Global specialty chemicals company Cognis has taken advantage of the favorable current conditions in the capital markets to issue notes and loans with a total value of the equivalent of approximately 1.65 billion euros. In the course of this refinancing, the company repaid its existing bank facilities and its second lien notes and loans, and redeemed a portion of the PIK (pay in kind) notes at its parent level.
The refinancing has enabled Cognis to achieve a considerable reduction in financing costs and improve the liquidity position going forward. Interest savings will be approximately 60 million euros per year. Including the benefit of having no scheduled amortization, the company expects to see a cash benefit of approximately 100 million euros per year.
Comments Cognis CFO Klaus Edelmann: “We are very pleased with how well the refinancing has gone. At 200 basis points above the respective Euribor/Libor rate, the pricing of the new floating rate notes and loans is towards the bottom end of our target price bracket. Interest from the markets was high and the offering was significantly oversubscribed. This shows that we are seen as a reliable partner and enjoy a high level of trust in the financial markets.”
Reduced financing costs
The money raised has been used by Cognis to redeem its existing senior bank facilities, the second lien loans and notes, and about half (350 million euros including accrued and not capitalized interest) of the outstanding PIK notes at parent level. Cognis refinanced this debt on more favorable terms. The existing private equity investors will not receive any payments from this refinancing.
The newly raised capital consists of senior secured floating-rate notes worth 610 million euros and 293 million US dollars and senior secured floating-rate loans also worth 610 million euros and 293 million US dollars. Interest is payable on all notes and loans at 200 basis points above the respective Euribor/Libor rate. They are repayable in September 2013 with a repayment penalty in the first 18 months.
Cognis has also replaced its existing revolving credit facility with a new facility, also worth 250 million euros and maturing in May 2013. The interest rate is 200 basis points above the Euribor rate.
Goldman Sachs and JP Morgan were bookrunners of the whole refinancing. As a precondition for this refinancing transaction and the partial redemption of the PIK notes, Cognis Deutschland GmbH & Co. KG has been merged with Cognis GmbH. Cognis GmbH is now an operating company.
The securities offered have not been registered under the Securities Act of 1933, as amended (the “Securities Act“) and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act and applicable state securities laws. Any public offering of securities to be made in the United States will be made by means of an Offering Circular that may be obtained from the Company that will contain detailed information about the Company and management, as well as financial statements. This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful.
This announcement is for general information only and does not form part of any offer to sell, or the solicitation of any offer to buy, securities. The distribution of this announcement and the offer and sale of the securities described in this announcement (the “Securities”) in certain jurisdictions may be restricted by law. Any persons reading this announcement should inform themselves of and observe any such restrictions.
This announcement is directed only at the following persons in the United Kingdom: persons having professional experience in matters relating to investments; and persons falling within Articles 49(2)(a) to (d) of the U.K. Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (high net worth corporations, unincorporated associations etc.). If you are in the United Kingdom and do not fall into one of the above categories, any investment or investment activity to which this announcement relates is not available to you, and will not be engaged in with you, and you should not act upon, or rely on, this announcement.
Cognis is a worldwide supplier of innovative specialty chemicals and nutritional ingredients, with a particular focus on the areas of wellness and sustainability. The company employs about 8,000 people, and it operates production sites and service centers in 30 countries. Cognis has dedicated its activities to a high level of sustainability and delivers natural source raw materials and ingredients for food, nutrition and healthcare markets, and the cosmetics, detergents and cleaners industries. Another main focus is on products for a number of other industries, such as coatings and inks, lubricants, textiles, as well as agriculture and mining. The company holds a 50-percent stake in the joint venture Cognis Oleochemicals, one of the world’s leading manufacturers of oleochemicals.
Cognis is owned by private equity funds advised by Permira, GS Capital Partners, and SV Life Sciences. In 2006, Cognis recorded sales of 3.37 billion euros and an Adjusted EBITDA (operating result) of 394 million euros.
The statements we make in this release may include statements about our plans and future prospects for the company and the industry that are forward-looking statements. Our actual performance may differ materially from performance suggested by those statements. We urge you to review the cautionary statements in our financial statements for information on factors that could cause those differences.