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NOTE 8. SENIOR UNSECURED DEBENTURES
The trust indenture under which the senior unsecured debentures have been issued requires Newalta to be in compliance with certain covenants as at December 31 of each year. At December 31, 2012 and December 31, 2011, Newalta was in compliance with all covenants.
December 31, 2012 December 31, 2011----------------------------------------------------------------------------Senior unsecured debentures series 1 125,376 125,000Senior unsecured debentures series 2 125,322 125,000Issue costs (4,364) (4,951)----------------------------------------------------------------------------Senior unsecured debentures 246,334 245,049----------------------------------------------------------------------------
Series 1
On November 23, 2010, Newalta issued $125.0 million of 7.625% series 1 senior unsecured debentures ("series 1"). The series 1 debentures mature on November 23, 2017. The series 1 debentures bear interest at 7.625% per annum and such interest is payable in equal instalments semi-annually in arrears on May 23 and November 23 in each year, which commenced on May 23, 2011. The series 1 debentures are unsecured senior obligations and rank equally with all other existing and future unsecured senior debt and senior to any subordinated debt that may be issued by Newalta or any of its subsidiaries. The series 1 debentures are effectively subordinated to all secured debt to the extent of collateral on such debt.
Prior to November 23, 2013, Newalta may on one or more occasions:
-- Redeem up to 35% of the aggregate principal amount of the series 1 debentures, with the net cash proceeds of one or more public equity offerings at a redemption price equal to 107.625% of the principal amount, plus accrued and unpaid interest to the date of redemption.-- Redeem the series 1 debentures, in whole or in part, at a redemption price which is equal to the greater of (a) the Canada Yield Price (as defined in the trust indenture) and (b) 101% of the aggregate principal amount of series 1 debentures redeemed, plus, in each case, accrued and unpaid interest to the redemption date.
After November 23, 2013, the series 1 debentures are redeemable at the option of Newalta, in whole or in part, at redemption prices expressed as percentages of the principal amount, plus in each case accrued interest to the redemption date, if redeemed during the twelve month period beginning on November 23 of the years as follows: Year 2013 - 103.813%; Year 2014 - 102.542%; Year 2015 - 101.906%; Year 2016 and thereafter - 100%.
If a change of control occurs, Newalta will be required to offer to purchase all or a portion of each debenture holder's series 1 debentures, at a purchase price in cash equal to 101% of the principal amount of the series 1 debentures offered for repurchase plus accrued interest to the date of purchase.
Series 2
On November 14, 2011, Newalta issued $125.0 million of 7.75% series 2 senior unsecured debentures ("series 2"). The series 2 debentures mature on November 14, 2019. The series 2 debentures bear interest at 7.75% per annum and such interest is payable in equal instalments semi-annually in arrears on May 14 and November 14 in each year, commencing on May 14, 2012. The series 2 debentures are unsecured senior obligations and rank equally with all other existing and future unsecured senior debt and senior to any subordinated debt that may be issued by Newalta or any of its subsidiaries. The series 2 debentures are effectively subordinated to all secured debt to the extent of collateral on such debt.
