Uni-Select Announces $125M Investment; Ends Strategic Review Process

Uni-Select recently announced that it has been able to complete a private placement offering of C$125 million principal amount of convertible senior subordinated unsecured debentures.

The company states that a shareholder and the lead investor in the Offering is Birch Hill Equity Partners Management. Birch Hill signed up for $75 million worth of the principal amount of debentures. After a private marketing approach, institutional investors bought the remaining $50 million worth of debentures.

“With this investment, a group which includes some of our largest shareholders are demonstrating their confidence in our team, our strategy, and the direction we’re taking to drive long-term value, as we continue to yield tangible cost savings and sustainable profitability improvement from our Performance Improvement Plan,” said Brent Windom, President and Chief Executive Officer of Uni-Select Inc. and President and Chief Operating Officer, Canadian Automotive Group.

With the net proceeds collected from the Offering, Uni-Select plans on decreasing borrowings under its senior debt credit facility. Additionally, the company wishes to undertake initiatives to reduce cost and as well as go after strategic opportunities.

Uni-Select notes in a release the co-agents and bookrunners on the offering were RBC Capital Markets and BMO Capital Markets. Birch Hill’s financial advisor was National Bank Financial Markets.

Uni-Select has announced the completion of its strategic review process. The company’s Board of Directors had created a Special Committee in September 2018 consisting of independent board members. The purpose was to carry out a review of strategic alternatives that could maximize value for shareholders. Several alternatives were reviewed and evaluated during this process. The Board has reached the conclusion that the best alternative for maximizing value for shareholders is modifying the capital structure with the debenture financing and allowing the Corporation to seek growth opportunities and take up cost reduction initiatives. Any future opportunities that conform to Uni-Select’s business strategies and can result in improving shareholder value, will be open for evaluation by the Board and the Corporation.

Uni-Select has released the following details of its convertible debentures financing:

  • The company is offering the Debentures at a price of C$1,000 per C$1,000 principal amount of Debenture.
  • The interest on them is 6.0% per annum, payable semi-annually in arrears on June 18 and December 18 commencing on June 18, 2020.
  • The maturity date for the Debentures is December 18, 2026.
  • They will be convertible at the holder’s option into common shares of the Corporation at a conversion price of C$13.57 per Common Share, representing a conversion rate of 73.69 Common Shares per C$1,000 principal amount of Debentures.

Birch Hill has been given some governance rights by Uni-Select due to this investment. The company now has the right to select two nominees on the board of directors in order to be able to maintain its pro rata ownership and customary registration rights.

Effective January 1, 2020, Uni-Select has appointed David G. Samuel and Matthew B. Kunica as directors of the Corporation.

Currently serving as the Chairman of Groupe Distinction, Samuel joined Birch Hill in 2005. He is also on the boards of directors of Cozzini Bros and Softchoice Corp. Kunica became a part of Birch Hill in 2003.  He is on the Boards of CCM Hockey, HomeEquity Bank and Bio Agri Mix at present.

Uni-Select notes that its Board of Directors will consist of nine members and one vacant spot, as of January 1, 2020. The company plans on using the vacancy to bring in a new member to increase diversity by the time of its next annual shareholder meeting.

“I wish to take this opportunity to thank David Bibby, Jeff Hall, George Heath, Dennis Welvaert and Michael Wright for their invaluable contributions to Uni-Select,” said Michelle Cormier, Chair of the Board of the Corporation. These members will be leaving the Board from January 1, 2020.

Uni-Select notes that it is taking meaningful action to confront a series of headwinds in Europe, due to market softness and uncertainties surrounding Brexit. In the meantime, the Corporation will be recording a non-recurring, non-cash goodwill impairment charge between US$45 million and US$50 million, related to a portion of the goodwill of its operations in the U.K. The Corporation’s upcoming Q4 and year-end financial statements will reflect this impairment.

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