- Reduces 2026 convertible debenture balance by $95 million to $250
million
- Reduces overall convertible debt by $10 million with issuance of new $85 million convertible debenture due
November 2028
- Company extends maturity of $85
million principal by 2.5-years for an increased
yield-to-maturity of 2.4%
- Actions provide increased flexibility to further optimize
balance sheet in the future
TORONTO, Oct. 20,
2023 /CNW/ - Dye & Durham Limited ("Dye &
Durham" or the "Company") (TSX: DND), one of the world's
largest providers of cloud-based legal practice management software
designed to make managing a law firm, organizing cases, and
collaborating with clients easy, today announced a series of
actions to improve its balance sheet flexibility and reduce its
convertible debt.
"By refinancing a sizeable portion of our convertible debt on
favourable terms, we are taking a meaningful step to deleverage our
balance sheet and improve our long-term capital structure," said
Dye & Durham CEO Matthew Proud.
"The actions we are taking today will, upon completion, reduce the
balance of our original convertible debentures by $95 million, decrease our overall convertible
debt by $10 million and give us
greater flexibility to refinance and strengthen our balance sheet
going forward as we continue to grow Dye & Durham into a global
legal technology leader."
The Company also has confirmed its Q1 2024 financial performance
is in line with expectations and will discuss further on its
upcoming quarterly conference call.
Details of Convertible Debenture Refinancing
Key terms are as follows:
- $95 million of 3.75% 2026
unsecured convertible debentures retired at $750 per $1,000
aggregate principal amount (approximately 17% yield to
maturity)
- $85 million of 6.50% 2028
unsecured convertible debentures issued at $600 per $1,000
aggregate principal amount (approximately 19% yield to
maturity)
- Results in $10 million reduction
in convertible debt
Dye & Durham's board of directors has approved the
commencement of a substantial issuer bid (the "Offer") under
which the Company will offer to repurchase for cancellation up to
$95 million of its issued and
outstanding 3.75% convertible senior unsecured debentures due
March 1, 2026 ("Original
Debentures") in exchange for cash, subject to a maximum
aggregate payment of $32,250,000
($750 cash for each $1,000 principal amount of Original Debentures)
or 6.50% unsecured convertible debentures due November 1, 2028 (the "New Debentures")
($1,250 principal amount of New
Debentures for each $1,000 principal
amount of Original Debentures) or a combination thereof, pursuant
to the election of the holders of the Original Debentures.
In addition, the Company also announced that it has entered into
an agreement with Canaccord Genuity Corp. ("Canaccord") to
issue, on a bought deal private placement basis, $20.4 million aggregate principal amount of New
Debentures (the "Bought Deal"). The Company intends to use
the proceeds of the Bought Deal to fund a portion of the cash
payable by the Company under the Offer. The Bought Deal is
scheduled to close on or about November 1,
2023, and is subject to certain customary conditions
including, but not limited to, the receipt of all necessary
approvals, including the approval of the Toronto Stock Exchange for
the listing of the common shares of the Company ("Common
Shares") underlying the New Debentures. The Company has also
granted Canaccord the right to purchase up to $5 million in aggregate principal amount of New
Debentures to cover over-allotments, in whole or in part, up to 48
hours prior to closing. In the event the Offer does not close
by December 22, 2023 or is otherwise
terminated, the New Debentures issued pursuant to the Bought Deal
will mature and the principal and accrued interest on the New
Debentures will be repaid in full.
The New Debentures will bear interest at 6.50% per annum,
payable in equal semi-annual payments, and will be convertible at
any time at the option of the holder into Common Shares at a price
of $40.00 (subject to adjustment) per
share (the "Conversion Price"). On or after November 1, 2026, the New Debentures will be
redeemable by the Company in the event that the Common Shares are
trading at 130% of the Conversion Price for cash or Common
Shares.
The New Debentures mature on the earlier of the date of take-up
of the Original Debentures or a Termination Event (as defined
below). If the take-up of the Original Debentures occurs prior to
the occurrence of a Termination Event, the maturity date of the New
Debentures shall be automatically extended to November 1, 2028. A "Termination Event"
means the earliest to occur of any of: (i) 5:00 pm (Toronto
time) on December 22, 2023 unless
extended in writing by the mutual agreement of the Company and
Canaccord; or (ii) the Company delivering to the debenture trustee
a notice, executed by the Company, declaring that the Company will
not be proceeding with the Offer.
In support of the Offer, holders of an aggregate principal
amount of $78.7 million of Original
Debentures have agreed to tender such Original Debentures to the
Offer, with $43 million of such
Original Debentures to be tendered in exchange for cash and the
balance to be tendered in exchange for New Debentures. If Original
Debentures are tendered to the Offer for cash such that the
aggregate cash payment for such Original Debentures would be
greater than $32.25 million, the
Company will acquire such Original Debentures, as applicable, on a
pro rata basis according to the amount of Original Debentures
deposited for cash and, if Original Debentures are tendered to the
Offer for New Debentures such that the aggregate consideration
payable for such Original Debentures would be greater than
$65.0 million of New Debentures, the
Company will acquire such Original Debentures on a pro rata basis
according to the amount of Original Debentures deposited for New
Debentures.
The Offer and Bought Deal will reduce the Company's aggregate
indebtedness by approximately $10
million consistent with our strategy to reduce total debt
over time. The Offer will not be conditional upon any minimum
number of Original Debentures being tendered. The Offer will,
however, be subject to other conditions and the Company will
reserve the right, subject to applicable laws, to withdraw or amend
the Offer, if, at any time prior to the payment of deposited
Original Debentures, certain events occur. The Company expects to
commence the Offer by the week of October
30, 2023.
