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Mega announces debt reduction plan - ToyNews

Mega announces debt reduction plan

Firm announces a recapitalisation scheme to lower its debt by around $300 million.
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Mega will issue approximately 284.7 million new shares at a price of CDN$0.50 per share and 234.6 million warrants exercisable into shares at a price of CDN$0.50 per warrant.

As a result, current shareholders will own approximately 11.4 per cent of the shares issued and outstanding at the closing of the recapitalisation plan and approximately 6.6 per cent on a fully diluted basis.

Annual interest expenses will be reduced by over 65 per cent from an estimated $43 million in 2009 to approximately $13 million going forward.

The new capital structure resulting from the scheme is set to create financial stability for Mega Brands and its stakeholders. It also provides a stronger financial base for the execution of the company’s operating strategy going forward with improved cash flow and liquidity .

Mega’s suppliers and employees, will be unaffected by the plan.

Marc Bertrand, president and CEO said: “This transaction is a significant positive development for Mega Brands. Once implemented, Mega Brands will be repositioned for the future with a solid balance sheet and the financial flexibility to focus on profitable growth globally.

‘‘After a thorough review of numerous alternatives, we are convinced this is the best option for all stakeholders. This transaction demonstrates the commitment of our current major shareholders and investors through the injection of over $121 million in new capital.

"Further, it is business as usual for our customers, suppliers and employees who will remain unaffected by this transaction.”

Under the recapitalization plan, the firm will repay all of its outstanding secured debt, which at December 31st, 2009 was approximately $357.2 million.

The recapitalisation scheme is expected to end on or about March 31st, 2010.

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