release dated March 24, 2020.
Debtholders and Shareholders who have already cast their votes in respec t of the
Debtholders’ Arrangement Resolution or the Stated Capital Reduction Resolution,
respectively, do not need to re-submit their votes.
How to Vote Before the Meetings and Voting Deadline
The holding of the Meetings in a virtual format does not impa ct the ability of Debtholders or
Shareholders as of the Record Date to vote in advance of their respective Meeting. The steps for
voting by proxy in advance of the Meetings remain as set forth in the Corporation’s Information
Circular, subject to the revised Early Consent Date and revised Voting Deadline discussed above.
Debtholders and Shareholders who have already cast their votes in respect of the
Debtholders’ Arrangement Resolution or the Stated Capital Reduction Resolution,
respectively, do not need to re-submit their votes. For Debtholders and Shareholders as at
the Record Date who have not cast their votes, or who wish to change their votes, the deadline
to submit their proxies or voting instructions in order to vote by proxy on the items to be considered
at the applicable Meeting is 5:00 p.m. (Toronto time) on the Voting Deadline of July 21, 2020.
Sherritt has designated the individuals named on the pro xy, voting information and/or election
forms previously distributed to Debtholders and Shareholders, as applicable, as persons whom a
Debtholder or Shareholder may appoint as their proxyholders for the applicable Meeting. The
individuals named in the proxy , voting information and/or election forms are directors and/or
officers of the Corporation. If a Debtholder or Shareholder wishes to appoint an individual not
named on the relevant proxy, voting information and/or election form (including himself or herself)
to represent such Debtholder or Shareholder at the applicable Meeting that the Debtholder or
Shareholder is entitled to attend, such Debtholder or Shareholder must follow the instructions set
out below under “How to Appoint a Proxyholder”.
Before the Debtholders’ Meeting, Noteholders as of the Record Date, or those who have acquired
beneficial ownership of Existing Notes prior to the Voting Deadline (or such earlier date as their
bank, broker or other intermediary (collectively, “ Intermediaries”) may advise) , may vote in
accordance with the instructions provided on the Noteholder voting information and election form
(the “Noteholder VIEF”). In order to cast a vote at the Debtholders’ Meeting by proxy, beneficial
Noteholders must submit to their respective Intermediaries by the Voting Deadline, or such earlier
deadline as their Intermediary may advise, their duly completed Noteholder VIEF (or such other
documentation or information as the ir Intermediary may customarily request for purposes of
obtaining voting and election instructions) in accordance with the instructions set forth in the
Noteholder VIEF and any instructions provided by the Intermediary or the Proxy, Information and
Exchange Agent, as applicable.
As described in the Information Circular, beneficial Noteholders shall be deemed to transfer their
rights to vote on the Debtholders’ Arrangement Resolution and attend the Debtholders’ Meeting
associated with their Existing Notes upon the transfer of their beneficial ownership of such
Existing Notes to any transferee of such Existing Notes on or prior to the Voting Deadline, or such
earlier date as their Intermediary may advise.
Before the Debtholders’ Meeting, CFA Lenders as of the Record Date may vote in accordance
with the instructions provided on the CFA Lender proxy, voting and election form. In order to cast
a vote at the Debtholders’ Meeting by proxy, CFA Lenders must submit to the Proxy, Information
and Exchange Agent, by the Voting Deadline, their duly completed CFA Lender proxy, voting and
election form in accordance with the instructions set forth in such form. CFA Lenders must also
submit their election for consideration under the Plan of Arrangement by the Voting Deadline (as
described further in CFA Lender proxy, voting and election form and the Information Circular).
Before the Shareholders’ Meeting, registered and non-registered Shareholders may vote in
accordance with the instructions provided on the Shareholder proxy or voting instruction form, as
applicable, using one of the available methods described therein. Registered Shareholders may
submit their proxy to AST Trust Company (Canada) (the “ Transfer Agent”) in accordance with
the details provided in the Information Circular. In order to be effective, Shareholder proxies or
voting instruction forms, as applicable, must be received by the Transfer Agent prior to the Voting
Deadline.
Intermediaries that hold Existing Notes or common shares of Sherritt on a securityholder’s behalf
may have internal deadlines that require such securityholders to submit their votes by an earlier
date in advance of the Early Consent Date and/or Voting Deadline, as applicable, and may have
internal requirements for the submission of voting instructions. Such secur ityholders are
encouraged to contact their Intermediaries directly to confirm any such internal deadlines or voting
instruction requirements.
Debtholders and Shareholders should refer to the Information Circular, which has been mailed to
Debtholders and Shareholders and is also available on SEDAR ( www.sedar.com) and Sherritt’s
website (www.sherritt.com), for additional information and instructions with respect to the process
for submitting voting and election instructions and eligibility for Noteholder Early Consent Cash
Consideration, as applicable. Debtholders and Shareholders with a ny questions are also
encouraged to contact Kingsdale Advisors, the Corporation’s Proxy, Information and Exchange
Agent, at the contact information provided in this news release.
Entitlement to Attend and Vote at the Virtual Meetings
Debtholders and Shareholders who have already cast their votes in respect of the
Debtholders’ Arrangement Resolution or the Stated Capital Reduction Resolution,
respectively, do not need to re-submit their votes. Debtholders and Shareholders who have
not cast their votes, or who wish to change their votes, are encouraged to vote by proxy in
advance of the applicable Meeting as discussed above, by following the instructions on the proxy,
voting information and/or election forms previously distributed to Debtholders and Shareholders,
as applicable. Such Debtholders and Shareholders, along with all other non -registered
Shareholders (who hold their common shares through an Intermediary), Noteholders and CFA
Lenders who have not duly appointed themselves as their own representatives for the applicable
Meeting will be able to attend such Meeting as guests and submit questions in writing. Guests of
a Meeting will not be able to vote at such Meeting.
