Terex drops waiver for asset sale repurchase offer, now seeks bank loan amendment

By Susanna Moon

Chicago, Sept. 26 – Terex Corp. amended the terms of its consent solicitation for its 6% senior notes due 2021 and its 6½% senior notes due 2020 related to plans to sell some assets.

Terex is now asking for only a waiver from compliance with the asset sale covenants in the note indentures that requires the company and its restricted subsidiaries to receive 75% of the payment in the form of cash and cash equivalents, according to a company update.

The company is no longer seeking a waiver to the requirement for an asset sale repurchase offer.

Separately, Terex is asking for an amendment to its senior secured credit facilities that would require at least $300 million of the proceeds of the asset sale within 60 days to reduce its outstanding senior debt.

As announced Sept. 22, Terex was asking for waivers from the asset sale covenants in the note indentures “in order to maximize Terex’s flexibility with its implementation of the previously announced disposition of its material handling and port solutions business to Konecranes plc and the timing and use of the net cash payments received from [the asset sale] or from the sale of shares of Konecranes plc received as partial consideration for the [the asset sale].”

Specifically, Terex was originally seeking to obtain a waiver from

• The requirements that Terex and its restricted subsidiaries receive 75% of the payment in the form of cash and cash equivalents for the asset sale, or the 75% cash requirement; and

• The obligations to apply the net cash payments received from the asset sale or from the sale of Konecranes shares according to the asset sale covenants, including the requirement to make an offer to purchase the notes at par.

As a result, the company plans to make a repurchase offer for its notes at par after the planned asset sale and any subsequent sale of Konecranes shares, the release noted.

Terex will comply with the asset sale covenants and use proceeds of the asset sale and from the subsequent sales of Konecranes shares within 365 days to repay other senior debt or to make investments in Terex’s business and to use the remainder to make a pro rata offer to purchase the notes at par.

The asset sale is expected to close in January.

Terex is offering cash fees of $2.50 for each $1,000 principal amount of 2021 notes and $2.50 per $1,000 principal amount of 2020 notes to holders who provide consent to the proposed waivers.

The consent solicitation will run until 5 p.m. ET on Sept. 30. Holders must be of record at 5 p.m. ET on Sept. 21.

The solicitation for the 2021 notes is contingent on the company obtaining a majority of consents for the 2020 notes, and the bid for the 2020 notes requires a majority of consent for the 2021 notes, which may be waived by the company.

The waivers are not needed for the planned asset sale, but “obtaining the proposed waivers will simplify the closing process,” the company noted.

Terex said it expects to execute waiver agreements for the notes “promptly” after securing the needed consents, but they will only become operative for the 75% cash requirement when all conditions, including the asset sale, have been met or waived and the consent fee paid.

As for the par offer requirement, in addition to the conditions just mentioned, Terex must use at least $300 million of the proceeds from the asset sale within 60 days to reduce its outstanding senior debt by either prepaying some of its senior secured term loans or repurchasing, redeeming or retiring other senior debt, the company noted.

Credit Suisse Securities (USA) LLC (800 820-1653 or 212 538-1862) is the solicitation agent. Global Bondholder Services Corp. (866 470-3800, 212 430-3774, fax 212 430-3775/3779 or 212 430-3774) is the information and tabulation agent.

Terex is a Westport, Conn.-based diversified equipment manufacturer.

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