Two press releases from Resolute Forest Products this morning:
Resolute Launches Tender Offer and Consent Solicitation for its 10.25% Senior Secured Notes
Resolute Forest Products Inc. has launched a cash tender offer for any and all of its $501 million outstanding aggregate principal amount of 10.25% senior secured notes due 2018 (CUSIP No. 003687AB6) (the “2018 notes”). In connection with the tender offer, Resolute is soliciting consents to amend the 2018 notes and the indenture that governs them to eliminate substantially all the restrictive covenants and certain events of default, and to release all the collateral securing the 2018 notes. The tender offer and consent solicitation are being made pursuant to an offer to purchase and consent solicitation statement, dated April 24, 2013 (the “offer to purchase”), which more fully sets out the terms and conditions of the tender offer and consent solicitation.
The tender offer and consent solicitation will expire at 12:00 midnight, New York City time, on May 21, 2013, unless extended or earlier terminated. We refer to that date and time, as extended or earlier terminated, as the “expiration time”.
The “total consideration” for each $1,000 principal amount of 2018 notes validly tendered and the related consents delivered at or before 5:00 p.m., New York City time, on May 7, 2013, (which date and time, as the same may be extended, we refer to as the “early tender deadline”) and accepted for purchase will be $1,166.94 per $1,000 principal amount of those notes, which includes an early tender premium of $30.00 per $1,000 principal amount of those notes.
The total consideration was calculated based on a settlement date of May 8, 2013 (the “initial settlement date”), using a weighted average that assumes: (i) $416.2 million of the 2018 notes would be repurchased at a price based on the present value of the 2018 notes’ remaining cash flows through the redemption date of October 15, 2014 (the “first call date”), including the applicable redemption price of $1,051.25, minus accrued interest through, but not including, the initial settlement date; and (ii) $85.0 million of the 2018 notes would be repurchased at a price based on the 2018 notes’ remaining cash flows through the redemption date of October 4, 2013 (the “special redemption date”), including the applicable redemption price of $1,030.00, minus accrued interest through, but not including, the initial settlement date; in each case discounted using a rate equal to the U.S. Treasury rate to the first call date or the special redemption date, as applicable, plus 50 basis points.
Holders who validly tender, and do not withdraw, their 2018 notes and validly deliver their consents at or before the early tender deadline, and whose notes are accepted for purchase, will be eligible to receive the total consideration. Holders who validly tender, and do not withdraw, their 2018 notes after the early tender deadline but at or before the expiration time, and whose notes are accepted for purchase, will be eligible to receive the “tender offer consideration,” which is the total consideration less the early tender premium. In addition, holders whose 2018 notes are purchased in the tender offer will receive accrued and unpaid interest on their purchased notes up to, but not including, the applicable settlement date.
We currently expect the settlement date for 2018 notes tendered before the early tender deadline to be May 8, 2013(and will not be before such date). The settlement date for 2018 notes tendered after the early tender deadline and before the expiration time will occur promptly after the expiration time.
Under the terms of the indenture governing the 2018 notes, before October 15, 2013, Resolute may at its option, during each 12-month period commencing with October 4, 2010, redeem up to 10% of the original aggregate principal amount of 2018 notes (i.e., $85 million principal amount) at a redemption price of 103% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date. Accordingly, if a holder does not tender its 2018 notes in the tender offer, up to all of their 2018 notes may be subject to redemption at 103%, plus accrued and unpaid interest.
Concurrently with the tender offer, Resolute is soliciting from holders of the 2018 notes consents to proposed amendments to the indenture and security documents governing the 2018 notes that would: (i) eliminate most of the restrictive covenants, eliminate certain events of default (the “proposed amendments”); and (ii) release all of the collateral securing the obligations under the 2018 notes (the “collateral release”). Consents in respect of at least a majority in aggregate principal amount of the outstanding 2018 notes are required to approve the proposed amendments and at least 66 2/3% in aggregate principal amount of the outstanding 2018 notes are required to approve the collateral release.
Holders are required to consent to the proposed amendments in order to tender their 2018 notes, and are not permitted to validly revoke a consent without validly withdrawing the previously tendered notes to which the consent relates. 2018 notes tendered can only be withdrawn, and related consents revoked, before 5:00 p.m., New York Citytime, on May 7, 2013, unless extended, except in certain limited circumstances where additional withdrawal rights are required by law.
The tender offer and the consent solicitation are conditioned upon, among other things, (a) the receipt of tendered 2018 notes from the holders of at least two-thirds of the aggregate principal amount of the outstanding 2018 notes (excluding any 2018 notes owned by Resolute or any of its affiliates), (b) receipt of funds from certain refinancing transactions, on terms and conditions acceptable to Resolute, in an amount sufficient to enable Resolute to purchase the tendered 2018 notes, pay the early tender premium and pay related costs and expenses, and (c) certain other general conditions, each of which is described in more detail in the Offer to Purchase.
Resolute Announces Proposed Offering of Senior Notes
Resolute Forest Products Inc. has launched a private offering for $600 million aggregate principal amount of senior notes due 2023. The notes will be unsecured and guaranteed by substantially all of Resolute’s U.S. subsidiaries. The net proceeds from the sale of the 2023 notes will be used in connection with the repurchase, repayment or other discharge of all, or substantially all, of the $501.2 million outstanding aggregate principal amount of the Company’s 10.25% senior secured notes due 2018. The Company has contemporaneously launched a tender offer for the 2018 notes, which offer is scheduled to expire at 12:00 midnight, New York City time, on May 21, 2013, unless extended by the Company.
The 2018 notes are being sold to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in reliance on Regulation S under the Securities Act. The 2023 notes have not been registered under the Securities Act or any state securities laws. Therefore, the notes may not be offered or sold in the U.S. absent registration or an applicable exemption from such registration requirements.