SunOpta Closes Initial US$30 Million Preferred Equity Financing
SunOpta Inc. (“SunOpta” or the “Company”) (Nasdaq:STKL) (TSX:SOY), a leading global company focused on plant-based foods and beverages, fruit-based foods and beverages, and organic ingredient sourcing and production, today announced that it had successfully closed a US$30 million preferred equity financing. As originally announced on April 16, 2020, the Company entered into a financing agreement with funds managed by Oaktree Capital Management, L.P. (“Oaktree”) and Engaged Capital, LLC (“Engaged”), leading alternative investment management firms, which invest in companies with strong, defensible franchises.
Under the agreement, Oaktree and Engaged have invested US$30 million in SunOpta in the form of exchangeable preferred shares and have committed to include an additional US$30 million at the Company’s option. Proceeds from the equity investment will be used primarily to invest in the Company’s plant-based foods and beverages business, principally to add capacity via capital projects and to provide incremental liquidity given the current general economic uncertainty.
Summary of the Financing
Oaktree and Engaged committed to purchase newly created Series B exchangeable preferred shares to be issued by the Company’s wholly-owned subsidiary, SunOpta Foods Inc. (the “Series B Preferred”) in two tranches. The first tranche consists of US$30 million of Series B-1 Preferred and closed on April 24, 2020. The Series B-1 Preferred issued in the initial closing is immediately exchangeable into shares of the Company's common stock at an initial exchange price of US$2.50 per share, which represents a 23% premium to the closing price of US$2.03 per share on April 15, 2020. The Series B-1 Preferred constitutes 12.0 million shares as-converted, and on an as-exchanged basis, an ownership level of approximately 12.0% (excluding any conversion of the previously issued 2016 Series A preferred shares) of the Company based on 88.3 million common shares outstanding.
In addition, the Company has the option to require that Oaktree and Engaged purchase a second tranche of the Series B-2 Preferred for up to US$30 million by giving notice to Oaktree and Engaged on or before July 15, 2020. The initial exchange price of the Series B-2 Preferred will be equal to a 30% premium to the 15-day volume weighted average stock price through the trading day immediately prior to the notice date, with an exchange price floor of US$2.00 per share and an exchange price cap of US$3.50 per share. Should the full amount of the second tranche of US$30 million be issued by the Company, the Series B-2 Preferred would constitute 8.6-15.0 million shares as-converted based on the US$2.00 to US$3.50 conversion price range, and on an as-exchanged basis, an incremental ownership level of approximately 7.9-13.0% (excluding any conversion of the previously issued 2016 Series A preferred shares) of the Company based on 88.3 million common shares outstanding.