SI Group, a prominent global developer and manufacturer of performance additives, process solutions, pharmaceuticals, and chemical intermediates, has announced the successful initial results of its recent exchange offer. This exchange transaction, which garnered substantial support from a significant majority of its existing creditors, was completed on September 18, 2024. In conjunction with this, SI Group launched a public exchange offer inviting its remaining creditors to participate in a follow-on transaction on the same terms. Collectively, these efforts are referred to as the “Transaction.”
Support from Creditors
As of the initial settlement date on September 30, 2024, the results revealed overwhelming support for the Transaction, with nearly 100% participation from first lien lenders and approximately 89% from holders of unsecured notes. This high level of engagement from creditors highlights their confidence in SI Group and its strategic direction moving forward.
Transaction Details
The Transaction involves extending the maturity of the Company’s debt to 2028, thereby enhancing its liquidity with full access to a newly established revolving credit facility amounting to $218 million. This restructuring results in a notable reduction in the Company’s annual cash interest expenses, providing a robust foundation for future growth. The positive impact of this restructuring will allow SI Group to allocate resources more efficiently, enabling the Company to pursue new opportunities and enhance its operations.
To enhance its financial security, SK Capital Partners, along with its affiliates, injected an additional investment of $150 million into the Company. This significant investment is instrumental in strengthening liquidity and facilitating debt repayment, thus ensuring that SI Group can maintain its operational momentum during this transition.
Strategic Implications
The successful restructuring of SI Group’s capital framework markedly enhances its liquidity profile, positioning the Company to leverage anticipated industry recovery trends effectively. The backing received from both SK Capital and the lenders signifies a strong belief in SI Group’s long-term objectives and growth potential.
With this restructured capital base, SI Group can focus on executing critical improvement initiatives, delivering exceptional service to its customers, and advancing its overarching goal of becoming a leading global powerhouse in performance additives. By improving its financial position, SI Group is now better equipped to respond to market dynamics and foster innovation in its product offerings.
Next Steps in the Process
The exchange offer will remain available until 5:00 p.m. New York City time on October 16, 2024. Holders of unsecured notes must tender their notes before 5:00 p.m. New York City time on October 1, 2024, to qualify for the Early Participation Premium, a significant incentive for early tendering.
Legal and Financial Advisory
Latham & Watkins LLP served as the legal counsel for SI Group, while PJT Partners acted as the Company’s financial advisor during this transformative process. An Ad Hoc Group of First Lien Lenders and holders of unsecured notes received advisory support from Milbank LLP. Furthermore, the administrative agent for the new credit facilities was counselled by Davis Polk & Wardwell LLP.
The initial results of SI Group’s exchange offer mark a pivotal moment in the Company’s financial journey, illustrating the support and confidence of its creditors while positioning it for sustained success in the competitive performance additives market.