(TSX:NFI) NFI Group Inc. ("NFI" or the "Company"),
one of the world’s leading independent bus and coach manufacturers,
today announced that it has entered into an agreement with a
syndicate of underwriters (the “Underwriters”) led by Scotiabank,
BMO Capital Markets and CIBC Capital Markets pursuant to which the
Company will issue from treasury, and the Underwriters will
purchase on a bought deal basis, 8,446,000 common shares (the
“Shares”) at a price of C$29.60 per Share for gross proceeds to the
Company of approximately C$250 million (the “Offering”).
The Company has also granted to the Underwriters
an over-allotment option to purchase up to an additional 1,266,900
Shares at a price of C$29.60 per Share, representing 15% of the
size of the Offering. The over-allotment option may be exercised
until 30 days following the closing of the Offering. The Shares
will be offered by way of a short form prospectus in each of the
provinces and territories of Canada. The Shares may also be offered
by way of private placement in the United States pursuant to
applicable registration exemptions.
The Company intends to use the net proceeds of
the Offering to reduce the outstanding balance under its revolving
senior credit facility. This is expected to strengthen NFI’s
balance sheet, reduce leverage and interest expense and
significantly increase liquidity. NFI believes that this will
provide the Company with additional financial flexibility to pursue
its operational and strategic goals, such as investments in NFI’s
zero-emission products and electric propulsion technology,
investments required under the previously disclosed NFI Forward
cost-reduction initiative and other potential growth
opportunities.
The Company also announced that it expects
Adjusted EBITDA1 for the fiscal year ending December 27, 2020 to be
near the high end of its previously announced guidance of US$145
million to US$155 million. The Company cautions that this
indication is preliminary, unaudited and subject to change as
management completes its year-end financial procedures. NFI plans
to announce its fourth quarter and 2020 year-end results on March
4, 2021 prior to market open.
“NFI is on a strong path to recovery that is
expected to deliver growth and profitability as we lead the
transition to a cleaner, more efficient zero-emission future. While
the COVID-19 pandemic has had a dramatic impact on NFI’s customers
and our business, we saw a strong finish to 2020 and anticipate
Adjusted EBITDA will be in-line with our expectations,” said Paul
Soubry, President and CEO. “Today’s financing will help strengthen
our balance sheet and provide us with flexibility to capitalize on
opportunities, both internal and external, to best position NFI for
the future.”
The Offering is expected to close on or about
March 1, 2021 and is subject to customary regulatory approvals,
including the approval of the Toronto Stock Exchange and applicable
securities regulatory authorities.
This news release does not constitute an offer
of securities for sale in the United States. The securities being
offered have not been, nor will they be, registered under the
United States Securities Act of 1933, as amended, and such
securities may not be offered or sold within the United States
absent U.S. registration or an applicable exemption from U.S.
registration requirements.
About NFI
NFI is a leading independent global bus
manufacturer providing a comprehensive suite of mass transportation
solutions in ten countries under brands: New Flyer® (heavy-duty
transit buses), Alexander Dennis Limited (single and double-deck
buses), Plaxton (motor coaches), MCI® (motor coaches), ARBOC®
(low-floor cutaway and medium-duty buses), and NFI Parts™. NFI
vehicles incorporate the widest range of drive systems available
including: clean diesel, natural gas, diesel-electric hybrid, and
zero-emission electric (trolley, battery, and fuel cell). In total,
NFI now supports over 105,000 buses and coaches currently in
service around the world.
Leveraging 450 years of combined experience, NFI
is leading the battery-electric transition of mass mobility around
the world. With zero-emission buses and coaches, infrastructure,
and technology, NFI meets today’s urban demands for scalable smart
mobility solutions. Together, NFI is enabling more livable cities
through connected, clean, and sustainable transportation.
NFI common shares are traded on the Toronto
Stock Exchange under the symbol NFI. Further information is
available at www.nfigroup.com, www.newflyer.com, www.mcicoach.com,
www.arbocsv.com, www.nfi.parts, and www.alexander-dennis.com.
For further information, please contact:
Stephen KingGroup Director, Treasury, Corporate
Development, and Investor
Relations204.224.6382Stephen.King@nfigroup.com
Non-IFRS Measures
References to “Adjusted EBITDA” are to earnings
before interest, income taxes, depreciation and amortization after
adjusting for the effects of certain non-recurring and/or
non-operations related items that do not reflect the current
ongoing cash operations of the Company as described in the
Company’s disclosure documents available on SEDAR at
www.sedar.com.
Management believes Adjusted EBITDA is a useful
measure in evaluating the performance of the Company. However,
Adjusted EBITDA is not a recognized earnings measure under IFRS and
does not have a standardized meaning prescribed by IFRS. Readers of
this press release are cautioned that Adjusted EBITDA should not be
construed as an alternative to net earnings or loss or cash flows
from operating activities determined in accordance with IFRS as an
indicator of NFI’s performance. Historical reconciliation of net
earnings to Adjusted EBITDA has been provided in the Company’s
disclosure documents available on SEDAR at www.sedar.com. NFI’s
method of calculating Adjusted EBITDA may differ materially from
the methods used by other issuers and, accordingly, may not be
comparable to similarly titled measures used by other issuers.
