TORONTO - Metal distributor Russel Metals Inc. (TSX:RUS) has arranged a $175-million syndicated debt financing, which will be used to run its business and potentially for acquisitions.
The convertible debentures will mature at the end of September 2016 and will pay interest at a rate of 7.75 per cent yearly. The bought-deal financing had originally been for $150 million but was increased later Monday by $25 million.
Debenture holders may convert the debt into common shares of Russel at any time up to the maturity date at $25.75 per common share. The company's shares have a 52-week range of $9.25 to $28.28 and closed Friday at $17.74.
Russel shares fell 45 cents or 2.5 per cent to $17.29 with less than 73,500 traded at mid-afternoon on the Toronto Stock Exchange.
The debentures will not be redeemable by Russel before September 2015, at which point the company may redeem some or all of them.
Russel Metals said it will also have the right to repay outstanding principle or interest through the issuance of cash or common shares of equal value.
The offering is being made through a syndicate of underwriters co-led by GMP Securities L.P. and RBC Capital Market. The offering closes Oct. 8, 2009.
Russel Metals, based in Mississauga, Ont., is one of the largest metals distribution companies in North America.