La Caisse de dépôt et placement du Québec is to invest an additional $125 million in the form of preferred equity in its McInnis Cement plant project.
The increased investment follows Caisse’s profitability assessment, which confirmed that, despite “significant cost overruns” in the project, the plant will still be profitable due to its fundamental qualities, including advanced equipment and low operating costs, and increased North American demand.
Funds managed by BlackRock Alternative Investors will also be added through a $125 million debenture. According to a press release from Caisse, the $250 million total comes in addition to incremental equity investments made by McInnis shareholders and is expected to be sufficient to complete the project.
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Also, to address execution issues, Caisse has also agreed to pass control of the project to Beaudier Ciment, the controlling shareholder of McInnis, which will consequently change control at McInnis’ board of directors.
“We believe that this project has high-quality fundamentals. For this reason, la Caisse has entered into a change-of-control agreement with Beaudier,” said Christian Dubé, Caisse’s executive vice-president of Québec. “With the new executive team in place and the new capital structure we are announcing today, McInnis Cement will be able to capitalize on attractive market opportunities and generate returns for la Caisse’s clients.”
The proposed transaction, including the new and additional financing, is still subject to certain conditions, including the execution and delivery of final documentation and approval by the banking syndicate.