9 July 2012capital raising announcement● NeutralMajor
Compton agreed a deal with MFC Industrial Ltd., which will offer $1.25 in cash per share for all Compton shares (about $33.0M based on 26,358,528 shares outstanding). The board unanimously recommends shareholders tender. Holders of about 54% of the shares have signed lock-up agreements with MFC, and the offer is conditional on at least 66 2/3% of fully-diluted shares being deposited, regulatory approvals, lender approval of a continued credit facility and agreement from the MPP term financing providers. Separately, MFC will buy 6,548,498 special warrants at $1.25 for about $8.2M (about 24.8% dilution, giving MFC 19.9% of the then-outstanding shares), with the money held in escrow until lender consent and then used with the Bigoray sale proceeds to partly repay the $30.0M overdrawn on the credit facility. The lenders extended the cure period to the earliest of September 30, 2012 (extendable to as late as October 30, 2012), completion of the offer, or lender termination. This follows the many short extensions and the July 5 Bigoray sale, and it is the first concrete recapitalization outcome after weeks of unspecified 'progress'. The offer is expected to close by early September 2012.