-Primary Energy's Board of Directors Unanimously Recommends Transaction-
OAK BROOK, Il, Oct. 20, 2014 /CNW/ - Primary Energy Recycling
Corporation (TSX: PRI) ("Primary Energy" or the "Company"), a clean
energy company that generates revenue from capturing and recycling
recoverable heat and byproduct fuels from industrial processes, and
Fortistar LLC ("Fortistar"), today announced that the Company has
entered into an agreement (the "Arrangement Agreement") with a
newly-formed company (the "Purchaser") owned by a consortium led by
Fortistar, under which the Purchaser will acquire all of the
outstanding common shares of Primary Energy (the "Common Shares") for
cash at a price of US$5.40 per Common Share.
The cash price will be paid in U.S. dollars at closing, and is
equivalent to approximately C$6.07 per Common Share (based on the daily
noon exchange rate of the Bank of Canada on October 17, 2014). This
price represents a premium of approximately 29% to the closing price of
the Common Shares on the TSX on October 17, 2014.
The transaction will be carried out by way of a statutory Plan of
Arrangement. The transaction will be financed through a US$215 million
senior credit facility arranged by Investec USA Holdings Corp., with
the balance through equity commitments from Fortistar and its partners,
including John Hancock Life Insurance Company (U.S.A.) and Prudential
Capital Group.
Following completion of the transaction, the Common Shares will be
de-listed from the TSX and no longer traded publicly.
Speaking on behalf of the Board of Directors, Chairman Robert A. Peiser
said, "Through a broad and thorough process, the Company and its
financial advisor, Moelis & Company LLC, contacted a large number of
potential purchasers and reviewed a number of other alternatives to
enhance shareholder value. This transaction with Fortistar, which is
the culmination of this extensive review of strategic alternatives,
provides clear and compelling value to our shareholders, while
providing the same level of service that is now offered to our
customers. On behalf of the Board, I would like to take this
opportunity to thank our shareholders and customers for their support
throughout the years."
Mark Comora, President of Fortistar, said, "We believe energy recycling
is an important component of providing affordable, reliable and
renewable energy to industrial America in general, and the steel
industry in particular. We look forward to working with the existing
management team, led by John Prunkl, to continue to deliver excellent
service to the Company's host steel mills. I would like to thank our
equity partners and lenders for their continued support."
Unanimous Approval of the Board
The Arrangement Agreement, entered into by the Company and the Purchaser
in connection with the transaction, has been approved unanimously by
the Board of Directors. In so doing, the Board of Directors determined
that the transaction is in the best interests of the Company and
recommends that holders of Common Shares (the "Shareholders") vote in
favour of the transaction at the upcoming special meeting of
Shareholders. It is anticipated that this special meeting will be held
before the end of the calendar year.
Moelis & Company LLC, financial advisor to the Board of Directors, has
provided an opinion to the Board of Directors that, as of October 19,
2014, and subject to the assumptions and limitations upon which the
opinion is based, the consideration to be received by Shareholders in
the transaction is fair, from a financial point of view, to the
Shareholders. The Moelis opinion did not consider the fairness of the
transaction to certain of the Shareholders and their respective
affiliates who entered into lock-up agreements with the Purchaser. The
opinion will be included in the management information circular that
will be mailed to Shareholders. The opinion is solely for the use and
benefit of the Board of Directors and may not be relied upon by any
other persons.
Shareholder Lock-Up Agreements
All of the directors and senior officers of the Company who own Common
Shares, as well as certain of the Shareholders (who collectively hold
approximately 44.5% of the Company's outstanding Common Shares) have
entered into lock-up agreements pursuant to which, among other things,
they have agreed to vote their Common Shares in favour of the
transaction.
Details of the Transaction
The transaction will be carried out by way of a statutory Plan of
Arrangement under the Business Corporations Act (British Columbia). The
implementation of the transaction will be subject to Shareholder
approval at the special meeting, including approval by a majority of
the votes cast at the special meeting by disinterested Shareholders
(which includes the Common Shares held by certain of the Shareholders
who entered into lock-up agreements with the Purchaser described above,
representing approximately 44.5% of the outstanding Common Shares), in
addition to approval by 66?% of the votes cast at the special meeting
by all Shareholders.
The transaction is also subject to approval by the Supreme Court of
British Columbia, as well as certain customary closing conditions.
In addition, the transaction is subject to the following conditions in
favour of the Purchaser, many of which are beyond the control of the
Company: (i) subject to certain exclusions, none of the Company's
facilities having sustained a failure, a condition in the assets of
such facility, damage or be subject to labor unrest that renders such
facility unable to achieve production levels and financial performance,
in each case, generally consistent with the Company's projected
production levels and projected financial performance for that
facility; and (ii) none of the Company's host facilities being subject
to any outage or interruption for any reason (including force majeure,
casualty or strike) that decreases the sale or delivery of coal
product, electricity, energy or services to the host facility from the
Company's facilities where such decrease has or would have a material
negative effect on the Company's projected financial performance for
such facility. The Purchaser also has the right to terminate the
Arrangement Agreement in certain circumstances, including if the
Company incurs specified liabilities as a result of outages,
governmental fines and environmental matters. There can be no assurance
that all conditions precedent to the transaction will be satisfied or
waived, or of the timing of their satisfaction or waiver, or that any
of the events giving rise to the Purchaser's termination rights under
the Arrangement Agreement will not occur on or prior to closing of the
transaction. If the transaction is not completed or is delayed for any
reason, among other consequences, the market price for the Common
Shares may decline. The terms and conditions of the transaction are
detailed in the Arrangement Agreement, the complete text of which will
be available on SEDAR at www.sedar.com. Investors are urged to read carefully the full text of the Arrangement
Agreement.
The Arrangement Agreement provides for, among other things, a
non-solicitation covenant on the part of the Company (subject to
customary fiduciary out provisions). The Arrangement Agreement also
provides the Purchaser with a right to match potential third party
proposals received by the Company. The Company is permitted to
terminate the Arrangement Agreement in certain circumstances,
including, subject to certain conditions, to allow the Company to
accept a superior proposal on the payment to Purchaser of a termination
fee of US$4 million. In addition, the Company is entitled to a reverse
break fee from the Purchaser of US$6.25 million in certain
circumstances, including where all conditions to closing have been
satisfied and the Purchaser breaches its obligation to pay the
consideration.
The terms and conditions of the transaction will be disclosed in more
detail in a management information circular that will be mailed to
Shareholders as of the record date to be established. It is anticipated
that the transaction, if approved by Shareholders and the Supreme Court
of British Columbia, will be completed by the end of 2014.
Moelis & Company LLC is acting as financial advisor to the Board of
Directors of the Company and Torys LLP is acting as legal counsel to
the Company. Credit Suisse is acting as financial advisor to the
Purchaser, and Shearman & Sterling LLP and Stikeman Elliott LLP are
acting as legal counsel to the Purchaser.
Copies of the Arrangement Agreement, the management information circular
for the special meeting and certain related documents will be filed
with Canadian securities regulators and will be available on the SEDAR
profile of the Company at www.sedar.com. In addition, investors and security holders may obtain free copies of
the documents the Company files with Canadian securities regulators by
directing a written request to Primary Energy Recycling Corporation,
2215 So. York Road, Suite 202, Oak Brook, Illinois, 60523, Attention:
Corporate Secretary.
Investors and security holders of the Company are urged to read the
management information circular and the other relevant materials when
they become available because such materials will contain important
information about the transaction.
Suspension of Future Dividends
In accordance with the terms of the Arrangement Agreement, the Board of
Directors has determined that the declaration and payment of all future
dividends on the Common Shares will be suspended pending completion of
the transaction.
About Primary Energy Recycling Corporation
Primary Energy Recycling Corporation, headquartered in Oak Brook,
Illinois, owns and operates four recycled energy projects and a 50
percent interest in a pulverized coal facility (collectively, the
"Projects"). The Projects have a combined electrical generating
capacity of 298 megawatts and a combined steam generating capacity of
1.8M lbs/hour. Primary Energy Recycling Corporation creates value for
its customers by capturing and recycling waste energy from industrial
and electric generation processes and converting it into reliable and
economical electricity and thermal energy for resale back to its
customers. For more information, please see www.primaryenergy.com.
About Fortistar
Fortistar, headquartered in White Plains, New York, has a 30 year
history of investing in and managing power assets. From its inception,
Fortistar has focused on cogeneration facilities and renewables.
Fortistar currently has ownership stakes in over 40 projects in North
America, including 265 MW of cogeneration and 400 MW of renewable
facilities. Fortistar has a strong record of operational excellence and
demonstrated capability of enhancing output and improving efficiency at
its other facilities. Most recently, through its TruStar Energy
affiliate, Fortistar has become a leading provider of compressed
natural gas infrastructure in the United States. For more information,
please see www.fortistar.com.
Forward-looking statements
This press release contains "forward-looking information" or
"forward-looking statements" within the meaning of applicable Canadian
securities laws, including statements regarding the expected timing and
completion of the transaction, the preparation, delivery and
availability of a management information circular and other relevant
materials in connection with the transaction, and the holding of the
special meeting, which forward-looking statements may use
forward-looking terminology such as "may", "will", "expect",
"anticipate", "believe", "continue", "potential", or the negative
thereof or other variations thereof or comparable terminology. Such
statements are subject to certain risks, uncertainties and assumptions
pertaining, but not limited, to the fact that the expected completion
of the transaction is subject to closing conditions and termination
rights in favour of the Purchaser, many of which are beyond the
Company's control, the Purchaser's inability to complete the
anticipated financing as contemplated by applicable commitment letters
prior to the contractually required time for closing of the transaction
or otherwise secure favourable terms for such financing, required
Shareholder approval and necessary court approvals, the satisfaction or
waiver of certain other conditions contemplated by the Arrangement
Agreement, disruptions resulting from the transaction making it more
difficult to maintain business relationships, and changes in applicable
laws or regulations, which could cause actual results to differ
materially from future results expressed, projected or implied by the
forward-looking statements.
As a result of these risks and uncertainties, the transaction could be
modified, restructured or may not be completed, and the results or
events predicted in these forward-looking statements may differ
materially from actual results or events. These forward-looking
statements are made as of the date of this press release and the
Company assumes no obligation to update or revise them to reflect new
events or circumstances, except as required by applicable securities
laws.
SOURCE Primary Energy Recycling Corporation
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