Debtholders as of the Record Date, or those Noteholders who have acquired beneficial ownership
of Existing Notes prior to the Voting Deadline (or such earlier date as their Intermediaries may
advise), that in each case have duly appointed themselves as their proxyholder, or their duly
appointed proxyholders, will be ent itled to attend the Debtholders’ Meeting, submit questions in
writing and vote on the Debtholders’ Arrangement Resolution, all in real time, online at
https://web.lumiagm.com/104887086.
Registered Shareholders as of the Record Date or their duly appointed proxyholders, and non -
registered Shareholders (who hold their common shares through an Intermediary) who have duly
appointed themselves as their proxyholder, or their duly appointed proxyholders, will be e ntitled
to attend the Shareholders’ Meeting , submit questions in writing and vote on the Stated Capital
Reduction, all in real time, online at https://web.lumiagm.com/196537476.
See also “How to Attend the Virtual Only Meetings” below for additional information.
How to Vote at the Meetings
Debtholders
Noteholders and CFA Lenders who wish to vote or have a proxyholder vote on their behalf at the
Debtholders’ Meeting may do so by logging in, or having such proxyholder log in, as applicable,
to the Debtholders’ Meeting using the control number to be obtained by contacting the Proxy,
Information and Exchange Agent and voting by completing an online ballot, as further described
below under “How to Attend the Virtual Only Meeting” , and following any additional instructions
provided at the Meeting . If you are a Noteholder or CFA Lender and wish to vote at the
Debtholders’ Meeting, or have a proxyholder do so on your behalf, you MUST insert your own
name or the name of your proxyholder, as applicable, in the space provided on your applicable
voting instruction and election form (or in the case of a beneficial Noteholder, provide such other
documentation or information as may be require d by your Intermediary) and follow any other
instructions provided by your Intermediary or the Proxy, Information and Exchange Agent as
applicable. You MUST ALSO register yourself as your proxyholder, or have your chosen
proxyholder register themselves, as applicable, as described below under “How to Appoint a
Proxyholder”. By doing so, you are instructing your Intermediary or the Proxy, Information and
Exchange Agent, as applicable, to appoint you or another person as your proxyholder. It is
important that you comply with the signature and return instructions provided by your Intermediary
or the Proxy, Information and Exchange Agent, as applicable. All appointments must be received
by the Proxy, Information and Exchange Agent on the Voting Deadline of July 21, 2020, and
before 5:00 p.m. (Toronto time) on July 21, 2020.
Noteholders and CFA Lenders who wish to vote at the Debtholders’ Meeting and have not duly
appointed themselves as proxyholder, as described below under “How to Appoint a Proxyholder”,
will not be able to obtain a control number and will not be able to vote at the Debtholders’ Meeting
but will be able to attend the Debtholders’ Meeting as guests.
Noteholders who wish to appoint a proxyholder (other than the individuals designated by
the Corporation on the Noteholder VIEF) to vote at the Debtholders’ Meeting, will not have
their voting instructions executed or tabulated until the Debtholders’ Meeting.
Accordingly, the voting instructions of such Noteholders will not have been properly
delivered prior to the Early Consent D ate and such Noteholders will NOT be eligible to
receive Noteholder Early Consent Cash Consideration even if such Noteholder s vote in
favour of the Debtholders’ Arrangement Resolution.
Shareholders
Registered Shareholders who have voted prior to the Shareholders’ Meeting need not vote at the
Shareholders’ Meeting to have such vote counted. Registered Shareholders who wish to vote at
the Shareholders’ Meeting may do so by logging in to the Shareholders’ Meeting using the
individual control number included on the Shareholder form of proxy distributed to each such
registered Shareholder and voting by completing an online ballot , as further described below
under “How to Attend the Virtual Only Meeting”, and following any additional instructions provided
at the Meeting.
Non-registered Shareholders who wish to vote at the Shareholders’ Meeting, or either registered
or non-registered Shareholders wishing to have a proxyholder vote on their behalf, may do so by
logging in, or having such proxyholder log in, as applicable, to the Shareholders’ Meeting using
the control number to be obtained by contacting the Transfer Agent and voting by completing an
online ballot, as further described below under “How to Attend the Virt ual Only Meeting” , and
following any additional instructions provided at the Meeting . If you are a non -registered
Shareholder and wish to vote at the Shareholders’ Meeting, or if you are a non -registered or
registered Shareholder and wish to have a proxyholder do so on your behalf, you MUST insert
your own name or the name of your proxyholder, as applicable, in the space provided on the form
of proxy or voting instruction form sent to you by your Intermediary or the Transfer Agent, as
applicable, and follow all of the instructions provided by your Intermediary or the Transfer Agent,
as applicable. If you are a non-registered Shareholder, you MUST ALSO register yourself as your
proxyholder, or if you are a non -registered or registered Shareholder, have your c hosen
proxyholder register themselves, as applicable, as described below under “How to Appoint a
Proxyholder”. By doing so, you are instructing your Intermediary or the Transfer Agent, as
applicable, to appoint you or another person , as applicable, as your proxyholder. It is important