Alberta Investment Management Corporation Lends Money to Tidewater Renewables
Posted on 10/24/2022
Tidewater Renewables Ltd. (TSX: LCFS) is focused on the production of low carbon fuels, including renewable diesel, renewable hydrogen, and renewable natural gas (RNG), as well as carbon capture through future initiatives.
On behalf of certain of its clients, Alberta Investment Management Corporation (AIMCo) is lending US$ 150 million through a five-year senior secured second lien credit facility to Tidewater Renewables. The AIMCo Facility’s term is five years, maturing on October 24, 2027 and at closing was drawn down by way of a single advance with net proceeds reflecting a 5% original issue discount. The AIMCo Facility will bear initial interest of 6.50% per annum (the “Base Interest Rate”), payable semi-annually. The Base Interest Rate will increase by 37.5 basis points in year four and five and is subject to certain inflation escalators, with a potential maximum cash coupon of approximately 8.50% by year five. As part of the AIMCo Facility, Tidewater Renewables issued 3.375 million warrants to AIMCo (the “AIMCo Warrants”). Each AIMCo Warrant entitles AIMCo to purchase one common share (“Common Share”) of Tidewater Renewables at a price per share of $14.84, for a term of five years. The exercise price reflects a 50% premium to the 10-day volume weighted average trading price of the Common Shares prior to closing of the AIMCo Facility. The AIMCo Warrants have a cashless exercise feature, which, if elected, can limit future dilution as in such circumstances only Common Shares for the in-the-money value of the Warrants are issued.
Proceeds of the AIMCo Facility will be used by Tidewater Renewables to repay 100% of the outstanding drawn credit under the Corporation’s senior credit facility, repay 100% of the outstanding drawn credit on the previously disclosed RNG credit facility (the “RNG Facility”) as well as enable the cancelation of the RNG Facility, for working capital, general corporate purposes, and for growth projects.
Advisors
INFOR Financial Inc. and National Bank Financial Inc. served as exclusive financial advisors to Tidewater Renewables in connection with the AIMCo Facility.
Tidewater Renewables completed its IPO in August 2021.
Tidewater Midstream and Infrastructure Ltd. is a majority shareholder in Tidewater Renewables. Tidewater Midstream and Infrastructure is traded on the TSX under the symbol “TWM”. Tidewater’s business objective is to build a diversified midstream and infrastructure company in the North American natural gas, natural gas liquids, crude oil, refined product, and renewable energy value chain. Tidewater Midstream and Infrastructure’s runs the Prince George Refinery, one of two oil refineries in British Columbia. Prince George Refinery was previously operated by Husky for over 50 years. Prince George crack spreads have been consistently above Gulf Coast, in part the result of favorable local B.C. supply & demand dynamics.
More Deal Details
The AIMCo Warrants also have two unique features: (1) If the consumer price index is greater than 4% per annum prior to a repayment of all or part of the AIMCo Facility, then the exercise price of the Warrants will be reduced by $2.00 per share go forward for that number of Warrants proportional to the amount of principal repaid. (2) AIMCo has the option to elect to be paid in cash (versus Common Shares) in connection with a cashless exercise. If the Corporation is unable or not permitted to make some or all of such cash payment, then the Corporation will assist AIMCo in the sale of the Common Shares issued upon such cashless exercise, with such sales to take place within 10 business days, and will be obligated to pay AIMCo certain market slippage costs (i.e. the difference between the trading price at the commencement of such sale process (the “Market Price”) and the sale price actually received by AIMCo) of up to 15% of the Market Price (with unsold Common Shares being deemed to have such maximum slippage) plus broker fees and related costs in respect of Common Shares sold. If the Corporation is not permitted to make some or all of such cash payments in connection with such sale process, then the Corporation is obligated to issue AIMCo Common Shares on a private placement basis having a value equal to such unpaid amounts and applying the maximum pricing discounts permitted by the Toronto Stock Exchange (“TSX”). For the unique feature in (2) approval of the Corporation’s shareholders is required by the TSX. As Tidewater Midstream and Infrastructure Ltd. owns approximately 69% of the Common Shares, it is able to provide such approval by giving its written consent, which it has done, in accordance with the exemption set forth in Section 604(d) of the TSX Company Manual. Accordingly, and as provided for in Section 604(d) of the TSX Company Manual, such unique feature will not be in effect until five business days after the issuance of this press release (which has been approved by the TSX) provided such written consent has been provided to the TSX by such time.
