Kraton Polymers begins tender offer, consent solicitation for 12% discount notes

By Angela McDaniels

Seattle, April 24 - Kraton Polymers LLC and parent company Polymer Holdings LLC have begun a tender offer for the $150 million principal amount at maturity of 12% senior discount notes due 2014 issued by Polymer Holdings and Polymer Holdings Capital Corp., according to a company news release.

The companies are also soliciting consents to amend the indenture governing the notes, eliminating substantially all of the restrictive covenants, some events of default and certain other provisions.

Holders may not tender without consenting and vice versa.

The consent solicitation will expire at 5 p.m. ET on May 5, and the tender offer will expire at 9 a.m. ET on May 22, unless either is terminated or extended.

Noteholders who tender will receive $860 for each $1,000 principal amount at maturity of notes. This includes a $50 consent fee per $1,000 principal amount at maturity of notes for noteholders who tender prior to the consent solicitation deadline.

Goldman, Sachs & Co. (800 828-3182 or 212 357-7867) is dealer manager for the offer, and Global Bondholder Services Corp. (212 430-3774 for banks and brokerages or 866 470-3800) is information agent.

The tender offer is subject to the receipt of consents from holders of a majority of the notes and the consummation of a refinancing by Kraton, which would add a new $365 million term loan facility to Kraton's existing term loan facility and increase the company's senior secured debt by $103 million.

The companies plan to fund the tender offer with proceeds from the new term loan facility and existing cash balances.

The notes rank junior to all existing and future debt of Kraton. Therefore, the increase in Kraton's senior secured debt will reduce the amount of assets available to noteholders in the event of a liquidation or reorganization of Kraton, according to the release.

Kraton Polymers is a specialty chemicals company based in Houston.

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