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Tervita Announces Proposed Recapitalization Transaction

/ -- Tervita Corporation ("Tervita" or the "Company"), and certain of its affiliates (collectively with Tervita, the "Tervita Group"), announced today that the Company has entered into support agreements that will reduce its outstanding indebtedness and annual interest costs by as much as 80%, significantly deleverage its balance sheet and improve its capital structure and liquidity. These agreements significantly decrease Tervita's long-term debt and give it the flexibility and working capital necessary to take full advantage of new opportunities for growth.

"We are extremely pleased to announce this transaction. This deal will strengthen Tervita, allowing us to sustain and grow our position as one of Canada's leading and most trusted environmental solutions providers," said Chris Synek, President and CEO. "Management and the Board believe that this recapitalization will enable Tervita to prosper in the future. After a thorough review process, consultation with its advisors and stakeholders and careful consideration of all options, the Board of Directors has approved the recapitalization transaction. I would personally like to thank Tervita's employees, the Board, our clients and vendors for their ongoing patience and support while we completed this important initiative."

Tervita has sufficient liquidity to maintain operations while pursuing the recapitalization transaction, having continued access to cash on hand in excess of $300 million and a $350 million revolving credit facility. Obligations to employees and trade creditors will remain unaffected by this transaction and will continue to be satisfied in the ordinary course.

As a result of previously announced discussions with its various lender and noteholder groups, the Company has entered into support agreements (the "Support Agreements") with holders of 63% of its 9.75% senior unsecured notes due 2019 (the "9.75% Unsecured Notes") and 10.875% senior unsecured notes due 2018 (the "10.875% Unsecured Notes") (the 9.75% Unsecured Notes and the 10.875% Unsecured Notes are collectively referred to as the "Unsecured Notes") and 90% of its 11.875% subordinated unsecured notes due 2018 (the "Subordinated Notes"), in respect of a proposed recapitalization transaction (the "Recapitalization Transaction").

Additionally, holders of 69% of equity of the applicable members of Tervita and applicable related entities have also entered into support agreements in connection with the Recapitalization Transaction.

The proposed Recapitalization Transaction is intended to be implemented by way of a corporate plan of arrangement (the "Plan") under the Canada Business Corporations Act (the "CBCA"). Tervita and a related entity (collectively, the "Tervita Applicants") sought and obtained a preliminary interim order (the "Preliminary Interim Order") from the Court of Queen's Bench of Alberta (the "Court") under the CBCA, which contains a stay that, among other things, prohibits persons (other than lenders under the Company's revolving credit facility) from terminating, making any demand, accelerating, amending or declaring in default or taking enforcement steps under any contract or other agreement to which any member of the Tervita Group is a party by reason of the Company's commencement of proceedings under the CBCA, among other reasons. The Company entered into an accommodation agreement with respect to its revolving credit facility that allows for continued access by the Company to such facility and waives events of default that may arise as a result of the proceedings under the CBCA, among other reasons, subject to customary conditions.

The Preliminary Interim Order authorized the Tervita Applicants to apply to the Court on or before October 14, 2016 to seek a further order in the CBCA proceedings (the "Interim Order Application") permitting the Tervita Applicants to call, hold and conduct the required special meetings (the "Special Meetings") of its affected stakeholders to consider and vote on the Plan. In the event that the requisite approvals are not obtained or the Tervita Applicants are otherwise unable to implement the Plan, pursuant and subject to the Support Agreements the Tervita Applicants may pursue the Recapitalization Transaction through a proceeding under the Companies' Creditors Arrangement Act.

The Tervita Applicants are continuing to negotiate and finalize the terms of the Plan, which will be fully disclosed as part of the Interim Order Application and in the management information circular that will be prepared in connection with the Special Meetings. The Company will issue a further press release when the exact record date and meeting date for such Special Meetings have been determined.

