Domtar Corporation Announces Consent
Solicitations Related to Its 6.25% Senior Notes Due 2042 and 6.75%
Senior Notes Due 2044
Karta Halten B.V., a private limited company organized under the
laws of the Netherlands (“Karta Halten”), announced today that its
wholly owned subsidiary, Pearl Merger Sub Inc., a Delaware
corporation (“Merger Sub”) and affiliate of Paper Excellence B.V.,
a private limited company organized under the laws of the
Netherlands (“Paper Excellence”), has launched offers (each, an
“Offer” and together, the “Offers”) to purchase for cash any and
all of Domtar Corporation’s (NYSE: UFS) (TSX: UFS) (“Domtar”)
outstanding (i) 6.25% Senior Notes due 2042 (the “2042 Notes”),
$250,000,000 aggregate principal amount, and (ii) 6.75% Senior
Notes due 2044 (the “2044 Notes” and, together with the 2042 Notes,
the “Notes,” each such series of the Notes, a “Series”),
$250,000,000 aggregate principal amount. In connection with the
Offers, Merger Sub is soliciting consents with respect to each
Series of Notes (the “Offer Consent Solicitations”) to amend the
senior indenture, dated as of November 19, 2007 (as supplemented
and amended to date (the “Indenture”), among Domtar, the subsidiary
guarantors from time to time party thereto and The Bank of New York
(predecessor to The Bank of New York Mellon), as trustee (the
“Trustee”), establishing the 2042 Notes and 2044 Notes. For any
Notes of a Series that a Holder tenders in either Offer, the Holder
will be deemed to have delivered (i) consents (“Offer Exit
Consents”) to, among other things, eliminate substantially all of
the restrictive covenants, to eliminate certain “Events of
Default,” amend the definition of “Change of Control” to exclude
the Merger (as defined below) and related transactions and amend
the issuer reporting covenant to remove the requirement to file
bondholder reports with the SEC and make other changes appropriate
for a private company, in each case in the Indenture (as set forth
in the Offer to Purchase and Consent Solicitation Statement, dated
August 9, 2021 (the “Offer to Purchase”)) (the “Offer Exit Proposed
Amendments”) and (ii) consents (“Offer Change of Control Consents”)
to the Change of Control Proposed Amendments (as defined
below).
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Concurrently, Domtar, announced today that it is soliciting (the
“Domtar Consent Solicitations”) with respect to the applicable
Series of Notes, consents of the Holders (the “Solicitation Change
of Control Consents”) to, with respect to the Indenture, (a) (i)
amend the definition of “Change of Control” to exclude the Merger
and related transactions and (ii) expressly permit the Merger and
related transactions and (b) amend the issuer reporting covenant to
remove the requirement to file bondholder reports with the SEC and
make other changes appropriate for a private company (collectively,
the amendments contemplated in (a)(i) and (ii) and (b) are the
“Change of Control Proposed Amendments”).
The Offers and the Domtar Consent Solicitations are being made
in connection with the pending acquisition of Domtar by the Paper
Excellence group pursuant to the Agreement and Plan of Merger,
dated as of May 10, 2021 (as amended, amended and restated,
supplemented, or otherwise modified from time to time, the “Merger”
or “Merger Agreement”), by and among Domtar, Paper Excellence,
Karta Halten, Hervey Investments B.V., a private limited company
organized under the laws of the Netherlands, and Merger Sub. The
Offers and the Domtar Consent Solicitations are open to all
registered holders of the Notes (individually, a “Holder,” and
collectively the “Holders”).
The Offers and Domtar Consent Solicitations are being made
pursuant to the Offer to Purchase, which sets forth a more detailed
description of the Offers and Domtar Consent Solicitations.
Holders of the Notes are urged to read carefully the Offer to
Purchase before making any decision with respect to the Offers and
Domtar Consent Solicitations.
