Rocky Mountain Dealerships Inc. (TSX:RME), a leading Canadian network of full service agriculture and construction equipment dealerships, today announced that it has entered into an agreement with a syndicate of underwriters co-led by National Bank Financial and RBC Capital Markets under which the underwriters have agreed to buy 30,000 convertible unsecured subordinated debentures (""Debentures") of the Company at a price of $1,000 per Debenture, representing an aggregate issue of $30,000,000 principal amount of debentures (the "Offering"). The Offering is expected to close on or about July 27, 2010 and is subject to regulatory and stock exchange approvals. Rocky Mountain has also granted the underwriters an over-allotment option to purchase up to $1,500,000 additional Debentures, representing 5% of the size of the Offering. The over-allotment option may be exercised up to 30 days after the closing of the Offering.
The Debentures will mature on September 30, 2017 and will accrue interest at the rate of 7.00% per annum payable semi-annually in arrears on March 31 and September 30 in each year, commencing on September 30, 2010. At the holder's option, the Debentures may be converted into common shares of the Company at any time on the earlier of Maturity and the business day immediately preceding the date fixed for redemption at a conversion price of 10.65 per share.
The Debentures will be direct, unsecured obligations of Rocky Mountain, subordinated to other indebtedness of the Company and ranking equally with all other unsecured subordinated indebtedness.
The Debentures will not be redeemable prior to September 30, 2014. On or after September 30, 2014 and prior to September 30, 2015, the Debentures may be redeemed in whole or in part at the option of the Company on not more than 60 days and not less than 30 days prior notice at a price equal to their principal amount plus accrued and unpaid interest, provided that the Current Market Price on the date on which the notice of redemption is given is not less than 125% of the Conversion Price. On or after September 30, 2015 and prior to the Maturity Date, the Debentures may be redeemed in whole or in part at the option of the Company on not more than 60 days and not less than 30 days prior notice at a price equal to their principal amount plus accrued and unpaid interest.
The net proceeds of the Offering will be used by Rocky Mountain for the repayment of a portion of its debt, general corporate purposes and to fund future acquisitions.
A preliminary short-form prospectus will be filed with securities regulatory authorities in all provinces and territories of Canada. The securities offered have not and will not be registered under the U.S. 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 such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction.
About Rocky Mountain
Rocky Mountain represents one of Canada's largest agriculture and construction equipment dealerships with a total of 29 dealership branches throughout Alberta, Saskatchewan and Manitoba. Rocky Mountain sells, rents, and leases new and used construction and agriculture equipment, including the Case Construction, Case IH agriculture and New Holland brands, as well as offering product support and finance and insurance products to its customers. In addition, Rocky Mountain also distributes equipment from a number of other manufacturers, including but not limited to Terex, Dynapac, Kawasaki, Leeboy, Bourgault, and Kubota.
This press release contains certain statements or disclosures relating to the Company that are based on the expectations of its management as well as assumptions made by information currently available to the Company which may constitute forward-looking information under applicable securities laws. All such statements and disclosures, other than those of historical fact, which address activities, events, outcomes, results or developments that the Company anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking information. In some case, forward-looking information can be identified by terms such as "forecast", "future", "may", "will", "expect", "anticipate", "believe", "potential", "enable", "plan", "continue", "contemplate", "pro-forma", or other comparable terminology.
In particular this press release states that the Company has entered into an agreement with a syndicate of underwriters with respect to a proposed Debenture financing and that such financing is expected to close on or about July 27, 2010. The foregoing assumes that all conditions pertaining to such a financing will be met to allow for the Debenture financing to be completed. There are risks that the conditions with respect to the Debenture financing will not be met as anticipated and, as such, the Debenture financing may close later than July 27, 2010 or not at all.
As such, many factors could cause the performance or achievement of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements.