Clarke announces proposal to extend maturity date of Debentures due December 31, 2013

Nov 13, 2012, 08:27 ET from CLARKE INC.

HALIFAX, Nov. 13, 2012 /CNW/ - Clarke Inc. ("Clarke" or the "Company") (TSX: CKI CKI.DB.A) announced today that it intends to seek the approval of the holders of its 6.00% convertible unsecured subordinated debentures due December 31, 2013 (the "Debentures") to extend the maturity date of the Debentures by five years from December 31, 2013 to December 31, 2018 (the "Extension"). The Extension will be considered at a meeting of debentureholders (the "Debentureholders") to be held on January 10, 2013 (the "Meeting").

Reasons for Extension

The principal purpose of the Extension is for Clarke to maintain the flexibility it currently has to pursue its investment strategy and to continue to build value for all of its securityholders. The Extension reflects many of the comments received from Debentureholders in connection with Clarke's previous proposal to amend the Debentures, including comments regarding the conversion feature of the Debentures, and Clarke believes the Extension is advantageous to Debentureholders.

Clarke believes that the advantages of the Extension include the following:

  • No change in the conversion rights of the Debentures. Debentureholders retain the right to convert the Debentures into common shares of Clarke and, therefore, have the opportunity to participate in the growth of Clarke's businesses and investment portfolio. This conversion feature offers Debentureholders the opportunity to generate capital appreciation from the Debentures in addition to earning interest during the extended term.
  • Consent fee. Debentureholders that vote in favour of the proposed amendments will receive a consent fee of 60 basis points or $6 per $1,000 principal amount of Debentures and soliciting dealers will receive a fee of 40 basis points or $4 per $1000 principal amount of Debentures.
  • Continued high interest rate. Clarke believes the 6.0% interest rate on the Debentures represents an attractive yield, especially in the current low interest rate environment and in light of other reinvestment opportunities available.
  • Strong financial position. Clarke has the financial capacity, through its committed credit facilities and marketable securities, to redeem the Debentures at this time. Clarke believes that doing so would result in Debentureholders losing an attractive and recurring source of income as well as the potential for capital appreciation through the conversion feature of the Debentures.

George Armoyan, CEO of Clarke, stated: "We believe that Clarke's proposal to extend the maturity date of the Debentures represents an attractive opportunity for Debentureholders to retain a high-interest investment for five more years while also being able to participate in Clarke's growth during that time." Mr. Armoyan added: "In developing this revised debenture proposal, we have incorporated many of the comments made by our Debentureholders as part of our previous debenture proposal. We believe this is a great opportunity for both Clarke and all of our securityholders."

Consent Fee 

The Company will pay a consent fee equal to $6 per $1,000 principal amount of Debentures (the "Consent Fee") conditional upon, among other things, holders of at least 66⅔% of the principal amount of the Debentures, present or represented by proxy at the Meeting, voting for the Extension. The Company will, as promptly as practicable after the satisfaction of the conditions precedent, pay the Consent Fee to Debentureholders that voted for the Extension. Concurrently with the payment of a Consent Fee in respect of any Debentures, the Company will also, subject to certain terms and conditions, pay a soliciting dealers' fee equal to $4 per $1000 principal amount of Debentures in respect of such Debentures to soliciting dealers that are entitled to receive the fee.

Board Recommendation

The Board of Directors of the Company (the "Board") believes that the Extension provides a number of benefits to Clarke, its shareholders and the Debentureholders. The Board UNANIMOUSLY RECOMMENDS that the Debentureholders vote FOR the Extension.

Further information with respect to the Extension will be outlined in a management information circular (the "Circular") expected to be mailed to the Debentureholders in mid-December 2012.

For the Extension to be approved, at least 66 2/3% of the principal amount of the Debentures voted (either in person at the Meeting or by proxy) must be FOR votes.

Detailed voting instructions will be found in the Circular. The Meeting is scheduled to be held on January 10, 2013 at 10:00 a.m. (Atlantic Daylight Time) at 6009 Quinpool Road, 9th Floor, Halifax, Nova Scotia B3K 5J7.

About Clarke

Halifax-based Clarke invests in a variety of private and publicly-traded businesses and participates actively where necessary to enhance performance and increase return. Clarke's securities trade on the Toronto Stock Exchange (CKI; CKI.DB.A); for more information about Clarke, please visit our website at