With respect to Notes of any Series, a Holder may participate in
either the applicable Offer made by Merger Sub (in which case such
Holder will also be deemed to deliver consents in the applicable
Offer Consent Solicitation with respect to such Notes) or the
applicable Domtar Consent Solicitations made by Domtar, but not
both.
Consideration
The following table sets forth certain information regarding the
Notes, the Offers and the Domtar Consent Solicitations:
Title of Security
CUSIP Numbers
Outstanding Aggregate Principal
Amount
The Offers Consideration
(including the Offer Exit Consents and Offer Change of Control
Consents)
Domtar Consent Solicitations
Only
Tender Offer Consideration(1)
Early Tender Payment(1)(5)
Total Tender Offer
Consideration
(1)(4)
Change of Control Consent
Solicitation Payment(2) (3)
6.25% Senior Notes due 2042
257559AJ3
$250,000,000
$962.50
$50.00
$1,012.50
$2.50
6.75% Senior Notes due 2044
257559AK0
$250,000,000
$962.50
$50.00
$1,012.50
$2.50
_____________________________
(1)
Per $1,000 principal amount of Notes that
are accepted for purchase.
(2)
Per $1,000 principal amount of Notes.
(3)
If you receive the Change of Control
Consent Solicitation Payment with respect to any series of Notes
you hold, you will not receive the Total Tender Offer Consideration
or the Tender Offer Consideration in respect of such Notes.
(4)
The Total Tender Offer Consideration
consists of the Tender Offer Consideration and the Early Tender
Payment.
(5)
Payable, subject to the terms and
conditions described in the Offer to Purchase, only to Holders who
validly tender (and do not validly withdraw) Notes prior to the
Early Tender Deadline.
The Offers
Each of the Offers is scheduled to expire at Midnight (end of
day), New York City time, on September 3, 2021, unless extended or
earlier terminated by Merger Sub (the “Expiration Time”). Notes
tendered in any Offer may be withdrawn at any time prior to 5:00
p.m., New York City time, on August 20, 2021, unless extended or
earlier terminated (the “Withdrawal Deadline”), but may not be
withdrawn thereafter except as required by law.
Notes that are validly tendered (and not validly withdrawn) at
or prior to 5:00 p.m., New York City time, on August 20, 2021 (the
“Early Tender Deadline”) and accepted by Merger Sub for purchase
will receive the applicable Total Tender Offer Consideration (as
set forth above) which includes an Early Tender Payment (as set
forth above). Notes that are validly tendered (and not validly
withdrawn) after the Early Tender Deadline and on or prior to the
Expiration Time and accepted by Merger Sub for purchase will
receive only the applicable Tender Offer Consideration (as set
forth above).
Payment for Notes accepted by Merger Sub for purchase will
include accrued and unpaid interest from the last payment date
applicable to the Notes up to, but excluding, the settlement date
for the Offers (“Offer Accrued Interest”).
Among other conditions, each Offer is conditioned upon the
substantially concurrent or prior closing of the Merger. Paper
Excellence and Domtar expect to complete the Merger in the fourth
calendar quarter of 2021, but the Merger Agreement provides for the
outside date thereunder to be automatically extended to as late as
February 10, 2022 under certain circumstances (the “Merger Outside
Date”), and Paper Excellence could further extend the Merger
Outside Date to the last day of the marketing period in the event
the marketing period has not ended by the Merger Outside Date, or
the parties could mutually agree to extend the Merger Outside Date
beyond that date. Merger Sub intends to extend the Expiration Time
with respect to each Offer, without extending the Withdrawal
Deadline (unless required by law), to have the payment of the
consideration in respect of such Offer occur concurrently with, or
promptly after, the closing of the Merger. Accordingly, any
Holder who tenders Notes (and does not validly withdraw such Notes
prior to the Withdrawal Deadline) may not receive payment of the
Total Tender Offer Consideration or the Tender Offer Consideration,
as applicable, and may be unable to validly withdraw or trade its
Notes, in each case for a substantial duration.
