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Share Name | Share Symbol | Market | Type |
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XS Cargo Income Fd | TSXV:XSC.UN | TSX Venture | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.00 | - |
XS Cargo Income Fund (the "Fund") (TSX:XSC.UN) today announced that it has reached agreement in principle as to the terms of revised financing agreements with the lenders of its $12 million subordinated debt and of an amended credit facility with the Canadian Imperial Bank of Commerce ("CIBC") which provides the Fund's senior term loan and operating facilities. Michael McKenna, President and Chief Executive Officer of the Fund stated, "We are very pleased to have these agreements in place with our lenders. Management can now focus its efforts on maximizing the Fund's sales and profits during the upcoming holiday shopping season." The material terms of the new financing agreements for the subordinated debt, (the Subordinated Debt Transaction") which is held equally by CIBC Leveraged Finance and Famous Brands Inc.(a company owned by Michael McKenna, the Fund's President and Chief Executive Officer and largest unitholder) include: - the expiry date of the subordinated debt facilities has been extended to June 30, 2009 - the interest rate on this financing is increased from 16% to 18%, with the cash pay interest remaining at 8% and the remaining 10% interest being capitalized - each of CIBC Leverage Finance and Famous Brands Inc. will receive 500,000 warrants to purchase trust units of the Fund, at an exercise price of $0.60 per unit at any time over the next 3 years - an amendment fee of $150,000 ($75,000 to each lender) is to be paid. The material terms of the amended credit facility with CIBC are: - the expiry date of the CIBC financing has been extended to April 30, 2009 - the pay down of the senior term debt (currently $11.25 million) by $4.5 million on or before December 31, 2008 - the financial covenants to be maintained by the Fund have all been amended or adjusted, and the Fund is now in compliance with all such financial covenants The transactions are expected to close in early October, 2008 and are subject to certain closing conditions, including finalization of definitive agreements for the Subordinated Debt Transaction and obtaining final approval of the Toronto Stock Exchange as to the issue of the warrants. The Subordinated Debt Transaction was negotiated with and approved by a special committee of the independent of directors of XS Cargo GP Inc, the administrator of the Fund. Deloitte & Touche LLP has provided the special committee and board of directors with its opinion that the Subordinated Debt Transaction is fair, from a financial point of view, to the unitholders of the Fund. Due to the participation of Famous Brands Inc. in the Subordinated Debt Transaction, the Subordinated Debt Transaction is a related party transaction for the purposes of Multilateral Instrument 61-101 and the Fund is relying on exemptions from the formal valuation and minority approval requirements of Multilateral Instrument 61-101, based on a determination that the fair market value of the Subordinated Debt Transaction, insofar as it relates to the Famous Brands Inc., does not exceed 25% of the Fund's market capitalization. A material change report will be filed less than 21 days before the closing date of the transactions. This shorter period is reasonable and necessary in the circumstances as the Fund wishes to complete the transactions in a timely manner. Mr. McKenna and companies owned or controlled by him currently own 5,866,450 special voting units and 305,000 trust units of the Fund, representing approximately 51% of the outstanding voting units of the Fund. Assuming the exercise of all of the 500,000 warrants to be issued to Famous Brands Inc. pursuant to the Subordinated Debt Transaction, Mr. McKenna and companies owned or controlled by him would then own 5,866,450 special voting units and 805,000 trust units of the Fund, representing approximately 53% of the outstanding voting units of the Fund, not including the warrants issued to CIBC Leveraged Finance, or 51% on a fully diluted basis. Business of the Fund The Fund owns a 51% indirect interest in XS Cargo Limited Partnership which operates 40 closeout retail stores in Alberta, British Columbia, Manitoba, Saskatchewan, Ontario, Newfoundland, Nova Scotia and New Brunswick. FORWARD LOOKING STATEMENTS This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release are forward-looking statements. You can identify many of these statements by looking for words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof. These forward-looking statements include statements with respect to the amount and timing of the payment of distributions of the Fund. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. Forward-looking statements are subject to risks, uncertainties and assumptions, including, but not limited to, those discussed elsewhere in the press release. There can be no assurance that such expectations will prove to be correct. Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include, but are not limited to, those discussed under "Risk Factors" in the Fund's MD&A and in the Fund's Annual Information Form. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and, except as required by law, the Fund assumes no obligation to update or revise them to reflect new events or circumstances.
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