Cara Operations Ltd.'s plan to buy Prime Restaurants Inc. faces a crucial deadline this afternoon, when Cara bondholders must give an okay that they have been withholding.
Cara needs the consent of its existing bondholders to issue $75-million of new debt. It needs the money from the new bonds to do the takeover.
Under the terms of the proposed deals, no consent means no bond issue and that means no takeover.
Cara sought the consent to add additional indebtedness, and it is trying to find the right price to compensate the existing bondholders for the decline in creditworthiness.
So far, the existing bondholders have forced Cara to extend the deadline for consent and raise the payment it is offering in return for consent twice.
The original offer was $5 per $1,000 of bonds. Cara raised that to $10, and when that didn't work, boosted it all the way to $30. The deadline was pushed back from its original Oct. 31 to Nov. 3, and now until noon Tuesday.
People close to the transaction say they expect the consent deal to get done, and say that the protracted negotiations are to be expected given that such consent solicitations aren't common in Canada.
Cara's original timeline called for the bond offering to happen in November, with the Prime deal closing in early 2012.