If, as of the Consent Solicitation Deadline (as defined below),
the Change of Control Requisite Consent Condition (as defined
below) has not been satisfied with respect to a Series of Notes by
the submission of Solicitation Change of Control Consents, without
counting any Offer Change of Control Consents (the foregoing
clause, the “Aggregation Trigger”), then Offer Change of Control
Consents deemed to have been delivered in respect of Notes of the
applicable Series that have been validly tendered and not validly
withdrawn will be aggregated with the Solicitation Change of
Control Consents validly delivered and not validly revoked to
determine whether the Change of Control Requisite Consent Condition
has been satisfied. If, in this scenario, the Change of Control
Requisite Consent Condition is satisfied for a Series of Notes and
the applicable Change of Control Supplemental Indenture (as defined
below) becomes effective, then, with respect to Notes validly
tendered and not validly withdrawn, Merger Sub will pay (or cause
to be paid to) the applicable Holder the Total Tender Offer
Consideration (plus Offer Accrued Interest) or Tender Offer
Consideration (plus Offer Accrued Interest), as the case may be,
subject to the Offer to Purchase. If a Holder receives the Tender
Offer Consideration or the Total Tender Offer Consideration with
respect to any Notes held, such Holder will not receive the Change
of Control Consent Solicitation Payment (as set forth above) in
respect of such Notes.
The obligation to accept for purchase and to pay (or cause to be
paid) the Total Tender Offer Consideration or the Tender Offer
Consideration, as applicable, for any and all Notes validly
tendered and not validly withdrawn pursuant to each of the Offers
is conditioned on the satisfaction of certain conditions that may
be waived by Merger Sub if they are not satisfied, as more fully
described in the Offer to Purchase. Merger Sub reserves the right
in its sole discretion, subject to applicable law, to terminate any
Offer if the conditions to such Offer have become incapable of
being satisfied at the Expiration Time. In particular, if, prior to
the Expiration Time, (a) the Change of Control Requisite Consent
Condition has been satisfied with respect to any Series of Notes by
the submission of Solicitation Change of Control Consents in
respect of a majority of the aggregate principal amount outstanding
of such Series of Notes, without counting any Offer Change of
Control Consents, and (b) the Change of Control Supplemental
Indenture has been executed with respect to such Series of Notes,
then Merger Sub expects that, subject to applicable law, it will
terminate the Offer with respect to such Series of Notes promptly
following the execution of the Change of Control Supplemental
Indenture with respect to such Series of Notes. In such event, (i)
Merger Sub will not accept for purchase or pay the Total Tender
Offer Consideration or the Tender Offer Consideration, as
applicable, for any Notes that tendered in the Offer with respect
to such Series of Notes and (ii) Holders who have tendered Notes
into such Offer will instead be eligible to receive from Merger Sub
the Change of Control Consent Solicitation Payment on the Change of
Control Consent Solicitation Payment Date in respect of such
Notes.
The Domtar Consent Solicitations
Approval of the Change of Control Proposed Amendments with
respect to a Series of Notes requires validly delivered and not
validly revoked consents from the Holders of a majority of the
aggregate principal amount outstanding of a Series of Notes (for
each Series, the “Change of Control Requisite Consent Condition”).
If, as of the Consent Solicitation Deadline, the Aggregation
Trigger has occurred, Offer Change of Control Consents deemed to
have been delivered in respect of Notes of the applicable Series
that have been validly tendered and not validly withdrawn will be
aggregated with the Solicitation Change of Control Consents validly
delivered and not validly revoked to determine whether the Change
of Control Requisite Consent Condition has been satisfied.
If the Change of Control Requisite Consent Condition is
satisfied for a Series of Notes, Domtar will enter into the
applicable supplemental indenture to the Indenture that would set
forth the Change of Control Proposed Amendments with respect to
such series of Notes (the “Change of Control Supplemental
Indenture”).
