Primary Energy Recycling Corporation (TSX: PRI) released second quarter 2012 financial and operational results, as well as established a new dividend policy.
- The Board of Directors has established a new dividend policy. The Board is satisfied that the financial flexibility provided by the Company’s recent financing, together with the Board’s confidence in the expected renewal of the Cokenergy contract, will support a sustainable US$0.20 per share annual dividend, payable quarterly. With respect to the third quarter of 2012, a US$0.05 per common share dividend is expected to be declared for payment on or about November 30, 2012 to shareholders of record on November 15, 2012. Declarations and payments of dividends will be made in US dollars. Declaration of any dividends will be at the discretion of the Board.
- Closed its transaction with Atlantic Power Corporation to purchase the 7,462,830 (14.3%) common membership interests in Primary Energy Recycling Holdings LLC not currently held by the Company and terminated the Management Agreement between the two companies for a total cost of approximately US$30.2 million. This transaction provides the Company with a clean, simple corporate structure, greater operational autonomy, and flexibility going forward;
- Announced the closing of a US$110 million senior secured credit facility of which US$85 million was drawn at close with the remaining US$25 million readily available under a revolving credit arrangement. The proceeds of the new credit facility have been applied to fully retire the Company’s US$36.4 million term loan that was previously outstanding, to fund the purchase of the Primary Energy Recycling Holdings LLC common membership interests and for other corporate purposes. The interest rate for the new credit facility is effectively 5.0%, a reduction from the 6.9% effective rate of the previous loan;
- Continued early stage contract renegotiation discussions with the site host for Cokenergy. The current contract expires in the third quarter of 2013;
- Substantially completed work on Phase II of the North Lake plant upgrade by the end of the quarter. As previously disclosed, the renewal contract requires the facility to be upgraded from its current rating of 75 MW to 90 MW.
John Prunkl, President and Chief Executive Officer of Primary Energy, commented:
The second quarter was a transformational period for the Company. We now have more operational independence, improved financial flexibility and a dividend policy that should improve our cost of capital which in turn will help us excel as leaders in the energy recycling space. The renewal of the Cokenergy contract and execution of our capital programs remain our top priorities.