Business Context and Reporting Period
Company: Rayonier Advanced Materials Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 20, 2017
Event Date: November 17, 2017
Context: The Company completed the acquisition of all outstanding common shares of Tembec Inc. (a Canadian corporation) pursuant to an Arrangement Agreement dated May 24, 2017, as amended on July 23, 2017.
Key Financial Metrics and Transaction Details
- Total Purchase Price: Approximately CDN $317.3 million in cash plus 8.4 million shares of Rayonier Advanced Materials common stock.
- Financing Structure: The cash consideration was funded using cash-on-hand and borrowings under an Amended and Restated Credit Agreement totaling US $680 million in aggregate principal.
- Debt Obligations Created:
- US $230 million in senior secured term A-1 loans borrowed by Rayonier A.M. Products Inc.
- US $450 million in senior secured term A-2 loans borrowed by Rayonier Performance Fibers, LLC.
- Equity Issuance: 8.4 million shares of Company Common Stock issued in reliance on Section 3(a)(10) of the Securities Act of 1933.
Material Changes
The primary material change is the completion of the acquisition of Tembec Inc., resulting in Tembec becoming a wholly-owned subsidiary of Rayonier Advanced Materials Inc. This transaction significantly altered the Company's capital structure through the issuance of equity and the incurrence of US $680 million in new debt obligations.
Guidance, Outlook, and Disclosures
- Financial Statements: The Company intends to file historical financial statements of Tembec and pro forma financial information in an amendment to this report (Form 8-K/A) within 71 calendar days of the filing date.
- Regulation FD: A press release regarding the completion of the Arrangement was issued on November 20, 2017, and is incorporated by reference.
- Legal Approval: The Plan of Arrangement was approved by the Québec Superior Court on August 7, 2017.
Investor Verification Checklist
- Verify the final terms of the Amended and Restated Credit Agreement (Exhibit 10.1) to understand debt covenants and repayment schedules.
- Review the upcoming Form 8-K/A for pro forma financial information to assess the combined entity's financial position.
- Confirm the impact of the 8.4 million share issuance on existing shareholder dilution.
- Monitor the integration of Tembec's operations and the realization of anticipated synergies.