KRONOS WORLDWIDE, INC. PRICES PRIVATE OFFERING OF AN ADDITIONAL €75 MILLION OF 9.50% SENIOR SECURED NOTES DUE 2029

Rhea-AI Summary

Kronos Worldwide, Inc. (NYSE: KRO) announced that its subsidiary, Kronos International, Inc. (KII), will issue an additional €75 million of 9.50% Senior Secured Notes due 2029 through a private placement. These notes will be added to the existing €276,174,000 of notes issued in February 2024. Priced at a premium of 107.50%, the offering is expected to yield approximately €80,625,000 (about $87,500,000) before fees.

The proceeds will be used to repay a portion of the company's global revolving credit facility with Wells Fargo, which was used for the recent acquisition of the remaining equity interest in Louisiana Pigment Company, L.P. The notes will be guaranteed by Kronos Worldwide and its domestic subsidiaries, secured by first-priority interests in certain assets. The offering, oversubscribed and to qualified institutional buyers, is expected to close around July 30, 2024.

Positive

• Oversubscribed offering indicates strong investor interest
• Premium pricing at 107.50% suggests favorable market perception
• Expected proceeds of €80,625,000 (approx. $87,500,000) before fees
• Repayment of revolving credit facility may improve debt structure
• Acquisition of remaining equity in Louisiana Pigment Company strengthens market position

Negative

• Additional debt issuance may increase financial leverage
• 9.50% interest rate on notes is relatively high, potentially increasing interest expenses
• to institutional investors, potentially excluding retail shareholders from participation

Insights

Financial Analyst

The issuance of an additional €75 million of 9.50% Senior Secured Notes by Kronos Worldwide is a strategic move that deserves close scrutiny from investors. This action demonstrates the company's ability to secure substantial funding through private placement, indicating strong investor confidence. The oversubscription and premium pricing of 107.50% further emphasize this confidence. The successful issuance at such terms suggests robust financial standing and market trust in Kronos' business model and future prospects.

From a financial perspective, the proceeds amounting to approximately €80,625,000 (or $87,500,000) will be directed towards repaying part of the global revolving credit facility used for the recent acquisition of Louisiana Pigment Company. This is a positive sign as it reduces debt liabilities related to the acquisition, thereby potentially improving their debt-to-equity ratio and overall financial stability. The 9.50% interest rate on the notes is relatively high, indicating a higher cost of borrowing, which may impact future profitability. Nonetheless, the strategic utilization of these funds to consolidate ownership in a valuable asset like Louisiana Pigment Company could yield significant long-term benefits.

Market Research Analyst

From a market perspective, this issuance and the subsequent use of proceeds reinforce Kronos Worldwide's strategic growth plans. The acquisition of the remaining equity interest in Louisiana Pigment Company, a chloride-process TiO2 production facility, places Kronos in a stronger competitive position within the titanium dioxide market. This sector is important for various industries, including paints, coatings, plastics and paper. By gaining full control, Kronos can streamline operations, optimize production processes and enhance profitability.

It’s also worth noting how the private placement was specifically structured to comply with various securities regulations, including Rule 144A under the U.S. Securities Act and Regulation S. This careful compliance ensures that Kronos avoids potential legal pitfalls and maintains a strong, regulatory-compliant profile. Furthermore, the swift closing of the offering, anticipated by July 30, 2024, suggests effective execution and solid demand from institutional investors, underlining market confidence.

Legal Expert

The legal structuring of this note issuance is sophisticated and demonstrates Kronos Worldwide's careful navigation of securities regulations. By issuing the notes as additional to the existing €276,174,000 Senior Secured Notes due 2029 and ensuring they are fully and unconditionally guaranteed by the Company and its subsidiaries (subject to certain exceptions), Kronos mitigates legal risks and provides clear security to investors. The adherence to Rule 144A and Regulation S under the U.S. Securities Act ensures that the notes are marketed to qualified institutional buyers and non-U.S. persons, respectively, which aligns with international securities laws and reduces the risk of non-compliance.

Moreover, the separation of ISIN and Common Code numbers for 40 days post-issuance under Regulation S is a meticulous compliance measure, reflecting a thorough understanding of cross-border securities transactions. This careful legal planning not only protects Kronos from regulatory issues but also enhances investor confidence by ensuring that all aspects of the note issuance are above board and transparent.

