Chemtrade completes debenture buybacks, cuts debt 90%

Executive Summary

• Chemtrade Logistics Income Fund announced the results of its Substantial Issuer Bids (SIBs) for its 6.25% convertible debentures due 2027 and 7.00% convertible debentures due 2028, resulting in the cancellation of approximately $168 million in aggregate principal amount of debt.
• The company successfully reduced its outstanding convertible debentures by approximately 90%, significantly lowering potential equity dilution and optimizing its capital structure.
• For the 2028 debentures, the company executed a mix of cash purchases and debt-for-debt exchanges, issuing new 7.00% unsecured subordinated debentures to replace a portion of the tendered 2028 debt.

Key Details

• 2027 Debentures (6.25% Convertible, Due Aug 31, 2027):

  • Tendered Amount: $85,628,000 aggregate principal amount.
  • Purchase Consideration: $115,694,571.37 total, representing a purchase price of $1,340 per $1,000 principal amount, plus accrued and unpaid interest.
  • Percentage Tendered: Approximately 94.61% of the outstanding aggregate principal amount.
  • Remaining Outstanding: Approximately $4,874,000 aggregate principal amount.
  • Redemption of Remainder: The remaining $4,874,000 was redeemed at par value ($1,011.1301370 per $1,000 principal) plus accrued interest, totaling $4,928,248.29.
  • Outcome: All 2027 debentures have been cancelled or redeemed.

• 2028 Debentures (7.00% Convertible, Due June 30, 2028):

  • Total Tendered: $82,458,000 aggregate principal amount.
  • Cash Election: $8,541,000 principal amount tendered for cash purchase.
    • Consideration: $10,457,226.00 in cash, representing $1,200 per $1,000 principal amount plus accrued interest.
  • Debenture Election: $73,917,000 principal amount tendered for exchange into new debentures.
    • Consideration: $73,917,000 in new debentures plus $16,583,734.60 in cash.
    • Exchange Ratio: $1,000 principal amount of new 7.00% unsecured subordinated debentures due June 30, 2028, plus $200 in cash, per $1,000 principal amount of tendered 2028 debentures.
  • New Instrument: New debentures (Ticker: CHE.DB.I) expected to list and trade on the TSX on or about Nov. 6, 2025.
  • Remaining Outstanding: Approximately $27,542,000 aggregate principal amount of 2028 debentures remain outstanding (representing ~25.04% of the original outstanding amount).

• Strategic Impact:

  • CFO Rohit Bhardwaj stated the initiatives reduced convertible debentures outstanding by ~90%.
  • The transactions support unit price stability and reduce a source of potential equity dilution.
  • Combined with senior unsecured notes issued in 2024 and earlier in 2025, the company reports a strengthening of its balance sheet and a reduction in its cost of capital.

Notable Quotes

• "We are pleased with the outcome of the SIBs and the significant reduction in outstanding convertible debentures. In addition to supporting our unit price, these transactions are another successful step in the optimization of our capital structure with the added benefit of substantially reducing a source of potential equity dilution. Together with the senior unsecured notes issued in 2024 and earlier this year, this initiative reflects the continued strengthening and maturing of Chemtrade's balance sheet, leading to a reduction in our cost of capital." — Rohit Bhardwaj, Chief Financial Officer
• "As a result of these initiatives, we have reduced our convertible debentures outstanding by approximately 90 per cent with approximately $28-million of 2028 maturing convertible debentures outstanding." — Rohit Bhardwaj, Chief Financial Officer