Afton Food Group Ltd
Thursday Mar 23 2000
Mr. Robert Macdonald reports
Afton Food Group has completed a $7.8-million financing which will be used to facilitate the purchase of 100 per cent of Robin's Foods Inc. Robin's was founded in 1975 and is one of Canada's largest franchisors of stores serving primarily coffee, donuts and deli items. Robin's currently operates approximately 244 corporate and franchised outlets which are across Canada. This acquisition, along with Afton's existing brands, will rank Afton as the 10th largest quick service restaurant chain in Canada. Robin's has annual system sales of approximately $85-million and annual revenue of approximately $24.5-million. Following completion of the acquisition, Afton will have approximately 500 corporate and franchised outlets generating approximately $200-million in system sales and in excess of $30-million in revenue on an annualized basis.
The private placement financing completed by Afton resulted in the corporation receiving gross proceeds of $7.8-million and consisted of $5.2-million principal amount of subordinated debentures and $2.6-million of special warrants. HSBC Capital (Canada) Inc. and PRIVEQ II Limited Partnership subscribed for and purchased over 90 per cent of the offering.
Each special warrant entitles the holder to acquire one unit in the capital of Afton, for no additional consideration, consisting of one common share and one-third of one common share purchase warrant. Each whole purchase warrant will entitle the holder to purchase one common share at a price of $1.60 and will be exercisable for three years. The special warrants will result in the issue of 2,471,862 common shares and, if the purchase warrants are exercised, an additional 823,954 common shares will be issued.
The five-year subordinated debentures have an annual interest cost of 10 per cent. Holders of the debentures also received common shares purchase warrants entitling them to purchase $5.2-million of common shares at a variable exercise price of between $1.50 per share and $3 per share based upon Afton's financial performance.
In order to finance the balance of the purchase price and refinance Robin's existing bank indebtedness, Afton has received a commitment from a banking syndicate led by Rabobank Canada, an affiliate of Nertherlands-based Rabobank
International, to provide it with $21.5-million. Closing of the Robin's transaction is scheduled to occur on or about March 31, 2000. All of the proceeds derived from the private placement are being held in escrow pending completion of the acquisition of Robin's.
Afton currently operates more than 250 corporate and franchise restaurants in Canada, the United States and Saudi Arabia under the brand names 2-4-1 Pizza, Ruffage, Donut Delite Cafe and Mrs. Powell's Bakery Eatery. |