Forward-Looking Statements
Certain statements in this press release are
“forward-looking statements”, which reflect the expectations of
management regarding the intended use of proceeds of the Offering,
Company’s future growth, financial performance and results of
operations and the Company’s strategic initiatives, plans, business
prospects and opportunities, including the duration, impact of and
recovery from the COVID-19 pandemic. The words “believes”, “views”,
“anticipates”, “plans”, “expects”, “intends”, “projects”,
“forecasts”, “estimates”, “guidance” and “targets”, “may”, “will”
and similar expressions are intended to identify forward looking
statements. These forward-looking statements reflect management's
current expectations regarding future events (including the
recovery of the Company’s markets and the expected benefits to be
obtained through its “NFI Forward” initiative) and the Company’s
financial and operating performance and speak only as of the date
of this press release. Forward-looking statements involve
significant risks and uncertainties, should not be read as
guarantees of future events, performance or results, and will not
necessarily be accurate indications of whether or not or the times
at or by which such performance or results will be achieved.
A number of factors that may cause actual
results to differ materially from the results discussed in the
forward-looking statements include: the Company may not be able to
achieve its targets for sales growth, funding may not continue to
be available to the Company’s customers at current levels or at
all; the Company's business is affected by economic factors and
adverse developments in economic conditions could have an adverse
effect on the for the Company's products and the results of its
operations; currency fluctuations could adversely affect the
Company's financial results or competitive position; interest rates
could change substantially, materially impacting the Company's
revenue and profitability; an active, liquid trading market for the
Company’s common shares (the “Common Shares”) may cease to exist,
which may limit the ability of shareholders to trade Common Shares;
the market price for the Common Shares may be volatile; if
securities or industry analysts do not publish research or reports
about the Company and its business, if they adversely change their
recommendations regarding the Common Shares or if the Company's
results of operations do not meet their expectations, the Common
Share price and trading volume could decline; in addition, if
securities or industry analysts publish inaccurate or unfavorable
research about the Company or its business, the Common Share price
and trading volume of the Common Shares could decline; competition
in the industry and entrance of new competitors; current
requirements under "Buy America" regulations may change and/or
become more onerous or suppliers' "Buy America" content may change;
failure of the Company to comply with the U.S. Disadvantaged
Business Enterprise ("DBE") program requirements or the failure to
have its DBE goals approved by the U.S. Federal Transit
Administration; absence of fixed term customer contracts, exercise
of options and customer suspension or termination for convenience;
local content bidding preferences in the United States may create a
competitive disadvantage; uncertainty resulting from the exit of
the UK from the European Union; requirements under Canadian content
policies may change and/or become more onerous; operational risk
resulting from inadequate or failed internal processes, people
and/or systems or from external events, including fiduciary
breaches, regulatory compliance failures, legal disputes, business
disruption, pandemics, floods, technology failures, processing
errors, business integration, damage to physical assets, employee
safety and insurance coverage; international operations subject the
Company to additional risks and costs and may cause profitability
to decline; dependence on limited sources or unique sources of
supply; dependence on supply of engines that comply with emission
regulations; a disruption, termination or alteration of the supply
of vehicle chassis or other critical components from third-party
suppliers could materially adversely affect the sales of certain of
the Company's products; the Company's profitability can be
adversely affected by increases in raw material and component
costs; the Company may incur material losses and costs as a result
of product warranty costs, recalls and remediation of transit buses
and motor coaches; production delays may result in liquidated
damages under the Company's contracts with its customers;
catastrophic events may lead to production curtailments or
shutdowns; the Company may not be able to successfully renegotiate
collective bargaining agreements when they expire and may be
adversely affected by labour disruptions and shortages of labour;
the Company's operations are subject to risks and hazards that may
result in monetary losses and liabilities not covered by insurance
or which exceed its insurance coverage; the Company may be
adversely affected by rising insurance costs; the Company may not
be able to maintain performance bonds or letters of credit required
by its contracts or obtain performance bonds and letters of credit
required for new contracts; the Company is subject to litigation in
the ordinary course of business and may incur material losses and
costs as a result of product liability claims; the Company may have
difficulty selling pre-owned coaches and realizing expected resale
values; the Company may incur costs in connection with regulations
relating to axle weight restrictions and vehicle lengths; the
Company may be subject to claims and liabilities under
environmental, health and safety laws; dependence on management
information systems and cyber security risks; the Company's ability
to execute its strategy and conduct operations is dependent upon
its ability to attract, train and retain qualified personnel,
including its ability to retain and attract executives, senior
management and key employees; the Company may be exposed to
liabilities under applicable anti-corruption laws and any
determination that it violated these laws could have a material
adverse effect on its business; the Company's risk management
policies and procedures may not be fully effective in achieving
their intended purposes; internal controls over financial
reporting, no matter how well designed, have inherent limitations;
there are inherent limitations to the effectiveness of any system
