ACQUISTION APPROVALS
The Acquisition must be approved by holders of at least two thirds of the MWH shares at a special meeting of MWH shareholders expected to be held in April 2016. The Acquisition is subject to certain customary conditions, including approval under the U.S. Hart-Scott-Rodino Anti-Trust Improvements Act. Stantec anticipates the Acquisition to close in the second quarter of 2016.
FINANCING
The Acquisition is expected to be financed with a combination of the proceeds of an equity financing and new credit facilities as follows:
-- A $525 million public offering of Subscription Receipts on a bought deal
basis at an offer price of $30.25 per Subscription Receipt for a total
of 17,360,000 Subscription Receipts (the "Equity Financing") and up to
an additional approximately $79 million in gross proceeds pursuant to an
underwriter over-allotment option;
-- A $800 million senior secured revolving credit facility (the "Revolving
Facility"), of which approximately $233 million will be drawn; and
-- A $450 million senior secured amortizing non-revolving term credit
facility (the "Term Facility").
Stantec has also secured a $525 million bridge facility (the "Bridge Facility") which could be used in conjunction with the Revolving Facility and the Term Facility to fund the Acquisition in the event the Equity Financing is not completed on or before the Acquisition Closing Date. The Bridge Facility will be terminated in the event the Equity Financing closes.
Public Offering of Subscription Receipts on a Bought Deal Basis
Stantec has entered into an agreement with CIBC World Markets Inc. ("CIBC Capital Markets") and RBC Dominion Securities Inc. ("RBC Capital Markets") (collectively, the "Joint Bookrunners"), on behalf of a syndicate of underwriters (the "Underwriters") with respect to the Equity Financing.
In addition, the Underwriters have been granted an over-allotment option, exercisable in whole or in part at the offer price not later than the earlier of the 30th day following the closing date of the Equity Financing and the occurrence of a Termination Event (as defined below), to purchase up to an additional 2,604,000 Subscription Receipts at a price of $30.25 per Subscription Receipt for additional gross proceeds of up to approximately $79 million. The Subscription Receipts will be offered to the public in Canada and the United States through the Underwriters or their affiliates under the multi-jurisdictional disclosure system by way of short form prospectus filed with the securities regulatory authorities in each of the provinces of Canada and with the Securities and Exchange Commission in the United States. The Equity Financing is scheduled to close on or about April 14, 2016.
Each Subscription Receipt will entitle the holder thereof to receive, without payment of additional consideration or further action, one common share in the capital of Stantec following the satisfaction of the Escrow Release Condition (as defined below) plus a Subscription Receipt Adjustment Payment (as defined below), if applicable. The gross proceeds from the sale of the Subscription Receipts, less 50% of the underwriters' fee with respect to such sale will be held by Computershare Trust Company of Canada, as subscription receipt agent, and invested as directed by Stantec in short term interest bearing or discount debt obligations issued or guaranteed by the Government of Canada or a Province of Canada or a Canadian chartered bank (subject to those investments having a certain minimum rating) pending satisfaction of the Escrow Release Condition, all pursuant to the terms of a subscription receipt agreement (the "Subscription Receipt Agreement") to be entered into on the closing of the Equity Financing among Stantec, the subscription receipt agent (the "Escrow Agent"), CIBC Capital Markets and RBC Capital Markets.
"Escrow Release Condition" means all conditions precedent to the completion of the Acquisition pursuant to the agreement in respect of the Acquisition (other than the delivery of the purchase price for the Acquisition) have been satisfied or waived, and the Company has delivered to CIBC Capital Markets and RBC Capital Markets, on their own behalf and on behalf of the Underwriters, and the Escrow Agent, a certificate, in accordance with the terms of the Subscription Receipt Agreement, confirming such satisfaction or waiver.
If: (i) the Escrow Release Condition is not satisfied on or before 5:00 p.m. (Edmonton time) on August 30, 2016 (the "Escrow Release Deadline"), (ii) the agreement in respect of the Acquisition is terminated prior to such deadline, or (iii) Stantec advises the subscription receipt agent, CIBC Capital Markets and RBC Capital Markets, or announces to the public, that it does not intend to proceed with the Acquisition prior to such deadline (each such event being a "Termination Event"), holders of Subscription Receipts will be entitled to receive an amount equal to the full subscription price and their pro rata portion of the interest earned thereon.
