Kronos Worldwide, Inc. (NYSE: KRO) (the “Company”) today announced
that it has commenced an offer to certain eligible holders
described below to exchange up to €325 million of outstanding
principal amount of 3.75% Senior Secured Notes due 2025 (the “Old
Notes”) of Kronos International, Inc., the Company’s wholly-owned
subsidiary (the “Issuer”), for newly issued 9.50% Senior Secured
Notes due 2029 of the Issuer (the “New Notes”) plus additional cash
consideration as described below, upon the terms and conditions set
forth in a Confidential Exchange Offering Memorandum and Consent
Solicitation Statement dated January 23, 2024 (the “Exchange
Offer”).
The table below summarizes the principal
economic terms of the Exchange Offer.
Old Notes to be Exchanged: 3.75% Senior Secured Notes due
2025Principal Amount Outstanding:
€400,000,000Maximum
Acceptance Amount: As described below(1)Old Note
ISIN: XS1680282453 (144A) / XS1680281133 (Reg
S)Old Note Common Code: 168028245 (144A) /
168028113 (Reg S) |
New Notes Description |
New Notes Coupon |
Maturity Date |
Exchange Offer Consideration per €1,000
Old Notes |
Early Participation Premium |
Total Consideration per €1,000 Old Notes |
9.50% Senior Secured Notes due 2029 |
9.50% |
March 15, 2029 |
€800 principal amount of New Notes plus a cash payment in an amount
equal to €150(2) |
€50 principal amount of New Notes(3) |
€850 principal amount of New Notes plus a cash payment in an amount
equal to €150(3)(4) |
___________________
(1) The “Maximum Acceptance Amount” means the maximum
amount of Old Notes that will be accepted in the Exchange Offer,
which shall be the principal amount of Old Notes that can be
accepted for exchange in the Exchange Offer without exceeding
€325,000,000 in aggregate principal amount of Old Notes exchanged
in connection with the Exchange Offer or redeemed in connection
with the Additional New Notes Offering (as defined below) and the
application of the proceeds thereof. |
(2) Per €1,000 principal amount of Old Notes
validly offered for exchange (and not validly withdrawn) and
accepted for exchange in the Exchange Offer, exclusive of any
accrued and unpaid interest, which will be paid in cash. |
(3) Per €1,000 principal amount of Old Notes
validly offered for exchange (and not validly withdrawn) and
accepted for exchange in the Exchange Offer on or prior to the
Early Participation Expiration Date (as defined below), exclusive
of any accrued and unpaid interest, which will be paid in
cash. |
(4) If the Issuer designates an early settlement date
(the “Early Settlement Date”), eligible holders that validly offer
(and do not validly withdraw) Old Notes for exchange on or prior to
the Early Participation Expiration Date will be paid accrued and
unpaid interest from the most recent interest payment date for the
Old Notes to, but not including, the Early Settlement Date.
Eligible holders that validly offer (and do not validly withdraw)
Old Notes for exchange after the Early Participation Expiration
Date under these circumstances will be paid accrued and unpaid
interest from the most recent interest payment date for the Old
Notes, to, but not including, the final settlement date (the “Final
Settlement Date”) offset by an amount equal to the interest that
has been deemed to have accrued before the Final Settlement Date in
respect of the New Notes issued to such holder. If the Issuer
does not designate an Early Settlement Date, eligible holders that
participate in the exchange offer will be paid accrued and unpaid
interest from the most recent interest payment date for the Old
Notes to, but not including, the Final Settlement Date. The
Exchange Consideration and Total Consideration presented in this
table do not include payments in respect of accrued and unpaid
interest. |
In conjunction with the Exchange Offer, the
Issuer is soliciting consents (the “Consent Solicitation”) from
eligible holders participating in the Exchange Offer to effect
certain proposed amendments (the “Proposed Amendments”) to the
indenture governing the Old Notes (the “Existing Indenture”), which
will conform the restrictive covenants in the Existing Indenture to
the restrictive covenants of the New Notes. Enacting the Proposed
Amendments will require the consent of holders representing a
majority of the aggregate principal amount of Old Notes issued and
outstanding (excluding Old Notes held by the Company or its
affiliates) (the “Consent Threshold”). If the Issuer receives
consents in excess of the Consent Threshold before the expiration
or termination of the Exchange Offer, it will give effect to the
Proposed Amendments by executing one or more supplemental
indentures to the Existing Indenture. Eligible holders who validly
tender their Old Notes in the Exchange Offer (unless validly
withdrawn) will be deemed to have submitted consents pursuant to
the Consent Solicitation.
