Business
Magellan Aerospace Corporation Announces Extension of Financing and Payment of Preferred Dividends
Magellan Aerospace Corporation Announces Extension of Financing and Payment of Preferred Dividends
About this update from Magellan Aerospace Corporation
[{"type":"text","content":"\n\n\n\nDec. 23, 2009 (Canada NewsWire Group) -- TORONTO, Dec. 23 /CNW/ -- Magellan Aerospace Corporation (\"Magellan\" or the \"Corporation\") announced today that the independent members of its Board of Directors have approved and Magellan has entered into a commitment letter for the extension of a previous secured subordinated loan in the principal amount of $65 million from Edco Capital Corporation (\"Edco\").The extension of the secured subordinated loan is to July 11, 2011 and will be on the same terms and conditions as the prior loan except that the interest rate will be reduced from 12% per annum to 11% per annum. Magellan will pay a one time fee to Edco of 1% of the principal amount of the loan as to 0.20% on the execution and delivery by Edco of a commitment letter for the renewal and as to 0.80% on the satisfaction of all conditions and closing of the renewal transaction. The completion of the extension transaction is subject to the condition that the secured subordinated loan is not in default and on the condition that there is no material change in the business, operations or capital of Magellan.Edco has also extended an option to Magellan exercisable on or before July 11, 2011 to renew the loan for a further one year period on payment of a fee of 1% of the principal amount of the loan and on the condition that the bank credit facility is renewed for an additional 364 day period beginning May 21, 2011 on terms satisfactory to the Board and on the condition that there is no material change in the business, operations or capital of Magellan.Edco is wholly-owned by N. Murray Edwards, who is the Chairman of the Board of the Corporation and a major shareholder. As such the financing arrangements constitute related party transactions within the meaning of Ontario Securities Policy 61-501. The extension of the loan and the option for a further extension of the loan are not subject to the formal valuation requirements and are exempt from the minority approval provisions as the transactions have no equity participation component and are on reasonable commercial terms that are not less advantageous to Magellan than if obtained from an arm's length person from Magellan. The transactions were reviewed by a committee of independent directors, recommended to the Board of Directors and approved by the independent members of the Bo...