The Domtar Consent Solicitations are scheduled to expire at 5:00
p.m., New York City time, on August 20, 2021, unless extended or
earlier terminated (the “Consent Solicitation Deadline”). Holders
may participate in the Domtar Consent Solicitations by validly
delivering and not validly revoking their Notes (as set forth in
the Offer to Purchase) at or prior to the Consent Solicitation
Deadline, in which case, they will be eligible to receive the
Change of Control Consent Solicitation Payment. Subject to the
following sentence, Solicitation Change of Control Consents
delivered in the Domtar Consent Solicitations may be revoked at or
prior to the Consent Solicitation Deadline. If, however, the Change
of Control Requisite Consent Condition is satisfied with respect to
a Series of Notes prior to the Consent Solicitation Deadline,
Domtar may issue a press release announcing such satisfaction at
which point any Solicitation Change of Control Consents delivered
in the applicable Domtar Consent Solicitation may no longer be
revoked.
Among other things, Merger Sub’s obligation to accept and pay
the Change of Control Consent Solicitation Payment for Notes
delivered (and not validly revoked) at or prior to the Consent
Solicitation Deadline is conditioned upon the substantially
concurrent or prior closing of the Merger. Paper Excellence and
Domtar expect to complete the Merger in the fourth calendar quarter
of 2021, but the Merger Agreement provides for the outside date
thereunder to be automatically extended to as late as the Merger
Outside Date under certain circumstances and Paper Excellence could
further extend the Merger Outside Date to the last day of the
marketing period in the event the marketing period has not ended by
the Merger Outside Date, or the parties could mutually agree to
extend the Merger Outside Date beyond that date. Paper Excellence
will pay or cause to be paid the Change of Control Consent
Solicitation Payment for certain Notes, as set forth in the Offer
to Purchase, on or promptly following the closing of the Merger.
Holders who receive the Change of Control Consent Solicitation
Payment will not be entitled to any accrued or unpaid interest.
Other Information
The Offers and/or Domtar Consent Solicitations with respect to
one or both series of Notes may be terminated or withdrawn at any
time and for any reason, including if certain conditions described
in the Offer to Purchase are not satisfied, subject to applicable
law. Merger Sub is making the Offers and Domtar is making the
Domtar Consent Solicitations only by, and pursuant to, the terms of
the Offer to Purchase. None of Paper Excellence, Karta Halten,
Merger Sub, Domtar, the Dealer Managers and Solicitation Agents (as
defined below), the Trustee, the tender agent and information agent
nor any of their respective affiliates makes any recommendation as
to whether or not Holders of the Notes should (i) tender or refrain
from tendering their Notes with regard to the Offers or deliver or
refrain from delivering their Notes with regard to the Offer
Consent Solicitations or (ii) deliver or refrain from delivering
their Notes with regard to the Domtar Consent Solicitations.
This announcement does not constitute an offer to sell any
securities or the solicitation of an offer to purchase any
securities. The Offers and Domtar Consent Solicitations are being
made only pursuant to the Offer to Purchase. The Offers and Domtar
Consent Solicitations are not being made to Holders of Notes in any
jurisdiction in which the making or acceptance thereof would not be
in compliance with the securities, blue sky or other laws of such
jurisdiction. In any jurisdiction in which the securities laws or
blue sky laws require the Offers and Domtar Consent Solicitations
to be made by a licensed broker or dealer, the Offers and Domtar
Consent Solicitations will be deemed to be made on behalf of Merger
Sub or Domtar, as applicable, by one or more registered brokers or
dealers that are licensed under the laws of such jurisdiction.
Barclays Capital Inc., BMO Capital Markets Corp., Credit Suisse
Securities (USA) LLC, and Wells Fargo Securities, LLC are serving
as the Dealer Managers for each of the Offers and Solicitation
Agents for each of the Offers and Domtar Consent Solicitations (the
“Dealer Managers and Solicitation Agents”).
Requests for the Offer to Purchase and questions or request for
assistance in relation to the Offer and Domtar Consent
Solicitations may be directed to Global Bondholder Services
Corporation at (212) 430-3774 (for brokers and banks) or (866)
807-2200 (for all others) or email contact@gbsc-usa.com.