Concurrently with, but separate from, the
Exchange Offer, the Issuer is offering for purchase up to
€50 million aggregate principal amount of 9.50% Senior Secured
Notes due 2029 (the “Additional New Notes”) pursuant to a
Confidential Offering Memorandum dated January 23, 2024 (the
“Additional New Notes Offering”). The Additional New Notes sold
pursuant to the Additional New Notes Offering will be issued under
the same indenture (the “New Notes Indenture”) governing the New
Notes issued in the Exchange Offer and will form a single class of
securities under the New Notes Indenture with the New Notes issued
in the Exchange Offer. If €325 million principal amount or more of
Old Notes are validly tendered in the Exchange offer and not
validly withdrawn on or prior to the Early Participation Expiration
Date, the Issuer will terminate the Additional New Notes
Offering.
The Issuer will not receive any cash proceeds
from the issuance and delivery of the New Notes in connection with
the Exchange Offer. If the Additional New Notes Offering is
consummated, the net proceeds of the sale of the Additional New
Notes will be used to redeem, at a price equal to the outstanding
principal amount plus accrued and unpaid interest, Old Notes that
would remain outstanding as of the Early Settlement Date if, and to
the extent that, €75 million aggregate principal amount of Old
Notes will remain following such redemption. The Old Notes
surrendered in connection with the Exchange Offer will be retired
and cancelled and will not be reissued.
Eligible holders that validly tender and do not
validly withdraw their Old Notes in the Exchange Offer prior to
5:00 p.m. Central European Time, on February 5, 2024 (the “Early
Participation Expiration Date”) will receive €850 in principal
amount of New Notes plus a cash payment in an amount equal to €150
per €1,000 principal amount of Old Notes, which includes an early
tender payment of €50 in principal amount of New Notes. For any Old
Notes validly tendered and not validly withdrawn after the Early
Participation Expiration Date, but before the expiration of the
Exchange Offer (the “Expiration Date”), and accepted in the
Exchange Offer, eligible holders will receive €800 in principal
amount of New Notes plus a cash payment in an amount equal to €150
per €1,000 principal amount of Old Notes.
The New Notes will be fully and unconditionally
guaranteed, jointly and severally, on a senior basis by the Company
and each of its direct and indirect domestic, wholly-owned
subsidiaries (other than the Issuer, the “Guarantors”), subject to
certain exceptions and secured by first-priority security interests
in certain assets of the Company and the Guarantors (the “Notes
Collateral”). The New Notes and the related guarantees will rank
pari passu in right of payment to all of the Issuer’s and the
Guarantors’ existing and future senior indebtedness, effectively
senior in right of payment to all of the Issuer’s and the
Guarantors’ existing and future indebtedness that is either secured
by the Notes Collateral on a junior-priority basis relative to the
New Notes or unsecured, in each case, to the extent of the value of
the Notes Collateral, effectively subordinated to all of the
Issuer’s and the Guarantors’ existing and future indebtedness that
is secured by assets other than the Notes Collateral to the extent
of the value of such assets and senior in right of payment to all
of the Issuer’s and Guarantors’ existing and future subordinated
indebtedness. In addition, the New Notes and the related guarantees
will be structurally subordinated to all existing and future
liabilities of each of the Parent’s existing and future
subsidiaries (other than the Issuer) that do not guarantee the New
Notes.
