MEGA BRANDS: Q2 results delayed

The company will postpone the release of second-quarter financials following its recent private placement.
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The company said yesterday that it needs more time to include the "material impact" of an agreement with Fairfax Financial Holdings earlier this week.

The deal will see the Toronto-based insurer invest $64m in a private placement of unsecured convertible debentures. Mega’s founder and chairman Victor Bertrand Sr. will also invest $7-million.

The firm’s results will now be released on Monday. In a statement, the company explained:

"Postponing the filing of the financial statements and management discussion and analysis for two business days will provide the corporation with sufficient time to finalize the transaction and properly report it as material subsequent events for the second quarter."

If Mega Brands’ debt is fully converted before the debentures mature in August 2013, Fairfax will hold 20 million common shares of Mega Brands, representing about 35.4 per cent of the company.

The announcement of the debt financing follows plans made by Mega Brands earlier this year, when it said that to raise much-needed cash, it would sell its stationery and activities assets, a move that was expected to bring in up to $200-million.

While the toymaker made a successful start in business in the 1990’s, it was hit by lawsuits and recalls of the Magnetix line, where one child died in the US as a result of ingesting loose magnets.

Mega Brands spokesman Harold Chizick said the Fairfax transaction will provide the needed liquidity for the second half of the year and the key holiday season.

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