PrefBlog

On 2016-1-20, Capstone Infrastructure Corporation announced:

that it has entered into a definitive arrangement agreement (the “Arrangement Agreement”) with Irving Infrastructure Corp., a subsidiary of iCON Infrastructure Partners III, L.P. (“iCON III”), a fund advised by London, UK-based iCON Infrastructure LLP (“iCON Infrastructure”), that provides for the acquisition of all issued and outstanding common shares of Capstone and Class B exchangeable units of Capstone’s subsidiary MPT LTC Holding LP for $4.90 cash per share or unit, as applicable. The acquisition will be completed by way of a plan of arrangement (the “Arrangement”) under the British Columbia Business Corporations Act (“BCBCA”). The total equity value of the transaction is approximately $480 million.
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Under the Arrangement, it is proposed that Capstone’s 6.50% convertible unsecured subordinated debentures due December 31, 2016 will be redeemed for 101% of their principal amount and Capstone Power Corp.’s 6.75% extendible convertible unsecured subordinated debentures due December 31, 2017 will be converted into common shares of Capstone in accordance with the cash change of control provisions of the debenture indenture governing such debentures and then immediately acquired by Irving Infrastructure Corp. at a price of $4.90 per share, in each case plus accrued and unpaid interest on the debenture until the Effective Date. Pursuant to the Arrangement Agreement, holders of the debentures will be asked to vote on the Arrangement, with each series of debentures voting as a separate class. However, completion of the Arrangement is not conditional on receipt of either of such approvals. If the requisite debenture holder approval is not obtained, such debentures will be excluded from the Arrangement and dealt with in accordance with their terms. For a series of debentures to be part of the Arrangement, the resolution approving the Arrangement must be approved by holders of not less than a majority in number and not less than 75% of the principal amount of such debentures present in person or by proxy at the special meeting of securityholders.

Capstone’s previously announced fourth quarter 2015 dividend will be paid to common and preferred shareholders on January 29, 2016, but no further dividends will be declared to common shareholders in anticipation of the consummation of the transaction. Quarterly dividends are expected to be declared to preferred shareholders on a continuing basis and those shares will continue to be listed and trade on the Toronto Stock Exchange following closing of the Arrangement.

Capstone expects to hold a meeting of securityholders to consider the resolution approving the Arrangement in mid-March 2016, and if approved, to complete the transaction in April 2016 following receipt of regulatory approvals.

They have now announced:

that Glass, Lewis & Co., LLC (“Glass Lewis”) and Institutional Shareholder Services, Inc. (“ISS”), two leading independent proxy advisory firms, have both recommended that Capstone shareholders vote FOR the previously announced arrangement (the “Arrangement”) that provides for Irving Infrastructure Corp., a subsidiary of iCON Infrastructure Partners III, L.P. (“iCON III”), a fund advised by London, UK-based iCON Infrastructure LLP (“iCON Infrastructure”), to acquire all issued and outstanding common shares of Capstone (“common shares”) and Class B exchangeable units of Capstone’s subsidiary MPT LTC Holding LP (“Class B units”) for $4.90 cash per share or unit, as applicable.

CSE.PR.A is a FixedReset, 5.00%+271, that commenced trading 2011-6-30 after being announced 2011-6-13. The issue dived in late 2011 when the company announced a review of the common dividend and the issue was downgraded to P-4(high) by S&P in April 2012.

There has been no indication as yet from S&P regarding the credit implications of a successful takeover.

Update, 2016-2-24: Barry Critchley is incensed by the voting terms:

Judging by some recent actions, it seems that preferred shareholders are preferred in name only.
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Holders of the rate-reset preferreds would have liked to have been invited. Given their recent trading price — during the past year the prefs have traded in the range of $9.50 to $15.30 and closed Tuesday at $12.46 – they would have gladly accepted a small premium and voted to support the offer.

The non-invite to the meeting and the decision to leave the prefs outstanding has upset some holders.
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ICON said, “the rights of preferred shareholders will not be affected by the transaction, since the preferred shares will remain outstanding on their current terms. The maintenance of a public listing leaves open the potential for future capital raisings of the public entity.”

This entry was posted on Wednesday, February 24th, 2016 at 12:57 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.