TFS Raises US$150 Million

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THE BOURSE WHISPERER: ASX-listed Indian Sandalwood producer TFS Corporation has priced an offering in the international markets to raise US$150 million.

TFS has over 4,500 hectares of Indian Sandalwood trees established in the Kimberley region of Western Australia.

The money will be raised through the issue of 11% Senior Secured Notes due 2018 and Warrants (Options) to purchase ordinary shares.

The settlement of the offering of the Notes is expected to occur in New York on 21 June 2011 and is subject to customary closing conditions.

TFS intends using the net proceeds from the offering in potential land acquisitions and for general corporate purposes, including other Indian Sandalwood acquisition opportunities and potential corporate acquisitions.

“At the closing of the offering, 50% of the net proceeds (US$75m) will be deposited into an escrow account that restricts use of the cash in the account (“Restricted Cash”),” the company said in an announcement.

“One-third of the Restricted Cash will become available for use upon TFS receiving shareholder approval for the issue of the Options. The remaining two-thirds of the Restricted Cash will become available once specific sales targets have been met for Beyond Carbon institutional sales.

“The Notes will be issued by TFS and will be guaranteed by 10 of its subsidiaries. The Notes will be secured by substantially all the assets of TFS and its subsidiary guarantors.”

Investors participating in the offering will receive 370 Options for each US$1,000 principal amount of the Notes purchased, resulting in a total of 55.5m Options to be issued.

Each Option will be exercisable for one ordinary share at a price per share of A$1.28 (a 40% premium to the 30 trading day volume weighted average price preceding the pricing of the offering), subject to adjustments permitted under the ASX Listing Rules. The Options will expire on 15 July 2018.

The issuance of the Options is subject to TFS shareholder approval at a general meeting that is expected to be held in late July or early August 2011.

TFS said its largest shareholder, with a holding 16.31% of the company’s ordinary shares, has agreed to vote to approve the issuance of the Options.
In the event that shareholder approval for the issue of the Options is not obtained by 15 July 2012, then special interest on the Notes would commence accruing until the Options are issued.