Reichhold Industries, Inc. Launches Exchange Offer for its 9% Senior Notes due 2014 to Increase Financial Flexibility
22 March 2012
Reichhold Industries, Inc. (“Reichhold” or the “Company”) today announced that it has launched the exchange offer and consent solicitation described in its February 16 press release (the “Exchange Offer”). The Company is offering to exchange its outstanding 9% Senior Notes due 2014 (the “Unsecured Notes”) for new 9%/11% Senior Secured Notes due 2017 (the “Secured Notes”) in a principal amount equal to the principal amount of the exchanged notes plus accrued interest. The Exchange Offer is conditioned on the holders of not less than 98% in principal amount of the Unsecured Notes agreeing to exchange their Unsecured Notes for Secured Notes (the “Exchanging Noteholders”). As part of the Exchange Offer, the Company is soliciting consents to remove substantially all of the restrictive covenants under the Unsecured Notes indenture. The Exchange Offer will expire on April 19, 2012, unless it is extended. If consummated, the Exchange Offer would significantly reduce the Company’s cash debt service obligations and provide the Company with enhanced financial, operational and strategic flexibility.
The Company will have the option to pay interest on the Secured Notes not in cash, but by increasing the principal amount of the Secured Notes, for the first two years following the Exchange Offer, providing the Company with the opportunity to retain substantial additional liquidity. In addition, the Secured Notes will extend maturity to 2017.
"The commencement of the Exchange Offer is an important milestone in our plan. It is expected to significantly improve our cash flow over the next two years and remove any refinancing risk as business conditions improve. This will provide us near- and long-term financial flexibility to continue our focus on product excellence, customer service and operational efficiencies” stated John Gaither, Chairman and CEO of Reichhold. “The Exchange Offer will place the Company on a more solid financial base and, in concert with other steps taken over the recent past to improve its operations and cost structure, will make Reichhold more competitive and position it to take advantage of improved industry conditions” Gaither continued.
Reichhold has been advised on financial matters by Moelis & Company and on legal matters by Dow Lohnes PLLC. The Exchanging Noteholders have been advised on financial matters by Houlihan Lokey and on legal matters by Paul, Weiss, Rifkind, Wharton & Garrison LLP.
None of the securities that the Company expects to offer or sell pursuant to the Exchange Offer have been or will be registered under the United States Securities Act of 1933, as amended (the “Act”), and none of them may be offered or sold in the United States absent registration or applicable exemption from the registration requirements of the Act. This is not an offer to buy or a solicitation of an offer to exchange Secured Notes, any such offer will be made through definitive documents delivered to holders of the Unsecured Notes as part of the Exchange Offer.
Founded in 1927, Reichhold, with its world headquarters and technology center in Research Triangle Park, North Carolina, USA, is one of the world’s largest suppliers of unsaturated polyester resins and a leading supplier of coating resins for the industrial, transportation, building and construction, marine, consumer and graphic arts markets. Reichhold has manufacturing operations throughout North America, Latin America, the Middle East, Asia and Europe.
This press release contains "forward-looking statements" that are based on current expectations, estimates, forecasts and projections about the Company, its future performance, liquidity and management’s beliefs and assumptions. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, “will,” “intend,” “expect,” “would,” “could,” “must,” “may,” “anticipate,” “project” and similar expressions or phrases identify forward-looking statements.
Factors that may cause expected results or anticipated events or circumstances discussed in this press release to not occur or to differ from expected results include: sufficient participation by holders of the notes in the Exchange Offer; the Company’s ability to negotiate an amendment to its credit facility to cure the events of default arising out of the Company’s failure to pay the February 15, 2012 interest payment due on the Unsecured Notes; general conditions in the capital markets; general economic conditions; our ability to maintain adequate liquidity to operate our business; volatility in raw material costs; or our ability to continue as a going concern.
All forward-looking statements involve risk and uncertainties. In light of these risks and uncertainties, expected results or other anticipated events or circumstances discussed in this press release might not occur. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
There can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences.