Kronos starts exchange offer, consent bid for 3¾% notes due 2025

By Marisa Wong

Los Angeles, Jan. 23 – Kronos Worldwide, Inc. has begun an offer to holders of wholly owned subsidiary Kronos International, Inc.’s 3¾% senior secured notes due 2025 to exchange up to €325 million of the €400 million outstanding notes for new 9½% senior secured notes due March 15, 2029, according to a press release.

Kronos is offering a total consideration per €1,000 of old notes of €850 principal amount of new notes plus a cash payment of €150.

The total consideration includes an early participation premium of €50 principal amount of new notes per €1,000 of old notes tendered for exchange by the early participation date.

Holders tendering their notes after the early deadline will only be eligible to receive the exchange offer consideration per €1,000 of old notes of €800 principal amount of new notes plus the €150 cash payment.

The company will also pay accrued interest in cash.

Consent solicitation

In conjunction with the exchange offer, Kronos is soliciting consents from holders participating in the exchange offer to some proposed amendments to the indenture governing the old notes.

The proposed amendments would conform the restrictive covenants in the existing indenture to the restrictive covenants of the new notes.

To take effect, the proposed amendments require the consents of holders representing a majority in principal amount of the outstanding notes (excluding those held by the company or its affiliates).

Holders who tender their notes in the exchange offer will be deemed to have submitted consents under the consent solicitation.

Additional offer

Concurrently with, but separate from, the exchange offer, Kronos is offering up to €50 million of additional 9½% senior secured notes due 2029 (//BB+).

The notes sold under the additional offering will form a single class with the new 2029 notes issued under the exchange offer.

If €325 million or more of the old 2025 notes are tendered under the exchange offer, the company will terminate the additional new notes offering.

The company will not receive any cash proceeds from the issuance of new notes in connection with the exchange offer.

If the additional new notes offering is completed, proceeds from that sale will be used to redeem 2025 notes that remain outstanding as of the early settlement date of the exchange offer if, and to the extent that, €75 million aggregate principal amount will remain following such redemption.

The old notes surrendered in connection with the exchange offer will be retired and canceled and will not be reissued.

Details, timeline

The new notes will be issued by Kronos International and guaranteed by Kronos Worldwide and each of its direct and indirect domestic wholly owned subsidiaries, other than Kronos International.

Notes tendered on or prior to the early participation date will have priority in acceptance over notes tendered after the early deadline.

The company will also give effect to the redemption of old notes in connection with the additional new notes offering, if it happens, before calculating the principal amount of old notes that may be accepted after the early participation date in the exchange offer.

As a result, if the exchange offer is fully subscribed or oversubscribed by the early participation date, then no old notes tendered after the early participation date will be accepted. If the offer cap is not met by the early participation date, then the company may sell additional new notes and use the proceeds to redeem old notes. If the amount of old notes remaining outstanding after the additional new notes price, after giving effect to the issuance of new notes under the exchange offer and the redemption of the old notes, is less than or equal to €75 million, then no old notes tendered after the early participation date will be accepted for exchange.

The exchange offer is conditioned on the receipt of tenders of at least €275 million of old notes prior to the expiration of the offer.

The exchange offer is only open to holders who are qualified institutional buyers under Rule 144A or non-U.S. persons under Regulation S outside the United States who are not retail investors residing in a member state of the European Economic Area or the United Kingdom.

The early participation date of the exchange offer is 11 a.m. ET on Feb. 5. Tenders may be withdrawn at any time prior to then.

The exchange offer and consent solicitation will expire at 11 a.m. ET on Feb. 21.

Early settlement is expected to occur three business days after the early participation date, and final settlement is expected to occur three business days after the expiration date.

The dealer manager and solicitation agent is Deutsche Bank AG, London Branch (+44 20 7545 8011, 855 287-1922, 212 250-7527).

Kronos is a Dallas-based chemicals company that produces and markets titanium dioxide pigments.

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