The Company has engaged Canaccord as dealer manager for the
Offer and Computershare Investor Services Inc.
("Computershare") to act as the depositary for the Offer.
Computershare will also act as trustee under the indenture
governing the New Debentures.
The formal offer to purchase and issuer bid circular, letter of
transmittal and notice of guaranteed delivery (collectively, the
"Offer Documents") containing the terms and conditions of
the Offer and instructions for tendering Original Debentures will
be filed with the applicable securities regulators and mailed to
registered debentureholders. The Offer Documents will be available
under the Company's SEDAR+ profile at www.sedarplus.ca.
The Original Debentures are not, and the New Debentures will not
be, listed or posted for trading on any stock exchange or
marketplace. INFOR Financial Inc. ("INFOR Financial") was
engaged by the board of directors of the Company as the independent
valuator to prepare formal valuations of the Original Debentures
and the New Debentures in accordance with applicable Canadian
securities laws (the "Formal Valuations"). The Formal
Valuations contains INFOR Financial's opinion that, based on the
scope of its review and subject to the assumptions, restrictions
and limitations provided therein, as of October 19, 2023, the fair market value of (a)
the Original Debentures falls within the range of $645 to $715 per
$1,000 principal amount of Original
Debenture, and (b) the New Debentures falls within the range of
$600 to $695 per $1,000 principal amount of New Debenture. Copies
of the Formal Valuations will be included with the Offer Documents.
The Formal Valuations are not, and should not be construed to be, a
recommendation to a debentureholder or to others, to take any
course of action.
Neither the Company nor its board of directors makes any
recommendation to debentureholders as to whether to tender or
refrain from tendering any or all of their Original Debentures to
the Offer. This press release is neither an offer to purchase nor a
solicitation of an offer to sell any Original Debentures. The
solicitation and the offer to purchase Original Debentures by the
Company is being made only pursuant to the Offer Documents.
Debentureholders of the Company are urged to read the Offer
Documents carefully and to consult with their own financial, tax
and legal advisors prior to making any decision with respect to the
Offer.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the
securities in any state in which such offer, solicitation or sale
would be unlawful. The securities being offered have not been, nor
will they be, registered under the United States Securities Act of
1933, as amended, and may not be offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
United States Securities Act of 1933, as amended, and applicable
state securities laws.
CONFERENCE CALL NOTICE
The Company will hold a conference call to discuss the
transaction later today, Friday, October 20,
2023, at 3:30 p.m. ET hosted
by senior management. A question-and-answer session will follow the
corporate update.
DATE: Friday, October 20, 2023
TIME: 3:30 p.m. ET
RAPIDCONNECT: To instantly join the conference call by phone,
please use the following URL to easily register and be connected
into the conference call automatically:
https://emportal.ink/45BTQuU
TRADITIONAL DIAL-IN NUMBER: (416) 764-8659 or (888) 664-6392
REFERENCE NUMBER: 60730705
TAPED REPLAY: (416) 764-8677 or (888) 390-0541
REPLAY CODE: 730705#
WEBCAST: https://app.webinar.net/R3JmB6LyvDZ
FORWARD LOOKING INFORMATION
This press release may contain forward-looking information
within the meaning of applicable securities laws, which reflects
the Company's current expectations regarding future events,
including regarding the timing and completion of the Offer, the
intentions of the Company's directors and officers
and debentureholders with respect to tendering to the Offer.
In some cases, but not necessarily in all cases, forward-looking
statements can be identified by the use of forward looking
terminology such as "plans", "targets", "expects" or "does not
expect", "is expected", "an opportunity exists", "is positioned",
"estimates", "intends", "assumes", "anticipates" or "does not
anticipate" or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might", "will" or "will be taken", "occur" or "be
achieved". In addition, any statements that refer to expectations,
projections or other characterizations of future events or
circumstances contain forward-looking statements. Forward-looking
statements are not historical facts, nor guarantees or assurances
of future performance but instead represent management's current
beliefs, expectations, estimates and projections regarding future
events and operating performance.
Forward-looking information is based on a number of assumptions
and is subject to a number of risks and uncertainties, many of
which are beyond the Company's control, which could cause actual
results and events to differ materially from those that are
disclosed in or implied by such forward-looking information. Such
risks and uncertainties include, but are not limited to, the
factors discussed under "Risk Factors" in the Company's most recent
annual information form. Dye & Durham does not undertake any
obligation to update such forward-looking information, whether as a
result of new information, future events or otherwise, except as
expressly required by applicable law.
ABOUT DYE & DURHAM LIMITED
Dye & Durham Limited provides premier practice management
solutions empowering legal professionals every day, delivers vital
data insights to support critical corporate transactions and
enables the essential payments infrastructure trusted by government
and financial institutions. The company has operations in
Canada, the United Kingdom, Ireland, Australia and South
Africa. Additional information can be found
at www.dyedurham.com.
FOR FURTHER INFORMATION:
Media Relations:
Morgan McLellan
VP, Global Communications
morgan.mclellan@dyedurham.com
647-802-4825
Investor Relations:
Ross Marshall
LodeRock Advisors Inc.
ross.marshall@loderockadvisors.com
416-526-1563
SOURCE Dye & Durham Limited