Trinseo Announces New Receivables Financing Facility from KKR

Rhea-AI Summary

Trinseo PLC (NYSE: TSE), a specialty material solutions provider, has announced a new $150 million non-recourse financing facility with credit funds and accounts managed by KKR. This facility, collateralized by trade receivables, replaces a prior facility of the same size maturing in November 2025. The new facility extends the maturity to December 2027 and has no minimum liquidity covenants, providing Trinseo with additional financial flexibility. Frank Bozich, President and CEO of Trinseo, expressed enthusiasm for KKR's support, highlighting the extended maturity and improved terms. Giacomo Picco, a Managing Director at KKR, emphasized their expertise in global receivables financing and commitment to supporting Trinseo's growth and supply of critical materials to essential markets globally.

Positive

• Secured a new $150 million non-recourse financing facility
• Extended maturity from November 2025 to December 2027
• Eliminated minimum liquidity covenants
• Maintained same facility size while improving terms
• Gained additional financial flexibility for portfolio transformation

Negative

• None.

Financial Analyst

The announcement of Trinseo's new $150 million non-recourse financing facility with KKR is significant for a few reasons. This type of financing allows Trinseo to convert its trade receivables into immediate cash without the risk of those receivables defaulting, hence the term 'non-recourse.' This improves the liquidity of the company, especially as the previous facility had the same size but more stringent liquidity covenants. By extending the maturity to December 2027, Trinseo gains additional financial flexibility.

For a retail investor, the keywords here are 'financial flexibility' and 'extended maturity'. This facility essentially acts as a financial cushion, providing the company with more leeway to manage its operations and investments without the pressure of immediate repayment. It is also notable that the collaboration is with a respected firm like KKR, which adds a layer of credibility to Trinseo's financial strategies.

However, the facility size remains unchanged at $150 million, so while the terms are more favorable, it does not inject additional capital into the company. Investors should also consider this in the context of Trinseo's overall debt level and cash flow requirements.

Market Research Analyst

From a market perspective, Trinseo's move to secure a non-recourse financing facility underlines its strategy to stabilize its financials while navigating through an evolving portfolio. This action is particularly beneficial given the current economic climate where liquidity is paramount. The absence of minimum liquidity covenants means Trinseo is not bound to maintain a cash or equivalent balance, likely freeing up resources for other operational needs or investments.

For investors, it's important to understand that while the facility provides immediate liquidity benefits, it also comes with a cost. The terms of this new facility, although not disclosed in detail, could involve higher financing costs compared to traditional loans due to its non-recourse nature. However, this trade-off might be worthwhile if it enables the company to maneuver more freely and invest in growth opportunities without immediate liquidity pressures.

WAYNE, Pa. & NEW YORK--(BUSINESS WIRE)-- Trinseo PLC (“Trinseo” or “the Company”)(NYSE: TSE), a specialty material solutions provider, today announced that a special purpose finance entity, Styron Receivables Funding Designated Activity Company, has entered into a $150 million non-recourse financing facility with credit funds and accounts managed by KKR, a leading global investment firm. The facility, which is collateralized by trade receivables originated by Trinseo and its subsidiaries, replaces a prior financing facility of the same size that matures in November 2025.

“We are thrilled to have the support of a leading capital provider like KKR,” said Frank Bozich, President and CEO of Trinseo. “While this facility replaces a previous one of the same size, it has no minimum liquidity covenants and extends the maturity by more than two years, to December 2027. This provides us with additional financial flexibility for the next several years as we continue to transform our portfolio.”

“We are pleased to use our deep experience in global receivables financing to provide Trinseo with capital to support its continued growth and ability to supply critical materials to a variety of essential markets globally,” said Giacomo Picco, a Managing Director at KKR.

About Trinseo

Trinseo (NYSE: TSE), a specialty material solutions provider, partners with companies to bring ideas to life in an imaginative, smart and sustainably focused manner by combining its premier expertise, forward-looking innovations and best-in-class materials to unlock value for companies and consumers.

From design to manufacturing, Trinseo taps into decades of experience in diverse material solutions to address customers’ unique challenges in a wide range of industries, including building and construction, consumer goods, medical and mobility.

Trinseo’s approximately 3,100 employees bring endless creativity to reimagining the possibilities with clients all over the world from the company’s locations in North America, Europe and Asia Pacific. Trinseo reported net sales of approximately $3.7 billion in 2023. Discover more by visiting www.trinseo.com and connecting with Trinseo on LinkedIn, Twitter, Facebook and WeChat.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKRs website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.

Cautionary Note on Forward-Looking Statements
This press release may contain forward-looking statements including, without limitation, statements concerning plans, objectives, goals, projections, forecasts, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts or guarantees or assurances of future performance. Forward-looking statements may be identified by the use of words like “expect,” “anticipate,” “believe,” “intend,” “forecast,” “outlook,” “will,” “may,” “might,” “see,” “tend,” “assume,” “potential,” “likely,” “target,” “plan,” “contemplate,” “seek,” “attempt,” “should,” “could,” “would” or expressions of similar meaning. Forward-looking statements reflect management’s evaluation of information currently available and are based on our current expectations and assumptions regarding our business, the economy, our current indebtedness, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Factors that might cause future results to differ from those expressed by the forward-looking statements include, but are not limited to, our ability to successfully implement proposed restructuring initiatives and to successfully generate cost savings through restructuring and cost reduction initiatives; our ability to successfully execute our business and transformation strategy; increased costs or disruption in the supply of raw materials; deterioration of our credit profile limiting our access to commercial credit; increased energy costs; compliance with laws and regulations impacting our business; any disruptions in production at our chemical manufacturing facilities, including those resulting from accidental spills or discharges; conditions in the global economy and capital markets; our current and future levels of indebtedness and ability to service our debt; our ability to meet the covenants under our existing indebtedness; our ability to generate cash flows from operations; and those discussed in our Annual Report on Form 10-K, under Part I, Item 1A —"Risk Factors" and elsewhere in our other reports, filings and furnishings made with the U.S. Securities and Exchange Commission from time to time. As a result of these or other factors, our actual results, performance or achievements may differ materially from those contemplated by the forward-looking statements. Therefore, we caution you against relying on any of these forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240718388261/en/

Media Contacts:

For Trinseo:

Andy Myers

+1 610-240-3221

aemyers@trinseo.com

For KKR:

Julia Kosygina

212-750-8300

media@kkr.com

Source: Trinseo PLC

FAQ

What is the size of Trinseo's new receivables financing facility with KKR?

Trinseo's new receivables financing facility with KKR is $150 million.

When does Trinseo's new financing facility with KKR mature?

Trinseo's new financing facility with KKR matures in December 2027.

How does the new facility differ from Trinseo's previous financing facility?

The new facility has no minimum liquidity covenants and extends the maturity by more than two years compared to the previous facility.

What is Trinseo's stock symbol on the New York Stock Exchange?

Trinseo's stock symbol on the New York Stock Exchange is TSE.