MONTREAL, May 13 /PRNewswire/ - MEGA Brands Inc. (TSX: MB) announces that is has purchased CA$20.0 million in principal amount of its outstanding 10% senior secured debentures through a debt substantial issuer bid. Giving effect to this transaction, the Corporation's long-term term debt is reduced to approximately CA$121.7 million.
A total of CA$34.178 million principal amount of debentures were tendered to the offer at CA$1,060 (plus any accrued but unpaid interest) per CA$1,000 principal amount of debentures. A total of CA$20.0 million principal amount of debentures was accepted. 58.5% of the principal amount of debentures tendered was accepted.
On May 6, 2011, debentureholders passed an extraordinary resolution approving amendments to the indenture governing the debentures. The amendments, among other things, allow the Corporation to increase available borrowings for working capital purposes under its existing asset-based credit agreement by an amount equal to 50% of the aggregate principal amount of debentures that it purchases, up to a maximum amount.
''This transaction reduces our debt by CA$20.0 million and, combined with the amendments to the debenture indenture, allows us to increase our financial flexibility by aligning our capital structure more closely with the inherent seasonality of our business,'' said Peter Ferrante, Chief Financial Officer of MEGA Brands. ''As a result, our cost of capital will improve as we move towards more variable debt at more favourable interest rates.''
About MEGA Brands
MEGA Brands Inc. is a trusted family of leading global brands in construction toys, games & puzzles, arts & crafts and stationery. They offer engaging creative experiences for children and families through innovative, well-designed, affordable and high-quality products. Visit http://www.megabrands.com for more information.
The MEGA logo, Mega Bloks, Rose Art, MEGA Games, MEGA Puzzles and Board Dudes are trademarks of MEGA Brands Inc. or its affiliates.
All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities laws. These statements represent the Corporation's intentions, plans, expectations and beliefs. Readers are cautioned not to place undue reliance on these forward-looking statements. Forward-looking information and statements are based on a number of assumptions and involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by them, including, but not limited to risks, assumptions and uncertainties described in the Corporation's MD&A for the year ended December 31, 2010, which is available at www.sedar.com. The Corporation disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law.
SOURCE MEGA BRANDS INC.