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Norske Skog sets minimum response in exchange, raises cash payment
New York, Feb. 2 Norske Skog Holding AS announced it has set a minimum response threshold and increased some of the cash payments in its exchange offers and consent solicitations for four issues of notes issued by Norske Skogindustrier ASA.
The changes follow a decision to increase to 290 million from 250 million the amount of new senior secured notes due 2019 that Norske Skog plans to issue.
In order to issue the extra notes and make the extra payments, Norske Skog will now require that it receives tenders of at least 50% of each of the four series of notes covered by the exchange. The debt includes:
$158.2 million of outstanding $200 million 6 1/8% senior notes due 2015;
129.6 million of outstanding 150 million 11Ύ% senior notes due 2016;
388.5 million of outstanding 500 million 7% senior notes due 2017; and
$200 million 7 1/8% senior notes due 2033.
Assuming the necessary consents are received from noteholders, Norske Skog will use the additional proceeds from the upsizing of the new notes to offer a larger cash component in the exchange, adding $50.00 or 50.00 per $1,000 or 1,000 principal amount to the amount on offer for its 6 1/8%, 11Ύ% and 7% notes.
The exchange ratio for these three series of notes will be correspondingly reduced by 6.25%.
Norske Skog also added a waterfall provision so that any additional cash proceeds not used for the 6 1/8% notes, 11Ύ% and 7% notes will be used to increase the payment for the 11Ύ%, 7% and 7 1/8% notes.
If at least 290 million of new notes are issued and at least 75% of any series of the 6 1/8% notes, 11Ύ% and 7% notes participate in the offer then the payment will be increased by $50.00 or 50.00 per $1,000 or 1,000 principal amount and the exchange ratio will decrease by 6.25%.
Previously the threshold was 80%, with additional payments made until all of the relevant series is tendered.
If the necessary consents are received, the exchange condition is satisfied and 290 million of new notes issued, then the early instruction fee for the 7 1/8% notes will be increased by $50 to $70.00 per $1,000 principal amount from $20.00. The payments will be as follows:
For each $1,000 principal amount of the $158.2 million outstanding 6 1/8% senior notes due 2015, the company is offering $487.50 of new exchange notes due 2021 plus $580.00 in cash plus a possible $20.00 per $1,000 early instruction fee;
For each 1,000 principal amount of 129.6 million outstanding 11Ύ% senior notes due 2016, the company is offering 537.50 of new exchange notes due 2021 plus 380.00 in cash plus a possible 20.00 per 1,000 early instruction fee;
For each 1,000 principal amount of 388.5 million outstanding 500 million 7% senior notes due 2017, the company is offering 618.75 of new exchange notes due 2021 plus 105.00 in cash plus a possible 20.00 per 1,000 early instruction fee; and
For each $1,000 principal amount of the $200 million 7 1/8% senior notes due 2033, the company is offering $687.50 of new exchange notes due 2023 if consents are received for the 11Ύ% notes or $712.50 of new exchange notes due 2033 if consents are not received for the 11Ύ% notes. There will be no cash component apart from a possible $70 per $1,000 early instruction fee.
If the exchange condition is not satisfied, the consents are not obtained and 179 million of new notes are issued, the payments will remain as previously announced:
For each $1,000 principal amount of the $158.2 million outstanding 6 1/8% senior notes due 2015, the company is offering $550.00 of new exchange notes due 2021 plus $530.00 in cash plus a possible $20.00 per $1,000 early instruction fee;
For each 1,000 principal amount of 129.6 million outstanding 11Ύ% senior notes due 2016, the company is offering 600.00 of new exchange notes due 2021 plus 330.00 in cash plus a possible 20.00 per 1,000 early instruction fee;
For each 1,000 principal amount of 388.5 million outstanding 500 million 7% senior notes due 2017, the company is offering 681.25 of new exchange notes due 2021 plus 55.00 in cash plus a possible 20.00 per 1,000 early instruction fee; and
For each $1,000 principal amount of the $200 million 7 1/8% senior notes due 2033, the company is offering $687.50 of new exchange notes due 2023 if consents are received for the 11Ύ% notes or $712.50 of new exchange notes due 2033 if consents are not received for the 11Ύ% notes. There will be no cash component apart from a possible $20.00 per $1,000 early instruction fee.
The previous cash participation incentive no longer applies. It had specified that for the first three series of notes those due 2015, 2016 and 2017 if the proceeds from the new notes offering exceed 225 million and 80% of the par amount of any series tenders their notes for exchange, and then again for each additional 5% of the par amount of that series the cash amount for the series will be bumped up by 10 per 1,000 or $10 per $1,000 and the exchange ratio for the series will drop by 1.25%, according to a company press release.
Norske Skogindustrier holds $41.8 million principal amount of the 2015 notes, 20.4 million principal amount of the 2016 notes and 111,534,000 principal amount of the 2017 notes. Norske Skogindustrier intends to vote in favor of the 2015 notes proposal but is not entitled to vote its 2016 notes nor its 2017 notes, the release noted.
The exchange notes will be issued in denominations of 100,000 and integral multiples of 1,000 after that for the notes due 2021 or $150,000 and integral multiples of $1,000 for the notes due 2023 and 2033.
The new notes offering is not contingent upon the completion of the exchange offers or the consent solicitations; however, Norske Skogindustriers ability to issue all of the 250 million of new senior secured notes will require receipt of required consents under the solicitations.
To date, the proposed issue would exceed the amount of secured debt permitted to be incurred under the notes indenture and agency agreements, which would have permitted a maximum of 179 million principal amount of additional secured debt as of Dec. 31, the company said.
The exchange was announced on Jan. 23.
The dealer managers are Goldman Sachs International (+44 0 207 774 9862, 800 828-3182 or 212 902-6941 or e-mail: liabilitymanagement.eu@gs.com) and Citigroup Global Markets Ltd. (+44 20 7986 8969, 800 558-3745, 212 723-6106 or e-mail: liabilitymanagement.europe@citi.com).
The exchange and tabulation agent is Lucid Issuer Services Ltd. (+44 20 7704 0880, attn: Thomas Choquet/Yves Theis or e-mail: norskeskog@lucid-is.com).
Norske Skog is an Oslo-based paper and pulp company.
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