Safety-Kleen plans to pay down debt via rights offering proceeds

By Jennifer Chiou

New York, May 19 - Safety-Kleen HoldCo., Inc. announced the approval of a subscription rights offering for its shareholders, which will be used to reduce debt.

The company said that each right will entitle the holder to purchase shares at a to-be-determined subscription price, which Safety-Kleen intends to allow be paid in cash or by exchange of senior subordinated term notes that are known as the "take back notes."

Safety-Kleen said it anticipates the size of the offering to be $115 million.

"This will be another significant step toward completing Safety-Kleen's turnaround," president and chief executive officer Frederick J. Florjancic, Jr. said in a news release.

"We expect the rights offering to significantly reduce Safety-Kleen's annual interest expense and enhance Safety-Kleen's capital structure."

T.R. Tunnell, Safety-Kleen's executive vice president, corporate secretary and general counsel, said in the release that the company is announcing the proposed rights offering today to provide the market with adequate time to complete trades in the company's stock.

"We are aware that many trades of our common stock and take back notes, which have been trading with the common stock as a unit, have not closed," Tunnell said.

"In fact, the Loan Syndication and Trading Association recently issued a legal advisory encouraging holders of term notes to settle their trades in accordance with normative loan market practice.

"If beneficial owners do not settle trades prior to the record date," Tunnell added, "they will not receive rights from Safety-Kleen and would need to contact their trading counter-parties to obtain the rights."

Safety-Kleen is a Plano, Texas, provider of industrial waste management services.

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