TIM.TO..news out just before 2pm, how good is this news? Stock has been down for awhile now, could this cause a run?
Timminco closes Dow Corning Becancour joint venture
2010-10-01 13:45 ET - News Release
Mr. Robert Dietrich reports
TIMMINCO ANNOUNCES CLOSING OF JOINT VENTURE WITH DOW CORNING AND PROVIDES UPDATE ON CREDIT FACILITIES
Timminco Ltd. has completed its previously announced joint-venture transaction with Dow Corning Corp. regarding the silicon metal production facilities of Timminco's wholly owned subsidiary, Becancour Silicon Inc.
As a result of today's closing, Dow Corning has acquired a 49% equity interest in Quebec Silicon Limited Partnership ("Quebec Silicon"), the new joint venture entity that owns the silicon metal operations in Becancour, Quebec, in consideration for net cash proceeds of approximately US$40.3 million. Becancour Silicon could receive earn-out payments of up to potentially an additional US$10.0 million, subject to achieving certain performance objectives relating to production cost and capacity improvements within three years after the closing. Becancour Silicon has retained a 51% equity stake in Quebec Silicon, as well as all of the solar grade silicon purification operations and facilities at the Becancour site. The majority of Becancour Silicon's senior management team, led by Mr. Rene Boisvert who becomes President and Chief Executive Officer of Quebec Silicon, will continue to manage the day-to-day silicon metal manufacturing operations of Quebec Silicon going forward.
Timminco and Becancour Silicon (collectively, the "Company") will use the net cash proceeds from the joint venture transaction to repay fully all outstanding amounts due under the existing revolving credit facility and term loan with Bank of America of approximately US$27.7 million. The balance of the net cash proceeds will be used for the Company's general corporate purposes.
Dow Corning is also providing a $10.0 million revolving credit facility to Quebec Silicon to provide funding for its working capital requirements. Funding is available to Quebec Silicon upon request at any time, up to the full amount of the unused credit commitment and subject to continued compliance. Outstanding amounts bear interest at a variable rate of Canadian prime plus 2%, which is payable quarterly. The revolving credit facility expires on October 1, 2013, and may be terminated earlier, at Dow Corning's discretion, if it ceases to own any interest in Quebec Silicon or upon the occurrence of certain change of control events in respect of Timminco. This facility includes customary negative debt and negative pledge covenants. All of Quebec Silicon's assets have been pledged to Dow Corning as security for Quebec Silicon's obligations under the revolving credit facility.
Timminco also announced today that the maturity date of the Credit Agreement with Bank of America has been extended for an interim period from September 30 to November 30, 2010, to facilitate on-going negotiations regarding a new multi-year revolving credit facility for the Company. For the duration of such period, the credit commitments have been reduced from US$39.0 million to US$20.0 million, the advance rates on eligible inventory have been capped at a reduced level, certain slow-moving inventories have been deemed ineligible, the minimum availability reserve has been increased to US$5.0 million from US$2.0 million, and certain other post-closing deliveries are required as a condition for further advances. All of the Company's assets, including Becancour Silicon's equity interests in Quebec Silicon, continue to be pledged as security for the Company's obligations under the Credit Agreement.
Timminco also announced today that Investissement Quebec has conditionally agreed to an eight-year extension of the maturity date of the $25.0 million term loan advanced to Becancour Silicon in July 2009, from August 31, 2011 to July 16, 2019, and certain other amendments to such term loan, subject to the Company's execution of a new revolving credit facility by December 1, 2010 in an amount and on terms that are satisfactory to Investissement Quebec. If the conditions for such extension and amendment are satisfied, the term loan would be repayable in monthly installments of $175,000, starting August 2012, and additional annual installments in amounts based on a percentage of Becancour Silicon's defined adjusted cash flow, in respect of periods beginning August 2012. As well, Becancour Silicon would be obligated to remit 50% of any future earn-out payments received from Dow Corning as repayment of any outstanding obligations under such term loan. Investissement Quebec continues to have a charge upon all of Becancour Silicon's assets, subordinated to the obligations of the Company under the Credit Agreement with Bank of America.
We seek Safe Harbor.