of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and
procedures; ability to successfully execute strategic plans and
maintain profitability; development of competitive or disruptive
products, services or technology; development and testing of new
products or model variants; acquisition risk; reliance on
third-party manufacturers; third-party distribution/dealer
agreements; availability to the Company of future financing; the
Company may not be able to generate the necessary amount of cash to
service its existing debt, which may require the Company to
refinance its debt; the restrictive covenants in the credit
facilities could impact the Company's business and affect its
ability to pursue its business strategies; payment of dividends is
not guaranteed; a significant amount of the Company's cash is
distributed, which may restrict potential growth; the Company is
dependent on its subsidiaries for all cash available for
distributions; future sales or the possibility of future sales of a
substantial number of Common Shares may impact the price of the
Common Shares and could result in dilution; if the Company is
required to write down goodwill or other intangible assets, its
financial condition and operating results would be negatively
affected; income tax risk due to the Company's operations being
complex and income tax interpretations, regulations and legislation
that pertain to its activities are subject to continual change;
investment eligibility and Canadian federal income tax risks;
certain U.S. tax rules may limit the ability of NF Holdings and its
U.S. subsidiaries (the "NF Group") to deduct interest expense for
U.S. federal income tax purposes and may increase the NF Group's
tax liability and certain financing transactions could be
characterized as "hybrid transactions" for U.S. tax purposes, which
could increase the NF Group's tax liability.
Factors relating to the global COVID-19 pandemic
include: the magnitude and duration of the global, national and
regional economic and social disruption being caused as a result of
the pandemic; the impact of national, regional and local
governmental laws, regulations and “shelter in place” or similar
orders relating to the pandemic which may materially adversely
impact the Company’s ability to continue operations; partial or
complete closures of one, more or all of the Company’s facilities
and work locations or the reduction of production rates (including
due to government mandates and to protect the health and safety of
the Company’s employees or as a result of employees being unable to
come to work due to COVID-19 infections with respect to them or
their family members); production rates may be further decreased as
a result of the pandemic; supply delays and shortages of parts and
components and disruption to labour supply as a result of the
pandemic; the pandemic will likely adversely affect operations of
customers and reduce and delay, for an unknown period, customers’
purchases of the Company’s products; the anticipated recovery of
the Company’s markets in the future may be delayed or increase in
demand may be lower than expected as a result of the continuing
effects of the pandemic; the Company’s ability to obtain access to
additional capital if required; and the Company’s financial
performance and condition, obligations, cash flow and liquidity and
its ability to maintain compliance with the covenants under its
credit facilities, which may also negatively impact the ability of
the Company to pay dividends. There can be no assurance that the
Company will be able to maintain sufficient liquidity for an
extended period, obtain future satisfactory covenant relief under
its credit facilities, if required, or access to additional capital
or access to government financial support or as to when production
operations will return to previous production rates. There is also
no assurance that governments will provide continued or adequate
stimulus funding during or after the pandemic for public transit
agencies to purchase transit vehicles or that public or private
demand for the Company’s vehicles will return to pre-pandemic
levels in the anticipated period of time. The Company cautions that
due to the dynamic, fluid and highly unpredictable nature of the
pandemic and its impact on global and local economies, businesses
and individuals, it is impossible to predict the severity of the
impact on the Company’s business, operating performance, financial
condition and ability to generate sufficient cash flow and maintain
adequate liquidity and any material adverse effects could very well
be rapid, unexpected and may continue for an extended and unknown
period of time.
Factors relating to the Company's "NFI Forward"
initiative include: the Company's ability to successfully execute
the initiative and to generate the planned savings in the expected
time frame or at all; management may have overestimated the amount
of savings and production efficiencies that can be generated or may
have underestimated the amount of costs to be expended; the
implementation of the initiative may take longer than planned to
achieve the expected savings; further restructuring and
cost-cutting may be required in order to achieve the objectives of
the initiative; the estimated amount of savings generated under the
initiative may not be sufficient to achieve the planned benefits;
combining business units and/or reducing the number of production
or parts facilities may not achieve the efficiencies anticipated;
and the impact of the continuing global COVID-19 pandemic. There
can be no assurance that the Company will be able to achieve the
anticipated financial and operational benefits, cost savings or
other benefits of the initiative.
The Company cautions that the foregoing factors
are not exhaustive of all potential risks. These factors and other
risks and uncertainties are discussed in the Company’s press
releases, Annual Information Form and materials filed with the
Canadian securities regulatory authorities which are available on
SEDAR at www.sedar.com. Due to the potential impact of these and
other factors, the Company disclaims any intention or obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, unless
required by applicable law.
1 Adjusted EBITDA is not a recognized earnings measure and does
not have a standardized meaning prescribed by IFRS. Therefore, it
may not be comparable to similar measures presented by other
issuers. See "Non-IFRS Measures" at the end of this press
release.
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