The key elements of the Recapitalization Transaction include:

  • The creation of a new class of common shares and a new class of preferred shares of Tervita;
  • The issuance of 48,360,000 of the new preferred shares (the "New Offering"), in consideration for an investment of up to $372 million (the value of the New Offering will be adjusted to ensure that Tervita has cash in an amount equal to no less than $75 million immediately after the implementation of the Recapitalization Transaction);
  • The issuance of 47,283,277 of the new preferred shares in consideration for the exchange and transfer of the secured debt held by the sponsors of the Recapitalization Transaction (the "Plan Sponsors");
  • Secured debt held by parties other than Plan Sponsors will be repaid in full;
  • Holders of the Unsecured Notes will receive 80% of the new common shares of Tervita, in consideration for the exchange and transfer of the Unsecured Notes;
  • Holders of Unsecured Notes that execute the applicable Support Agreement by October 14, 2016 will also receive 20% of the new common shares of Tervita, as additional consideration for the exchange and transfer of the Unsecured Notes;
  • Payment of $20 million to holders of Subordinated Notes in consideration for the exchange and transfer of all Subordinated Notes;
  • An additional payment of $5 million to holders of Subordinated Notes that execute the applicable Support Agreement by October 14, 2016 will be made in consideration for the exchange and transfer of all Subordinated Notes;
  • Total debt reduced by approximately $2 billion and annual cash interest expense reduced by approximately $200 million;
  • The exchange of all equity of Tervita existing prior to the effective time of the Recapitalization Transaction for 20% of the net proceeds from litigation after certain deductions; and
  • New debt in the amount of $475 million and the reinstatement or replacement of Tervita's revolving credit facility, each on terms acceptable to Tervita and the Plan Sponsors.

Eligible holders of Unsecured Notes will have the right, but not the obligation, to participate in the New Offering on a pro rata basis. Tervita and the Plan Sponsors entered into a backstop commitment letter pursuant to which, among other things, each Plan Sponsor shall backstop the funding of the New Offering on a pro rata basis.

Tervita, with the assistance of its financial and legal advisors, has been exploring and reviewing alternatives to improve its operations, capital structure and liquidity, including among other things, transactions to reduce debt levels and the sale of some or all of Tervita's assets. The Recapitalization Transaction is the result of this initiative.

This press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent an exemption from registration under the Securities Act of 1933.

Tervita's legal advisors in connection with the Recapitalization Transaction are Osler, Hoskin & Harcourt LLP and Fasken Martineau DuMoulin LLP and its financial advisor is Barclays Capital Inc.

Dollar values contained herein are expressed in Canadian currency.

About Tervita
Tervita has operated in Canada for almost 40 years and is a leading environmental solutions provider. Our integrated earth, water, waste and resource solutions deliver safe and efficient results through all phases of a project by minimizing impact and maximizing returns™. Our dedicated employees are trusted sustainability partners to oil and gas, construction, mining, government and communities. Safety is our highest priority: it influences our actions and shapes our culture.

Additional information about the Company is available at

Reader Advisory Regarding Forward-Looking Statements

This news release contains certain "forward-looking statements" or "forward-looking information" (collectively referred to herein as "forward-looking statements"). Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or are events or conditions that "will", "would", "may", "could" or "should" occur or be achieved. This news release contains forward-looking statements, pertaining to, among other things, the following: the ability of the Company to reach an agreement with its lenders to restructure or recapitalize its long-term debt, the Company's liquidity and ability to meet payment obligations and the timing of meeting such payment obligations, the Company's intentions for the future of its business operations, prospects, long-term strategy and the Company's commitment to its employees, suppliers and customers. Statements regarding future growth, capital expenditures and development plans are subject to all of the risks and uncertainties that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. These risks include, but are not limited to, general economic conditions, inflation or lack of availability of goods and services, environmental risks, customer risks, regulatory changes and certain other known and unknown risks.

Although Tervita believes that the material factors, expectations and assumptions expressed in such forward-looking statements are reasonable based on information available to it on the date such statements were made, no assurances can be given as to future results, levels of activity and achievements and such statements are not guarantees of future performance. Tervita's actual results may differ materially from those expressed or implied in forward-looking statements and readers should not place undue importance or reliance on the forward-looking statements. Statements including forward-looking statements are made as of the date they are given and, except as required by applicable laws, Tervita disclaims any intention or obligation to publically update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Tervita Corporation
Ryan Wong
Vice President, Treasury
(403) 231-1116

Distribution channels: Energy, Waste Management