Solvay releases financial statements for holders to review before submitting consents, tenders

By Marisa Wong

Los Angeles, Aug. 28 – Solvay SA issued an update on Monday relating to its liability management exercises launched on Aug. 4.

Solvay announced that it has released first half 2023 financial statements on its website: https://www.solvay.com/en/investors/creating-two-strong-industry-leaders.

The company is encouraging noteholders to review those financial statements.

The company also reminded holders of the upcoming early deadlines for the consent solicitations and the tender offer, which now coincide with the expiration times.

Solvay had announced on Wednesday an extension of the early instruction deadline for its consent solicitations affecting three series of bonds and an extension of the early tender deadline with respect to the tender offer for another series of bonds.

As previously reported, Solvay is soliciting consents from noteholders to separate into two independent publicly traded companies.

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

The H1 2023 statements released Monday are for EssentialCo (Solvay), which would comprise the leading mono-technology businesses in the Solvay’s chemicals segment, including soda ash, peroxides, silica and coatis and special chemicals; and SpecialtyCo (Syensqo), which would comprise Solvay’s materials segment, including its specialty polymers and composites businesses, its four growth platforms and the majority of Solvay’s solutions segment, including Novecare, technology solutions, aroma performance and oil and gas solutions.

Consent bids

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.

Solvay had announced on Wednesday that it extended the early instruction deadline to 11 a.m. ET on Aug. 31 from 11 a.m. ET on Aug. 22. The early instruction deadline, the deadline for being eligible to receive the early participation fee, coincides with the expiration deadline of the consent solicitations.

Consent solicitations cover the following bonds:

• €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).

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

Bondholder meetings will be held at the company’s offices in Belgium on Sept. 5 starting at 5 a.m. ET for the hybrid bonds, with subsequent meetings for the 2027 bonds and 2029 bonds being held sequentially in that order at 15-minute intervals after that or after completion of the preceding meeting, whichever is later.

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 consist of holders of at least 75% of the bonds, and the quorum for the 2027 bonds is 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 any and all of their notes.

The issuer is offering a purchase price of €1,017.50 per €1,000 note, inclusive of a €17.50 early tender fee that will only be paid to holders who deliver tender instructions by the early tender deadline.

The early tender deadline is 11 a.m. ET on Sept. 5, extended from 11 a.m. ET on Aug. 22. The early tender deadline is now the same time as the expiration deadline for the tender offer.

Interest will also be paid to the settlement date.

Settlement is expected for Sept. 8.

The tender offer is conditioned on 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.

Upcoming exchange

As previously reported, the liability management exercises also include, in addition to the consent solicitations and the tender offer, an upcoming exchange offer.

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

In terms of an exchange, holders of some 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.

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 exchange exercise will cover the:

• $800 million 4.45% senior notes due 2025 issued by Solvay Finance (America) and guaranteed by Solvay (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 (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.

The tender and information agent and the tabulation agent is D.F. King & Co., Inc. (+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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