Accord Financial will seek the approval of holders of its 7% convertible unsecured subordinated debentures due Dec. 31 to amend certain terms of such debentures at a special meeting of the debenture holders to be held in Toronto on Aug. 10 at 10 a.m. EDT.
The proposed amendments consist of the following:
- Increasing the interest rate on the debentures from 7% to 10%, effective as of Jan. 2, 2024, in accordance with the requirements of the Toronto Stock Exchange
- Extending the maturity date of the debentures from Dec. 31, 2023, to Jan. 31, 2026
- Removing the conversion right of the debenture holders;
- Removing Accord Financial’s right to repay the principal amount of the debentures in common shares of the company on the new maturity date or any redemption date
- Providing that the debentures are not redeemable prior to Feb. 1, 2025, except in the event of a change of control as provided in the company’s trust indenture dated Dec. 18, 2018, as supplemented by the first supplemental indenture dated Sept. 13, 2019.
Any debenture holder that votes for the amendments will receive a cash consent fee of $20 per $1,000 principal amount of debentures they hold as of June 26, 2023 (the “record date”) provided that certain other conditions required for the payment of the consent fee are satisfied, including the amendments are validly approved by debenture holders and the Toronto Stock Exchange.
“Accord continues to execute our growth plan, delivering much-needed capital to small and medium-sized companies while maintaining our financial strength,” Simon Hitzig, president and CEO of Accord Financial, said. “We’re pleased to reflect this performance through enhanced terms for our debenture holders.”
If approved, the amendments will be reflected in a supplemental trust indenture between Accord Financial and its debenture trustee with the expected effective date of Aug. 15, 2023 (provided that the interest rate increase will be effective as of Jan. 2, 2024, in accordance with the requirements of the Toronto Stock Exchange).
The amendments will only be effective if passed by an extraordinary resolution of the holders of at least 66.67% of the principal amount of the debentures present in person or by proxy at the meeting and entitled to vote in respect of the amendments. The amendments are also subject to the approval of the Toronto Stock Exchange.
In the event that the amendments are not approved by the debenture holders and the Toronto Stock Exchange, the debentures will mature on Dec. 31 and Accord will consider other alternatives to address the maturity of the debentures. The options may include arranging for alternate debt financing to fund the repayment of principal in cash and/or settling the amount owing on maturity, in whole or in part, through the issuance of common shares.