Dallas, Texas, July 23, 2024 (GLOBE NEWSWIRE) -- Kronos Worldwide, Inc. (NYSE: KRO) (the “Company”) announced today that its wholly-owned subsidiary, Kronos International, Inc. (“KII”), has agreed to sell €75 million aggregate principal amount of additional 9.50% Senior Secured Notes due 2029 (the “Notes”) through an institutional private placement. The Notes will be issued as additional notes to the existing €276,174,000 aggregate principal amount of 9.50% Senior Secured Notes due 2029 that KII issued on February 12, 2024 (the “Existing Notes”). Other than with respect to the date of issuance and issue price, the Notes will have the same terms as the Existing Notes. The Notes will be maintained under the same ISIN and Common Code numbers as the Existing Notes, except that the Notes issued pursuant to Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), will trade separately under different ISIN and Common Code numbers until 40 days after the issue date of the Notes, but thereafter, the Notes issued pursuant to Regulation S will be maintained under the same ISIN and Common Code numbers as the Existing Notes issued pursuant to Regulation  S.

The Notes will be fully and unconditionally guaranteed, jointly and severally, on a senior basis by the Company and each of its direct and indirect domestic, wholly-owned subsidiaries (other than the Issuer, the “Guarantors”), subject to certain exceptions and secured by first-priority security interests in certain assets of the Company and the Guarantors.

The Notes were oversubscribed and priced at a premium of 107.50%. The proceeds to the Company are expected to be approximately €80,625,000 (or approximately $87,500,000 at current exchange rates) before fees and expenses. The Company intends to use the proceeds of the offering, after payment of fees and expenses, to repay a portion of its global revolving credit facility with Wells Fargo, on which it drew in connection with its recently announced acquisition of the remaining equity interest that it did not already own of Louisiana Pigment Company. L.P., a chloride-process TiO₂ production facility located in Lake Charles, LA which the Company had previously operated as a 50% owned joint venture with Venator Materials. Subject to customary closing conditions, the closing of this offering is expected to occur on or about July 30, 2024.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy any of the Notes nor shall there be any sales of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful without registration or qualification under the securities laws of any such jurisdiction. This notice is being issued pursuant to and in accordance with Rule 135(c) under the Securities Act.

The Notes and related guarantees subject to the private placement have not been and will not be registered under the Securities Act, or any state securities laws, and will be sold only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and in offshore transactions to non-U.S. persons (within the meaning of Regulation S) outside the U.S. that are not “retail investors” residing in a member state of the EEA or the UK. The Notes and related guarantees may not be offered or sold in the United States or to U.S. persons except pursuant to registration under or an exemption from the registration requirements of the Securities Act and applicable state securities laws.

About the Company

Kronos Worldwide, Inc., incorporated in Delaware in 1989, is a leading global producer and marketer of value-added titanium dioxide pigments, or TiO₂, a base industrial product used in a wide range of applications. The Company, along with its distributors and agents, sells and provides technical services for its products to approximately 3,000 customers in 100 countries with the majority of its sales in Europe, North America and the Asia Pacific region. The Company believes it has developed considerable expertise and efficiency in the manufacture, sale, shipment and service of its products in domestic and international markets.

Forward-Looking Statements

The statements in this press release relating to matters that are not historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. These forward-looking statements include, among others, statements about the potential outcome or effect of the notes offering or the use of proceeds therefrom. Although Kronos believes the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such forward-looking statements. The factors that could cause actual future results to differ materially include, but are not limited to, those identified in the Company’s most recent annual and quarterly reports filed with the Securities and Exchange Commission.

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This news release is for informational purposes only and is not an offer to sell, or the solicitation of an offer to buy, securities.

Investor Relations Contact

Bryan A. Hanley
Senior Vice President and Treasurer
Tel. 972-233-1700

FAQ

What is the size and purpose of Kronos Worldwide's (KRO) new note offering?

Kronos Worldwide (KRO) is offering an additional €75 million of 9.50% Senior Secured Notes due 2029. The proceeds will be used to repay a portion of the company's global revolving credit facility with Wells Fargo, which was used for the recent acquisition of the remaining equity interest in Louisiana Pigment Company, L.P.

When is the expected closing date for Kronos Worldwide's (KRO) new note offering?

The closing of Kronos Worldwide's (KRO) new note offering is expected to occur on or about July 30, 2024, subject to customary closing conditions.

What is the pricing of Kronos Worldwide's (KRO) additional notes offering?

Kronos Worldwide's (KRO) additional notes are priced at a premium of 107.50%, with expected proceeds of approximately €80,625,000 (or about $87,500,000 at current exchange rates) before fees and expenses.

How will the new notes be guaranteed for Kronos Worldwide (KRO)?

The new notes will be fully and unconditionally guaranteed, jointly and severally, on a senior basis by Kronos Worldwide (KRO) and each of its direct and indirect domestic, wholly-owned subsidiaries, subject to certain exceptions. They will also be secured by first-priority security interests in certain assets of the company and the guarantors.