Eligible holders whose Old Notes are accepted
for exchange will also receive accrued and unpaid interest in cash
on the exchanged Old Notes up to, but not including, the applicable
settlement date. Settlements are expected to occur three business
days after the Early Participation Expiration Date for Old Notes
properly tendered and not withdrawn prior to the Early
Participation Expiration Date and three business days after the
Expiration Date for Old Notes properly tendered and not withdrawn
after the Early Participation Expiration Date but before the
Expiration Date. However, the Issuer may designate any other date
between the Early Participation Expiration Date and the Final
Settlement Date as the Early Settlement Date or decline to
designate an Early Settlement Date if its sole discretion. Interest
on the New Notes will accrue from the applicable settlement
date.
Old Notes validly tendered and not validly
withdrawn on or prior to the Early Participation Expiration Date
will have priority in acceptance over Old Notes validly tendered
after the Early Participation Expiration Date and the Issuer will
give effect to the redemption of Old Notes in connection with the
Additional New Notes Offering (if it is consummated) before
calculating the principal amount of Old Notes that may be accepted
after the Early Participation Expiration Date in the Exchange
Offer. As a result, if the principal amount of Old Notes validly
tendered and not validly withdrawn on or prior to the Early
Participation Expiration Date equals or exceeds the Maximum
Acceptance Amount, then no Old Notes tendered after that date will
be accepted for exchange. Additionally, in the event that the
amount of Old Notes validly tendered and not validly withdrawn on
or prior to the Early Participation Expiration Date is less than
the Maximum Acceptance Amount as determined on such date, the
Issuer may sell Additional New Notes in the Additional New Notes
Offering on or prior to the Early Settlement Date (if the Issuer
elects to designate one) or the Expiration Date and use the
proceeds therefrom to redeem Old Notes. If the amount of Old Notes
remaining outstanding following the announcement of the pricing of
the Additional New Notes Offering, after giving effect to the
issuance of New Notes pursuant to the Exchange Offer and the
redemption of Old Notes with the proceeds of the Additional New
Notes Offering, is less than or equal to €75 million in aggregate
principal amount, then no Old Notes tendered after the Early
Participation Expiration Date will be accepted for exchange.
The New Notes have not been and will not be
registered under the Securities Act of 1933, as amended (the
“Securities Act”), or with any securities regulatory authority of
any state of other jurisdiction of the United States.
The Exchange Offer is subject to the
satisfaction or waiver of certain conditions, including among other
things, the receipt of valid offers (that are not validly
withdrawn) to exchange at least €275 million in principal amount of
Old Notes prior to the Expiration Date.
The Exchange Offer and Consent Solicitation will
expire at 5:00 p.m., Central European Time, on February 21,
2024 (unless extended). Tendered Old Notes may be validly withdrawn
at any time prior to the Early Participation Expiration Date, but
not thereafter.
The Exchange Offer will only be made, and the
New Notes are only being offered and will only be issued, to
holders of Old Notes either (a) in the United States, that the
Company reasonably believes are "qualified institutional buyers,"
or "QIBs," as that term is defined in Rule 144A under the
Securities Act, in a private transaction in reliance upon an
exemption from the registration requirements of the Securities Act
or (b) non-U.S. persons (within the meaning of Regulation S under
the Securities Act) outside the U.S. that are not “retail
investors” residing in a member state of the EEA or the UK. The
Additional New Notes Offering will only be made, and Additional New
Notes in the Additional New Notes Offering are only being offered
and will only be issued to investors meeting the same
qualifications.
This press release shall not constitute an offer
to sell or a solicitation of an offer to buy or exchange the Old
Notes or any New Notes (including those issued in the Exchange
Offer or in the Additional New Notes Offering) in the United States
and shall not constitute an offer, solicitation or sale of the
Additional New Notes in any jurisdiction where such offering or
sale would be unlawful. There shall not be any sale of the
Additional New Notes in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction.
About the Company
Kronos Worldwide, Inc., incorporated in Delaware
in 1989, is a leading global producer and marketer of value-added
titanium dioxide pigments, or TiO2, a base industrial product used
in a wide range of applications. The Company, along with its
distributors and agents, sells and provides technical services for
its products to approximately 3,000 customers in 100 countries with
the majority of its sales in Europe, North America and the Asia
Pacific region. The Company believes it has developed considerable
expertise and efficiency in the manufacture, sale, shipment and
service of its products in domestic and international markets.
