Viterra has secured an agreement to raise $400 million through a share offering to finance future acquisitions.
The Regina-based company announced the bought deal with a syndicate of underwriters April 21. It will sell 28.6 million common shares at $14 each to the syndicate led by TD Securities and Genuity Capital Markets.
Viterra chief financial officer Rex McLennan said the underwriters would in turn offer the shares to the public. The offering is expected to close May 9.
“The structure of it has the advantage of ease of execution, speed of execution and it avoids the risks of a longer transaction,” McLennan said of the decision to use the bought deal approach. “It takes the price risk out of the equation.”
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Viterra has not used this type of offering before, although the former Saskatchewan Wheat Pool did use a subscription receipt program of $921 million to finance the Agricore United purchase that ultimately formed Viterra.
McLennan said the proceeds of this offering will pay for future acquisitions but not necessarily one specific transaction.
“We have a growth strategy,” he said. “This gives us a solid financial platform.”
The deal also gives the underwriters an option to buy an additional 4.29 million common shares at the same price within 30 days of the May 9 close.
The underwriters’ syndicate also includes National Bank Financial Inc., Scotia Capital Inc., UBS Securities Canada Inc., BMO Capital Markets, HSBC Securities (Canada) Inc., and RBC Capital Markets.
McLennan stressed this is a Canadian offering. A short form prospectus was to be issued this week.
However, there are large American institutions that will be able to buy shares under an exemption available to them.
Viterra also announced that it is refinancing its bridge loan facility through a new syndicated term. That refinancing should be complete before the current facility matures May 28 so it will not use proceeds from the share offering.
Trading of Viterra shares on the Toronto Stock Exchange was halted for the announcement. Shares closed down eight cents at $14.57 April 21.
Share prices hit a five-year high of $15.19 April 16.
There are more than 204 million shares outstanding.
