Alberta Investment Management Corporation lends money to Tidewater Renewables

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Published on 24/10/2022


Tidewater Renewables Ltd. (TSX: LCFS) is focused on producing low-carbon fuels, including renewable diesel, renewable hydrogen and renewable natural gas (RNG), as well as carbon capture through initiatives future.

On behalf of certain of its clients, Alberta Investment Management Corporation (AIMCo) is lending US$150 million through a five-year, senior secured, subordinated credit facility to Tidewater Renewables. The term of the AIMCo facility is five years, maturing on October 24, 2027 and, at closing, it was drawn by way of a one-time advance with the net proceeds reflecting an initial issue discount of 5%. The AIMCo Facility will bear an initial interest of 6.50% per annum (the “Base Interest Rate”), payable semi-annually. The base interest rate will increase by 37.5 basis points in the fourth and fifth years and is subject to certain inflation indexations, with a potential maximum cash coupon of approximately 8.50% between now and the fifth year. Under the AIMCo Facility, Tidewater Renewables has issued 3.375 million warrants to AIMCo (the “AIMCo Warrants”). Each AIMCo Warrant entitles AIMCo to purchase one common share (“Common Share”) of Tidewater Renewables at a price per share of $14.84, for a term of five years. The exercise price reflects a 50% premium to the 10-day volume-weighted average trading price of the common shares prior to the closing of the AIMCo facility. AIMCo’s warrants have a cashless exercise feature which, if elected, may limit future dilution since in such circumstances, only common shares for the in-the-money value of the warrants are issued.

Proceeds from the AIMCo facility will be used by Tidewater Renewables to repay 100% of outstanding credit drawn under the Company’s senior credit facility, repay 100% of outstanding credit drawn under the previously disclosed RNG Credit (the “RNG Facility”) as well as allowing the cancellation of the RNG Facility, for working capital, general corporate purposes and for growth projects.

Advisors
INFOR Financial Inc. and National Bank Financial Inc. served as exclusive financial advisors to Tidewater Renewables in connection with the AIMCo Facility.

Tidewater Renewables completed its IPO in August 2021.

Tidewater Midstream and Infrastructure Ltd. is a majority shareholder of Tidewater Renewables. Tidewater Midstream and Infrastructure is listed on the TSX under the symbol “TWM”. Tidewater’s business objective is to create a diversified midstream and infrastructure company in the North American natural gas, natural gas liquids, crude oil, refined products and renewable energy value chain. Tidewater Midstream and Infrastructure operates the Prince George Refinery, one of two petroleum refineries in British Columbia. The Prince George refinery was previously operated by Husky for over 50 years. Prince George crack spreads have been consistently above the Gulf Coast, in part due to favorable local supply and demand dynamics in British Columbia.

More details on the offer
The AIMCo Warrants also have two unique features: (1) If the Consumer Price Index is greater than 4% per annum prior to repayment of all or part of the AIMCo Facility, the exercise price of the Warrants subscription will be reduced by $2.00 per Unit going forward for that number of Warrants proportional to the amount of principal repaid. (2) AIMCo has the option to elect to be paid in cash (vs. common stock) on a cashless exercise. If the Company is unable or not permitted to make any or all of such cash payment, the Company will assist AIMCo in the sale of the common stock issued in such cashless exercise, such sales to have take place within 10 business days, and be obligated to pay AIMCo certain market slippage costs (i.e. the difference between the trading price at the start of such sale process (the “market price “) and the sale price actually received by AIMCo) up to 15% of the market price (the unsold common shares being deemed to have such maximum slippage) plus brokerage fees and related costs in respect of the shares ordinary sold. If the Company is not permitted to make some or all of such cash payments in connection with such sale process, then the Company is required to issue shares of AIMCo common stock in connection with a private placement having a value equal to these unpaid amounts and applying the maximum discount price allowed by the Toronto Stock Exchange (“TSX”). For the unique feature in (2), the approval of the shareholders of the Company is required by the TSX. As Tidewater Midstream and Infrastructure Ltd. owns approximately 69% of the common stock, she is able to provide such approval by giving her written consent, which she has done, pursuant to the exemption set out in Section 604(d) of the TSX Company Handbook . Accordingly, and as provided in Section 604(d) of the TSX Company Manual, this unique feature will not become effective until five business days after the issuance of this press release (which has been approved by the TSX) provided that such written consent has been provided to the TSX at such time.

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