Forward Looking Statements
The statements in this release relating to
matters that are not historical facts are forward-looking
statements that represent management's beliefs and assumptions
based on currently available information. These forward-looking
statements include, among others, statements about the potential
outcome or effect of the Exchange Offer and the Additional New
Notes Offering. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it
cannot give any assurances that these expectations will prove to be
correct. Such statements by their nature involve substantial risks
and uncertainties that could significantly impact expected results,
and actual future results could differ materially from those
described in such forward-looking statements. The factors that
could cause actual future results to differ materially include, but
are not limited to, the following:
- future supply
and demand for the Company’s products;
- the Company’s
ability to realize expected cost savings from strategic and
operational initiatives;
- the extent of
the dependence of certain of the Company’s businesses on certain
market sectors;
- the cyclicality
of the Company’s business;
- customer and
producer inventory levels;
- unexpected or
earlier-than-expected industry capacity expansion;
- changes in raw
material and other operating costs (such as energy and ore
costs);
- changes in the
availability of raw materials (such as ore);
- general global
economic and political conditions that harm the worldwide economy,
disrupt the Company’s supply chain, increase material and energy
costs or reduce demand or perceived demand for its TiO2 products or
impair the Company’s ability to operate its facilities (including
changes in the level of gross domestic product in various regions
of the world, natural disasters, terrorist acts, global conflicts
and public health crises such as COVID-19);
- operating
interruptions (including, but not limited to, labor disputes,
leaks, natural disasters, fires, explosions, unscheduled or
unplanned downtime, transportation interruptions, cyber-attacks,
certain regional and world events or economic conditions and public
health crises such as COVID-19);
- competitive
products and substitute products;
- customer and
competitor strategies;
- potential
consolidation of competitors;
- potential
consolidation of customers;
- the impact of
pricing and production decisions;
- competitive
technology positions;
- potential
difficulties in upgrading or implementing accounting and
manufacturing software systems;
- the
introduction of trade barriers or trade disputes;
- fluctuations in
currency exchange rates (such as changes in the exchange rate
between the U.S. dollar and each of the euro, the Norwegian krone
and the Canadian dollar and between the euro and the Norwegian
krone), or possible disruptions to the Company’s business resulting
from uncertainties associated with the euro or other
currencies;
- the Company’s
ability to renew or refinance credit facilities;
- changes in
interest rates;
- the Company’s
ability to maintain sufficient liquidity;
- the ultimate
outcome of income tax audits, tax settlement initiatives or other
tax matters, including future tax reform;
- the Company’s
ability to utilize income tax attributes, the benefits of which may
or may not have been recognized under the more-likely-than-not
recognition criteria;
- environmental
matters (such as those requiring compliance with emission and
discharge standards for existing and new facilities);
- government laws
and regulations and possible changes therein including new
environmental, health and safety or other regulations (such as
those seeking to limit or classify TiO2 or its use); and
- pending or
possible future litigation or other actions
Should one or more of these risks materialize
(or the consequences of such a development worsen), or should the
underlying assumptions prove incorrect, actual results could differ
materially from those forecasted or expected. The Company disclaims
any intention or obligation to update or revise any forward-looking
statement whether as a result of changes in information, future
events or otherwise.
** The Company **
Kronos Worldwide, Inc. 5430 LBJ Freeway, Suite
1700, Dallas, TX 75240, USA
** The Issuer ** Kronos
International, Inc. 5430 LBJ Freeway, Suite 1700, Dallas,
TX 75240, USA
** The Dealer Manager and Solicitation
Agent ** Deutsche Bank AG, London Branch:
+44 20 7545 8011 (UK Number) / +1 (855) 287-1922 (Call U.S.
Toll-Free) / +1 (212) 250-7527 (US Call Collect)
Investor Relations
Contact: Bryan
A. HanleySenior Vice President & Treasurer
Tel: (972) 233-1700
Kronos Worldwide (NYSE:KRO)
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