About Paper Excellence
Paper Excellence, a private limited company organized under the
laws of the Netherlands, is a diversified manufacturer of pulp and
paper, including printing and writing, packaging, and specialty
papers. Paper Excellence believes in the enduring value of
wood-based products in global markets and has built a large network
of mills and chipping plants to produce them competitively. Through
its distinct approach to operational excellence, Paper Excellence
delivers high-quality and cost-effective products to international
customers. Paper Excellence has grown through logical acquisitions
from a single mill to a group producing 2.8 million tonnes of paper
and pulp and employing more than 2,800 people over the past
decade.
Additional information about Paper Excellence is available at
https://paperexcellence.com/
About Domtar
Domtar is a leading provider of a wide variety of fiber-based
products including communication, specialty and packaging papers,
market pulp and airlaid nonwovens. With approximately 6,400
employees serving more than 50 countries around the world, Domtar
is driven by a commitment to turn sustainable wood fiber into
useful products that people rely on every day. Domtar’s annual
sales are approximately $3.7 billion, and its common stock is
traded on the New York and Toronto Stock Exchanges. Domtar’s
principal executive office is in Fort Mill, South Carolina. To
learn more, visit www.domtar.com.
Forward-Looking Statements
All statements made herein that are not historical facts should
be considered as forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results to differ materially. These
statements include, but are not limited to, statements regarding
the expected completion and timing of the proposed transaction
between Paper Excellence and Domtar, expected benefits and costs of
the proposed transaction, and management plans relating to the
proposed transaction, statements that address each company’s
expected future business and financial performance, statements
regarding the impact of natural disasters, health epidemics and
other outbreaks, especially the outbreak of COVID-19 since December
2019, which may have a material adverse effect on each company’s
business, results of operations and financial conditions, and other
statements identified by words such as “anticipate”, “believe”,
“expect”, “intend”, “aim”, “target”, “plan”, “continue”,
“estimate”, “project”, “may”, “will”, “should” and similar
expressions. These forward-looking statements should be considered
with the understanding that such statements involve a variety of
risks and uncertainties, known and unknown, and may be affected by
inaccurate assumptions. Consequently, no forward-looking statement
can be guaranteed and actual results may vary materially. Many
risks, contingencies and uncertainties could cause actual results
to differ materially from our forward-looking statements. Certain
of these risks are set forth in Domtar’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2020, as well as the
company’s other reports filed with the U.S. Securities and Exchange
Commission (the “SEC”).
Those risks, uncertainties and assumptions also include the
timing, receipt and terms and conditions of any required
governmental and regulatory approvals of the proposed transaction
between Paper Excellence and Domtar that could reduce anticipated
benefits or cause the parties to abandon the proposed transaction,
the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement, the
risk that the parties may not be able to satisfy the conditions to
the proposed transaction in a timely manner or at all, risks
related to disruption of management time from ongoing business
operations due to the proposed transaction, the risk that any
announcements relating to the proposed transaction could have
adverse effects on the market price of Domtar’s common stock, the
risk of any unexpected costs or expenses resulting from the
proposed transaction, the risk of any litigation relating to the
proposed transaction, the risk that the proposed transaction and
its announcement could have an adverse effect on the ability of
Paper Excellence or Domtar to retain customers and retain and hire
key personnel and maintain relationships with their suppliers,
customers and other business relationships and on their operating
results and businesses generally, the risk that the pending
proposed transaction could distract management of both entities and
they will incur substantial costs, the risk that the combined
company may not operate as effectively and efficiently as expected
and other important factors that could cause actual results to
differ materially from those projected. All such factors are
difficult to predict and are beyond each company’s control.
Additional factors that could cause results to differ materially
from those described above can be found in Domtar’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2020, as well
as in Domtar’s other reports filed with the SEC.
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version on businesswire.com: https://www.businesswire.com/news/home/20210809005541/en/
Nicholas Estrela Director Investor Relations Tel.:
514-848-5049
Domtar (NYSE:UFS)
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