Swedish Match gains consents to amend eight notes

By Mary-Katherine Stinson

Lexington, Ky., July 28 – Swedish Match AB noteholders approved an extraordinary resolution to amend eight series of notes in a July 28 meeting, according to an 8-K filing with the Securities and Exchange Commission.

The eight series of notes covered in the consent solicitation proposal were:

• $50 million outstanding 4% fixed-rate series 34 notes due May 31, 2028 (ISIN: XS0939505003);

• SEK 250 million outstanding floating-rate series 39 notes due October 2023 (ISIN: XS1400621030);

• €300 million outstanding 0.875% fixed-rate series 40 notes due Sept. 23, 2024 (ISIN: XS1493333717);

• €300 million outstanding 1.2% fixed-rate series 42 notes due Nov. 10, 2025 (ISIN: XS1715328768);

• SEK 1 billion outstanding 2.71% fixed-rate series 48 notes due Jan. 28, 2026 (ISIN: XS1940966317);

• €300 million outstanding 0.875% fixed-rate series 49 notes due Feb. 26, 2027 (ISIN: XS2125123039);

• SEK 1.2 billion outstanding 1.395% fixed-rate series 50 notes due Feb. 24 2026 (ISIN: XS2306815114); and

• SEK 300 million outstanding 2.19% fixed-rate series 51 notes due April 12, 2029 (ISIN: XS2329603539).

The issuer will pay a 0.15% consent fee, which is expected to be made no later than five business days after the results announcement.

Regulation S holders were eligible to participate in the solicitation.

Amendments

The notes have been amended to reduce the company’s reporting requirements and to obtain additional flexibility for potential reorganization of its group and its subsidiaries, if required.

As a result of the passage of the extraordinary resolution and the satisfaction of the other effectiveness conditions, the notes have been amended to:

• Remove all references to “relevant subsidiary” and to thereby remove the obligation under the notes to prepare audited consolidated financial accounts;

• Modify the events of default under the conditions for each series so that such events of default are limited to the issuer and do not extend to the “relevant subsidiaries,” as well as to delete the existing cross-default provision and impose no restrictions on the issuer’s ability to manage its subsidiaries, including any potential sale, disposal (including intragroup asset or share transfers) or dissolution; and

• Procure a guarantee from Philip Morris International Inc. to guarantee its payment obligations under the notes.

Under the guarantee, Philip Morris agrees that, if and each time that Swedish Match fails to make any payment under the notes when due, Philip Morris will on demand make the payment to noteholders in the amount and currency then payable by Swedish Match.

Background

As previously reported, following the takeover of Swedish Match by Philip Morris Holland Holdings BV, a wholly owned affiliate of Philip Morris International, Philip Morris Holland had acquired 94.81% of the outstanding shares of Swedish Match as of Dec. 31.

On Feb. 17, Philip Morris Holland obtained legal title under the Swedish Companies Act to the remaining issued and outstanding shares in Swedish Match, following the exercise of its right to compulsory redemption of all remaining shares.

Swedish Match has been delisted from Nasdaq Stockholm, and Dec. 30 was the last day of trading for its shares. Because of this delisting, the company is no longer required to prepare consolidated financial accounts.

However, under the terms and conditions of the notes, particularly the definition of the “relevant subsidiary,” the issuer is, effectively, still required to prepare consolidated financial accounts as “relevant subsidiary” has been defined by referring to the audited consolidated financial accounts of Swedish Match.

The proposal under the consent solicitation would remove all references to “relevant subsidiary,” which would remove the issuer’s obligation to prepare audited consolidated financial accounts.

The series 34, series 40, series 42, series 49 and series 50 notes are each admitted to trading on the London Stock Exchange. In line with the requirements of the listing rules published by the U.K. Financial Conduct Authority, the issuer will continue to publish its annual financial accounts, but, subject to the proposal being passed, in standalone form and in line with the timetable required by the London Stock Exchange.

As previously disclosed, as of Nov. 11, 2022, Swedish Match’s obligations under the notes are included in Philip Morris’s consolidated financial statements, and, as a result, the guarantee does not affect Philip Morris’s consolidated debt basis.

Details

The solicitation agent is Deutsche Bank AG, London Branch (+44 20 7545 8011).

Kroll Issuer Services Ltd. (+44 20 7704 0880; swedishmatch@is.kroll.com; attn.: Owen Morris; https://deals.is.kroll.com/swedishmatch) is the information and tabulation agent.

Swedish Match is a Stockholm-based tobacco company.

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