Solvay starts liability management exercises to demerge company

Chicago, Aug. 4 – Solvay SA started a consent solicitation for noteholders that will permit the company to separate into two independent publicly traded companies, according to a press release.

The company is also running a tender offer for certain notes, detailed below.

The partial demerger will result in one entity that will keep the Solvay name and a new entity called Syensqo.

The liability management exercises include consent solicitations, a tender offer and an upcoming exchange offer.

In terms of an exchange, holders of certain of the outstanding securities will be given the opportunity to transfer their securities to a new Syensqo entity (preliminary: Baa1/BBB+), the stronger-rated of the two entities post separation, although both will be working to stay investment grade, according to an earlier notice.

Consent solicitation

Solvay is soliciting consents to substitute the issuer on three series of bonds and amend the conditions. The company is also asking for a waiver relating to the partial demerger.

Consent solicitations cover the:

• €500 million undated deeply subordinated fixed-to-reset rate perpetual non-call 5.5-year bonds with a first call date on Dec. 2, 2025 (ISIN: BE6324000858);

• €500 million 2.75% fixed-rate bonds due Dec. 2, 2027 (ISIN: BE6282460615); and

• €600 million 0.5% fixed-rate bonds due Sept. 6, 2029 (ISIN: BE6315847804).

There is an early participation fee of 0.25% of the nominal amount of bonds. The fee will only be paid if the extraordinary resolution is passed and has been implemented.

To be eligible for the consent fee, instructions are due by 11 a.m. ET on Aug. 22.

The solicitations expire on Aug. 31.

Bondholder meetings will be held at the company’s offices in Belgium on Sept. 5 starting at 5 a.m. ET.

The extraordinary resolution requires that three-quarters of the participants vote in favor of the proposals.

Quorums for the hybrid bonds and the 2029 bonds need to consist of holders of at least 75% of the bonds and the quorum for the 2027 bonds must represent half of the bondholders.

Tender offer

Holders of Solvay Finance’s €500 million 5.869% undated deeply subordinated fixed-to-reset rate perpetual non-call 8.5-year bonds with a first optional redemption date on June 3, 2024 (ISIN: XS1323897725) are being offered the opportunity to tender their notes.

The offered purchase price is €1,017.50 per €1,000 note, inclusive of a €17.50 early tender fee that will only be paid to early participants. Interest will also be paid to the settlement date.

There is no cap on the offer.

The early tender deadline is 11 a.m. ET on Aug. 22.

The offer expires at 11 a.m. ET on Sept. 5.

Settlement is expected for Sept. 8.

The tender offer is conditional upon the success of the consent solicitations and Solvay implementing the extraordinary resolution.

Solvay intends to exercise a clean-up call if more than 90% of the bonds are tendered.

To come

In early September, Solvay expects to launch exchange offers and consent solicitations for notes issued by Solvay Finance (America) LLC and Cytec Industries Inc.

The rationale for the upcoming exchange offer is that the partial demerger is expected to be effective in December and the first optional redemption date for the notes listed below is June 3, 2024.

The company deems it more efficient to purchase the bonds by way of an exchange offer rather than undertake a different liability management exercise.

The exercise will cover the:

• $800 million 4.45% senior notes due 2025 issued by Solvay and guaranteed by Solvay SA (Cusips: 834423AB1, U8344PAB5); and the

• $163,495,000 outstanding of the $250 million 3.95% senior notes due 2025 issued by Cytec and guaranteed by Solvay SA (Cusip: 232820AK6).

Details

If one or more of the liability management exercises are not successful, Solvay will consider alternative options to proceed with the partial demerger.

BNP Paribas +33 1 55 77 78 94, liability.management@bnpparibas.com), Citigroup Global Markets Europe AG (+44 20 7986 8969, liabilitymanagement.europe@citi.com), Morgan Stanley & Co. International plc (+44 20 7677 5040, debt_advisory@morganstanley.com) and MUFG Securities (Europe) NV (+33 1 70 91 42 55, liability.management@murgsecurities.com) are the dealer managers and the solicitation agents.

D.F. King & Co., Inc. is the tender and information agent and the tabulation agent for the offers (+44 20 7920 9700, Solvay@dfking.com, https://www.dfkingltd.com/solvay).

Solvay is a Brussels-based chemical manufacturer. The new Solvay entity will be comprised of the mono-technology business in the chemical segment, including soda ash, peroxides, silica and coatis and specialty chem. Syensqo will have the materials segment, covering novecare, technology solutions, aroma performance and oil and gas solutions, broadly specialty polymers and composite materials.

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