LEXPERT MAGAZINE
|
JANUARY/FEBRUARY 2018 9
LEXPERT: Deals seem to be flowing fast in
the maple syrup business of late. Was it the
right time for RSI/Lantic to get in?
Sébastien Roy, Davies Ward Phillips & Vine-
berg LLP (for RSI/Lantic): Yes, it was the
right time for RSI/Lantic to get in. …. Our
firm has been involved in three significant
maple syrup transactions in 2017, includ-
ing this one. It's definitely an industry that
is consolidating for the first time.
Jean-Sébastien Dugas, Fasken Martineau
DuMoulin LLP (for Champlain Financial
Corp. and LBMT): It's a growth industry.
Maple syrup is in increasing favour among
consumers worldwide, particularly as op-
posed to more artificial or refined alterna-
tives. ere's definitely lots of potential.
LEXPERT: How did the deal come about?
Roy: John Holliday, the CEO of RSI/Lan-
tic, has been vocal since his appointment in
2015 about his interest in carrying out an
acquisition in the sweetener-adjacent space.
… John was introduced to the principals at
Champlain [a private equity firm] in 2016,
and aer months of spirited negotiations,
discussions and diligence, an agreement
was reached between the parties.
Dugas: e company [LBMT] embarked
on an aggressive acquisition strategy as of
February 2016, when it was sold to our cli-
ent, Champlain Financial Corp. ey were
confident of the benefits of scaling up the
operation through
M&A, and indeed it
was one of the main pillars of their invest-
ment thesis. It would seem that RSI/Lantic
have the same view.
LEXPERT: What regulatory approvals were
necessary in this transaction?
Roy: e real regulatory hurdle for this
transaction was approval from the Com-
petition Bureau, since our transaction was
notifiable. At first blush, one might think
that there could be concerns since RSI/
Lantic and LBMT are both large players
in the sweetener industry, but from a com-
petition standpoint, these products are in
two quite different categories, so the ap-
proval process, to everyone's relief, went
very smoothly.
LEXPERT: Were there concerns that the
combined company would lose its pro-
ducer status with the Federation of Quebec
Maple Syrup Producers (FPAQ )?
Dugas: LBMT has always been a big sup-
porter of the FPAQ and the role that it
plays to encourage the industry in Que-
bec. We saw no reason to believe that this
would change with the transaction, as ev-
eryone's objectives are aligned — grow the
Scaling up Sweet
industry to everyone's benefit, that is, pro-
ducers represented by the FPAQ, bottlers
and consumers.
LEXPERT: Getting a bit more into the spe-
cifics, there were several elements to the
financing of this deal. e $69.2-million
bought deal public offering of subscription
receipts, the $57.5-million convertible de-
bentures offering, and $50 million of debt.
Why did RSI/Lantic decide to structure
the financing in this way?
Roy: Subscription receipts are a staple of
acquisition financing, it's a product that
is well understood by investors and allows
the company to issue equity upfront, with-
out diluting its existing shareholders in the
event that the deal does not close. We were
told that the equity market was not deep
enough to finance the acquisition entirely
on the equity markets, so a portion of the
capital markets financing was done by is-
suing convertible debentures. e balance
was taken from available funds under RSI/
Lantic's credit facilities.
Warren Katz, Stikeman Elliott LLP (for the
syndicate of underwriters co-led by TD
Securities Inc. and BMO Capital Markets):
Rogers Sugar had not done an equity of-
fering for more than 10 years. Rogers
Sugar also wanted to finance part of the
transaction from its credit facility. Fur-
ther to numerous discussions between
the underwriters and Rogers Sugar, it was
decided that it would be more prudent to
split the deal between a debenture offering
— which Rogers Sugar is accustomed to —
and an equity offering. is turned out to
be a wise decision.
LEXPERT: What was it like working on this
aspect of the deal?
Roy: is deal was like a beast with many-
heads — the capital markets financing,
which I oversaw in addition to the acquisi-
Rogers Sugar and its subsidiary Lantic were not known for incremental M&A — until now
INTERVIEW BY GENA SMITH
Sébas-
tien Roy
Davies
Ward
Phillips &
Vineberg
LLP (for
RSI/Lantic)
Jean-Sébas-
tien Dugas
Fasken
Martineau
DuMoulin LLP
(for Champlain
Financial,
LBMT)
ON THE DEAL
Rogers Sugar (RSI) is a storied Canadian sugar company. L.B. Maple Treat (LBMT) is a
bottler and distributor of Canada's iconic "liquid gold," aka maple syrup. RSI had long
planned to diversify. It finally found a match in LBMT, closing a $160.3-million acquisi-
tion in August. RSI has since added yet another maple syrup company — Decacer — to
the mix. In this rapidly consolidating industry, dealmaking has never been so sweet.
Warren
Katz
Stikeman
Elliott LLP
(for the
Underwriters)
