The Globe and Mail November 12, 1996
SHERRITT TO SINK $300-MILLION INTO CUBA
Takes aim at country's infrastructure
By Brent Jang, Alberta Bureau
CALGARY -- Standing firm in the face of U.S. pressure,
Sherritt International Corp. is raising more than $300-
million to pursue an ambitious expansion program in
Cuba.
Sherritt announced yesterday that it wants to pump
money across the Cuban economy, including into
petroleum refining, real estate, sugar and
communications.
"It's full steam ahead," said Sherritt spokeswoman
Patrice Merrin Best. "We'll be able to participate as
a proxy for economic growth as the Cuban economy starts
to develop."
The Toronto-based company, which held a board meeting
in Havana two months ago, already plays an important
role in Cuba, with investments in oil exploration,
nickel mining, agriculture and tourism.
While Sherritt has been praised by Cuban leader Fidel
Castro, it has also attracted strong criticism in the
United States for conducting business in Cuba, where
U.S.-based firms had property seized after the 1959
Communist revolution.
As part of various U.S. attempts to punish companies
that invest in Cuba, numerous Sherritt directors and
officials were barred earlier this year from entering
the United States.
Sherritt was one of a handful of companies singled out
under the controversial U.S. Helms-Burton law that
included measures to block entry to the United States
of such executives and their immediate families.
But in raising $300-million through a debenture issue,
Sherritt is signalling its refusal to capitulate to
American politicians who have expressed outrage at
foreign companies operating in Cuba.
"We're a Canadian company. We operate legitimately in
Cuba," Ms. Merrin Best said. "The Cuban infrastructure
needs a tremendous amount of investment."
Echoing the sentiments of Sherritt chairman Ian
Delaney, she said Sherritt will be aggressively moving
ahead in its goal to become the "Canadian Pacific Ltd.
of Cuba."
Sherritt's offering of debentures is expected to
completed by Dec. 4. The underwriters have agreed to
sell $300-million in debentures to the public in a so-
called bought deal, in which Midland Walwyn Capital
Inc. and Griffiths McBurney & Partners will assume the
risks of finding buyers.
Early indications suggest an enthusiastic response to
the issue. There are provisions for a large
"overallotment" of an additional $300-million to be
raised if the demand is strong enough.
In a statement before the Toronto Stock Exchange closed
yesterday, Sherritt said it "intends to use the
proceeds of the offering to finance capital projects
and growth in its existing businesses, as well as
pursue [new] investments in the Republic of Cuba."
Sherritt rose 40 cents to end at $9.40 yesterday on the
TSE.
Mr. Delaney is concentrating his efforts on Cuba these
days.
He announced last month that he is resigning as
chairman and chief executive officer of fertilizer
giant Viridian Inc. of Fort Saskatchewan, Alta.
Viridian formerly operated under the name Sherritt
Inc., which also used to oversee the assets of Sherritt
International. Mr. Delaney split the fertilizer and
Cuban operations in two last year.
Calgary-based Agrium Inc. announced three weeks ago
that it will be acquiring Viridian in a $1.3-billion
stock swap. A special Viridian shareholders' meeting
for the Agrium-Viridian merger will held Dec. 10 in
Toronto to approve the transaction.
The debentures of Sherritt carry a 6-per-cent, 10-year
convertible feature. Investors must pay $500 on a par
value of $1,000 on the closing of the offering, with
the remaining $500 instalment due by Dec. 1, 1997.
Interest will be paid every June 15 and Dec. 15, with
the first payment coming on June 15, 1997. The company
will have the flexibility to pay "principal and
interest in the form of its restricted voting shares."
As well, the debentures can be redeemed on or after
Dec. 16, 1999, subject to certain conditions. The
company also noted that the debentures can be converted
into Sherritt shares at a conversion rate of 105.263
shares for every $1,000 in debentures.
============================================
The Financial Post November 12,
1996
SHERRITT TO EXPAND IN CUBA
Company snubs Helms-Burton legislation with goal to
raise $600M in debentures to finance plans to develop
infrastructure projects in country
By PETER KENNEDY, Mining Reporter, The Financial
Post
Sherritt International Corp. sidestepped Washington's
controversial Helms-Burton law yesterday, saying it
expects to raise $600 million from the sale of
convertible debentures for projects in Cuba.
One analyst said Sherritt has elected to raise the
money through a debenture issue rather than go to the
banks. "The banks would have had difficulty dealing in
Cuba because they risked being blacklisted in the
U.S,'' the analyst said.
The debentures are being bought by a syndicate led by
Griffiths McBurney and Midland Walwyn Capital Inc.,
which both remain independent from major banks.
Toronto-based Sherritt had been keeping a low profile
during the recent U.S. elections. But six days after
Bill Clinton won a second term, Sherritt said it had
entered a bought deal to raise $300 million from the
sale of 6% 10-year convertible unsecured subordinated
debentures.
The debentures, to be offered to investors by way of
instalment receipts, will be issued at par value of
$1,000, the company said. Of that amount, $500 is due
upon closing of the offering, while the balance of $500
is payable by Dec. 1, 1997.
Sherritt said the underwriters have been granted the
option to take up another $300 million in debentures, a
move that would raise total proceeds of the offering to
$600 million.
"We expect to exercise that option within the next 48
hours,'' said Brad Griffiths, chairman of Toronto-based
Griffiths McBurney, the lead underwriter.
Clinton's election victory has raised hopes his
administration will water down Helms-Burton, which
allows U.S. citizens to sue foreign companies or
individuals over property confiscated by the Cuban
government.
However, analysts were still shocked at the size of the
financing. "That certainly is an eye popping number,''
said Manford Mallory of Research Capital Corp. in
Toronto.
Sherritt's flagship Cuban operation is its 24,000-tonne
per year Moa Bay nickel-cobalt operation, which is held
50% by Sherritt and 50% by the Cuban government. The
company also has investments in oil and gas, technology
and tourism.
Sherritt spokesman Patrice Merrin Best declined to say
exactly what her company plans to do with proceeds of
the financing.
"This company was destined to be an infrastructure
company in Cuba,'' said Merrin Best. "We have legs
under us and we are carrying on with that strategy.''
she said.
Brad Griffiths attributed the size of the financing to
"the confidence the market has in Sherritt
International chairman Ian Delaney.
