High Liner Foods Announces Favourable Amendments to Debt Facilities

LUNENBURG, NS, Feb. 8, 2013 /CNW/ - High Liner Foods Incorporated (TSX: HLF) ("the Company"), the leading North American value-added frozen seafood company, announced today that it concluded amendments to its senior secured term loan (the "Term Loan B") and asset-based revolving loan facility (the "ABL Facility"). 

The principal amendments to the Term Loan B are summarized as follows:

  • Reduction in applicable interest rates for loans under the facility from LIBOR plus 5.5% (with a 1.5% LIBOR floor), to LIBOR plus 3.5% (with a 1.25% LIBOR floor);
  • Leverage covenants which are more favorable to the Company;
  • Increased capacity for capital expenditures, distributions and repurchases; and
  • Increased flexibility and capacity for permitted investments and acquisitions by the Company.

The principal amount, maturity and amortization terms of the Term Loan B were not changed by the amendments.

Management expects that the Company will realize material benefits as a result of the amendments to the Term Loan B. Based on the Company's expected mandatory repayments under the Term Loan B, and assuming no market valuation adjustments on the LIBOR floor-related embedded derivative1, we estimate that financing costs (including the change in deferred financing costs) in 2013 will be reduced by $6.2 million ($4.7 million in cash interest), and over the remaining term of the loan by approximately $33 million ($24 million of cash interest). After applicable income taxes, the increase in income for 2013 is estimated to be $4.5 million ($0.30 per basic share).

Due to the magnitude of the interest savings arising from the amendments, accounting rules require the deferred costs related to the original placement of the Term Loan B to be expensed. Net deferred financing costs of $8.7 million ($6.3 million after tax) as at the end of 2012 will thus be expensed in 2012  earnings as financing costs. Transaction costs associated with the amendment of an estimated $1.3 million ($0.9 million after tax) will be expensed in 2013.

In addition, the ABL Facility was amended concurrently with amendments to the Term Loan B.  The principal ABL Facility amendments include improved interest costs.  The Company expects the amendments to the ABL Facility will result in savings of between $150,000 and $250,000 during 2013, with additional savings thereafter during the term, depending on the amount drawn under the ABL Facility.

RBC Capital Markets acted as Lead Arranger and Bookrunner for the debt amendments.

1 Due to the fact that the Term Loan has a LIBOR floor, there is an embedded derivative that is separated from the loan value and both the amortization of the original amount plus any mark-to-market valuations are expensed as financing costs over the life of the loan and will be recovered as income on the payout of the loan.  See Management Discussion and Analysis for quarter ended September 29, 2012.

About High Liner Foods Incorporated

High Liner Foods Incorporated is the leading North American processor and marketer of prepared, value-added frozen seafood.  High Liner's branded products are sold throughout the United States, Canada and Mexico under the High Liner, Fisher Boy, Mirabel, Sea Cuisine and Royal Sea labels, and are available in most grocery and club stores.  The Company also sells its products under the High Liner, FPI, Mirabel, Viking, Icelandic Seafood, Samband of Iceland, Seastar, and Seaside brands to restaurants and institutions, and is the major supplier of private label seafood products to North American food retailers and food service distributors.  High Liner Foods is a publicly traded Canadian company, trading under the symbol HLF on the Toronto Stock Exchange.

This document contains forward-looking statements. Forward-looking statements can generally be identified by the use of the conditional tense, the words "may", "should", "would", "believe", "plan", "expect", "intend", "anticipate", "estimate", "foresee", "objective" or "continue" or the negative of these terms or variations of them or words and expressions of similar nature.  Specific forward-looking statements in this document include, but are not limited to expectations with respect to: increased capacity for capital expenditures, distributions and repurchases, including any payment of same; increased flexibility and capacity for permitted investments, including whether or not investments will be made; increased flexibility under the ABL Facility; annual and/or aggregate savings from amendments to debt facilities; and improvements to cash or profit of the Company.  These statements are based on a number of factors and assumptions including, but not limited to: the LIBOR interest rate and prime lending interest rates in Canada and the United States; market valuation adjustments on the LIBOR floor-related embedded derivative, the principal amount outstanding from time to time under the debt facilities described above; the occurrence of mandatory prepayments; income tax rates; decisions of the directors of the Company regarding capital expenditures, distributions and repurchases; opportunity and availability to make permitted investments under the debt facilities; and the amount and timing of the capital expenditures in excess of normal requirements to allow facilitate production improvements by the Company.  The statements are not a guarantee of future performance or events.  By their nature, forward-looking statements involve uncertainties and risks that the forecasts and targets will not be achieved.  Readers are cautioned not to place undue reliance on forward-looking statements, as actual results may differ materially from those expressed in such forward-looking statements.  We include in publicly available documents filed from time to time with securities commissions and The Toronto Stock Exchange, a discussion of the risk factors that can cause anticipated outcomes to differ from actual outcomes.  Except as required under applicable securities legislation, we do not undertake to update forward-looking statements, whether written or oral, that may be made from time to time by us or on our behalf, whether as a result of new information, future events or otherwise.

For further information about the Company, please visit our website at www.highlinerfoods.com or send an e-mail to investor@highlinerfoods.com.

SOURCE: High Liner Foods Incorporated