Belgium’s Balta launches tender offer, exchange offer and solicitation

By Mary-Katherine Stinson

Lexington, Ky., March 3 – Balta Group NV launched an offer to purchase for cash any and all of its €234,027,888 senior secured notes due 2024, exchange any and all of the notes for new senior secured notes and is soliciting consents to vote in favor of certain amendments to the terms of the notes and the indenture governing the notes, according to a press release Thursday.

The offers are in preparation for and conditioned upon the completion of Balta’s previously announced plan to reduce its debt by selling its rugs, residential polypropylene and non-woven businesses, together with the Balta brand.

The early tender deadline is 12 p.m. ET on March 16 which is also the withdrawal deadline.

The offer will expire at 12 p.m. ET on March 30 unless amended, extended or terminated by the company.

Tender offer

Balta is offering to purchase for cash all its €234,027,888 senior secured notes due 2024 at par plus accrued and unpaid interest to, but not including the settlement date. The amount includes an early tender payment of 2%.

Holders who tender after the early tender date will receive 98% of the principal plus accrued and unpaid interest.

Noteholders who validly tender their notes are consenting to the proposed amendments, but no additional consideration will be given.

Exchange offer

Eligible holders may exchange their notes for new notes which will reflect various amendments to the indenture governing the notes including waiver of the application of the assets sales, offer to repurchase upon change of control and merger, consolidation or sale of assets covenants in order to make clear that the disposal is permitted.

The new notes will also have the following credit enhancements: the addition of Bentley Mills entities and ITC Co. BV as guarantors; the granting of customary all assets security by the Bentley Mills entities and ITC Co. BV including pledges over the entire issued share capital of the Bentley Mills entities and ITC Co. BV as collateral; an increased redemption price to March 14, 2023 from the settlement date to 101 and additional amounts; and a reduction of the sizes of certain baskets to reflect the new capital structure.

The new notes redemption price will decrease on or after March 15, 2023 to par plus interest and additional amounts to but excluding the redemption date.

Holders who tender their notes for exchange prior to the early deadline will be entitled to a rollover consideration of 1% of the principal amount of the notes exchanged.

Rollover consideration will not be paid to noteholders who tender after the early tender deadline or on notes redeemed in the optional redemption.

In 2021, the Bentley Mills entities were responsible for 30% of Balta’s EBITDA and, as of Dec. 31, held 25% of Balta’s total assets.

On a pro forma basis for the disposal, in 2021, the Bentley Mills entities generated 60% of the ongoing business’ EBITDA and, as of Dec. 31, 2021, held 50% of the ongoing business’ total assets and, as a result, the offeror and the guarantors would have generated 60% of Balta’s EBITDA and held 41% of the total assets on a pro forma basis.

Noteholders who tender their notes for exchange will also be consenting to the proposed amendments.

Consent solicitation

The company is seeking consents to the proposed 50% amendments, which, if effected and operative, will amend the indenture to make clear that the disposal is permitted by waiving the application of the asset sales, offer to repurchase upon change of control and merger and consolidation or sale of assets covenants in the indenture and, unless the proposed 90% amendments become operative, will amend the indenture to remove all of the covenants that can be removed with majority consent of the noteholders.

The company is also seeking approval of the proposed 90% amendments, which, if effected and operative, will amend the indenture to decrease the redemption price of the notes on or after March 15, 2023 to (but excluding) the redemption date, to par plus accrued and unpaid interest and additional amounts.

Approval of the proposed 90% amendments by noteholders holding at least 90% of the principal will make the credit enhancing amendments to the indenture operative.

The proposed 90% amendments will become operative on the settlement date and the company will not exchange any notes for new notes, but rather the notes will remain outstanding as a single tranche if holders of more than 90% of the outstanding principal participate in the tender offer and/or the exchange offer. Also, the removal of the covenants in the supplemental indenture that give effect to the proposed 50% amendments would not go into effect.

Optional redemption

If less than €105,198,028 is tendered, the company will issue an optional redemption notice following the early tender deadline or the expiration deadline offering to repurchase on the settlement date an amount that equals €105,198,028 together with the amount of notes tendered.

This will be used to repurchase all or a portion of the notes from noteholders who do not respond to the offer.

Following the offers, €130 million including, if applicable, the new notes, will be outstanding.

However, if more than €130 million notes are exchanged in the exchange offer, the company will redeem the excess notes over €130 million in the optional redemption.

Timing and conditions

Settlement is conditioned upon, among other things, the majority of the holders of the then outstanding notes participating in either the tender offer or the exchange offer, closing of the disposal and other customary conditions.

The company stated that under the share purchase agreement the disposal could be completed as early as April 4 or as late as June 30. If not completed by April 4, the expiration deadline of the offers will likely be extended so that settlement occurs on the date of the disposal.

The company stated it if the minimum conditions are not satisfied, they plan to use a portion of the proceeds from the disposal plus funds committed by Albacore Capital LLP to redeem the notes in full.

As a result, Albacore Capital LLP will then purchase €130 million of privately placed new notes.

Lucid Issuer Services Ltd. (+44 207 704 0880, balta@lucid-is.com, https://deals.lucid-is.com/balta) is the tender and information agent for the offers.

Balta Group is a producer of textile floor coverings.

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