If the Escrow Release Condition is satisfied on or before the Escrow Release Deadline and holders of Subscription Receipts become entitled to receive common shares pursuant to the Subscription Receipt Agreement, such holders will also be entitled to receive, without duplication, an amount, if any, representing an amount per Subscription Receipt equal to the amount per common share of any cash dividends declared by Stantec for which record dates have occurred during the period from and including the date of the closing of the Equity Offering to and including the date immediately preceding the date common shares are issued or deemed to be issued pursuant to the Subscription Receipt Agreement (the "Subscription Receipt Adjustment Payment"), less any applicable withholding taxes, for each Subscription Receipt so held, as further described in the Subscription Receipt Agreement.
The issuance of the Subscription Receipts pursuant to the Equity Financing is subject to customary approvals of applicable securities regulatory authorities, including the Toronto Stock Exchange and the New York Stock Exchange.
Investors should read the short form prospectus related to the Equity Financing before making an investment decision. The description of the Subscription Receipts set forth above is qualified in its entirety by the subscription receipt agreement and the summary thereof contained in the short form prospectus. This news release does not constitute an offer to sell or the solicitation of any offer to buy nor will there be any sale of these securities in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such province, state or jurisdiction.
New Credit Facilities
Concurrently with the announcement of the Acquisition, Stantec has obtained an underwritten financing from Canadian Imperial Bank of Commerce, as sole lead arranger and sole bookrunner, providing for the Revolving Facility, the Term Facility and the Bridge Facility (together the "New Credit Facilities").
The Bridge Facility, to be used only in the event the Equity Financing does not close on or before the Acquisition Closing Date, would be a senior secured one-year non-revolving bridge credit facility in the maximum amount of $525 million.
FINANCIAL AND LEGAL ADVISORS
DBO Partners acted as lead financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to Stantec in connection with the Acquisition. CIBC Capital Markets also acted as financial advisor to Stantec on the Acquisition. Legal advice to Stantec in connection with the financing is being provided, with respect to Canadian law, by Dentons Canada LLP for the Equity Financing and Bennett Jones LLP for the New Credit Facilities and, with respect to US law, by Paul, Weiss, Rifkind, Wharton & Garrison LLP. BofA Merrill Lynch acted as financial advisor and Kirkland & Ellis LLP acted as legal advisor to MWH in connection with the Acquisition.
CONFERENCE CALL INFORMATION
Stantec will hold a conference call, to be held Tuesday, March 29, 2016, at 2:45 PM MDT (4:45 PM EDT), and broadcast live and archived in the Investors section of www.stantec.com. Interested parties who wish to listen to the conference call are invited to call 1-800-499-4035 and provide confirmation code 5229404 to the operator.
AVAILABILITY OF DOCUMENTS
Copies of related documents, such as the preliminary short form prospectus, underwriting agreement, the subscription receipt agreement and the merger agreement will be available on SEDAR ( www.sedar.com) as part of the public filings of Stantec.
The Company has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (the "SEC") for the Equity Financing to which this communication relates. The Subscription Receipts may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. Before readers invest, they should read the prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the Equity Financing. The Company has also filed a preliminary short form prospectus relating to the Equity Financing with each of the provincial securities regulatory authorities in Canada. Potential investors may get any of these documents for free by visiting EDGAR on the SEC website at
www.sec.gov or via SEDAR at
www.sedar.com . Alternatively, the Company, any underwriter or any dealer participating in the Equity Financing will arrange to send potential investors the prospectus without charge if requested in the U.S. from CIBC Capital Markets, 425 Lexington Avenue, 5th floor, New York, NY; Attention: Hector Cruz; Phone: 1-800-282-0822; Email:
useprospectus@cibc.com or from RBC Capital Markets, LLC, 200 Vesey Street, 8th Floor, New York, NY 10281-8098; Attention: Equity Syndicate; Phone: 877-822-4089; Email:
equityprospectus@rbccm.com .
