Sealed Air lets solicitation expire for 8 3/8% notes, lacks consents

By Susanna Moon

Chicago, Dec. 1 – Sealed Air Corp. said it lacks the needed consents to amend its $750 million principal amount of 8 3/8% senior notes due 2021.

The consent solicitation ended at 5 p.m. ET on Nov. 28, extended from 5 p.m. ET on Nov. 21.

Some holders asked for an increase in the consent, but the company decided that the incremental value achieved from the consents against the payment of an added consent fee was not in the best interest of the company and its shareholders, according to a press release.

The proposed amendment would have given the company more flexibility to repurchase shares of its outstanding common stock and increase the rate of quarterly cash dividends per share, as previously announced.

Even without the consents, the expiration does not affect the company’s ability to continue its share repurchase program and payment of dividends, the company noted.

“While we are disappointed that we were not granted the consent, we are on track to achieve our 2014-2016 free cash flow objectives, and during that period we will be well-positioned to return cash to shareholders as permitted by our restricted payments covenant while staying committed to our target leverage ratio of 3.5 - 4.0x adjusted EBITDA,” Jerome Peribere, the company’s president and chief executive officer, said in the press release.

The solicitation began on Nov. 7, along with a tender offer for the company’s $750 million principal amount of 8 1/8% senior notes due 2019.

The company sought consents to eliminate most of the restrictive covenants and events of default in the notes indenture.

The consent fee would have been $10 per $1,000 principal amount.

Tender offer update, call

In the tender offer, investors had tendered $602,559,000 principal amount, or 80.3%, of the 8 1/8% notes by 5 p.m. ET on Nov. 21, the consent payment date.

As previously announced, the tender offer price is $1,100.92 for each $1,000 principal amount of 8 1/8% notes, which includes a payment of $10 per $1,000 of notes tendered by the consent payment deadline.

The tender offer will end at 11:59 p.m. ET on Dec. 8. Tendered notes may no longer be withdrawn, as of the consent date.

The company said it received the needed majority consents and executed a supplemental indenture to eliminate restrictive covenants contained in the notes indenture, which became operative at settlement on Nov. 24.

Those who tender after the consent date will receive $1,090.92 per $1,000 principal amount.

The company also will pay accrued interest to but excluding the payment date.

The offer is conditioned on the company securing consents from holders of at least a majority of the outstanding notes to the proposed amendments and on obtaining at least $750 million from an offering of new senior notes.

J.P. Morgan Securities LLC (800 245-8812 or 212 270-1200 collect) is the dealer manager and solicitation agent. Global Bondholder Services Corp. (866 924-2200 or 212 430-3774 banks and brokers) is the depositary and information agent.

The company also called the remaining $147,441,000 principal amount of the 2019 notes that were not tendered by the early settlement date of Nov. 24.

The remaining notes will be redeemed at a make-whole redemption price plus accrued interest to but excluding the redemption date of Dec. 24.

Sealed Air is an Elmwood Park, N.J.-based manufacturer of packaging and performance-based materials and equipment systems that have food, industrial, medical and consumer applications.

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