Karta Halten extends, amends, increases tender offer for Domtar notes

Chicago, Aug. 23 – Karta Halten BV announced that its wholly owned subsidiary, Pearl Merger Sub Inc., an affiliate of Paper Excellence BV, has extended the early deadline in the cash tender offer for any and all of Domtar Corp.’s outstanding $250 million 6¼% senior notes due 2024 (Cusip: 2573359AJ3) and $250 million 6¾% notes due 2042 (Cusip: 257559AK0), according to a press release.

The early deadline is now 5 p.m. ET on Aug. 27. The withdrawal deadline has also been extended to 5 p.m. ET on Aug. 27. Previously, the early deadline was 5 p.m. ET on Aug. 20.

The final deadline has been pushed back to midnight ET on Oct. 1. The deadline had been set for midnight ET on Sept. 3.

The company also increased the total tender offer to $1,020 per $1,000 note. For each $1,000 note from either series, noteholders were originally offered a total tender consideration of $1,012.50, inclusive of a $50 early tender payment. The early tender payment has been increased to $57.50. The tender offer consideration after the early deadline remains $962.50 per note.

As of the original early deadline, noteholders had tendered $57.5 million of the 2024 notes and $43.6 million of the 2044 notes.

Consent solicitation

The original announcement also included a consent solicitation for the notes.

The offers and consent solicitations are being made in connection with the pending acquisition of Domtar by the Paper Excellence group.

Tendering noteholders were being asked to give consents to eliminate substantially all of the restrictive covenants, to eliminate certain events of default, to amend the definition of change of control to exclude the merger and related transactions and to amend the issuer reporting covenant to remove the requirement to file bondholder reports with the Securities and Exchange Commission and to make other changes appropriate for a private company.

The consent solicitations have been amended to exclude the offer exit proposed amendments (other than the reporting covenant amendment and the amendment to the definition of “change of control” under the indenture to exclude the Paper Excellence transaction) from the proposed amendments to the indenture that are being solicited from holders of the notes of each series in connection with the offer consent solicitations. This means that only offer exit consents to the reporting covenant amendment to the indenture and offer change-of-control consents to the change-of-control proposed amendments to the indenture are being solicited from holders of each series of notes in connection with the offer consent solicitations.

As a result, the proposed amendments to the indenture do not include an amendment to eliminate substantially all of the restrictive covenants in the indenture or an amendment to eliminate certain of the events which may lead to an “event of default” in the indenture. Second, it was announced that the company now expects to accept notes of each series validly tendered (and not validly withdrawn) in the offers 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 offer change-of-control consents, and (b) the change-of-control supplemental indenture has been executed with respect to such series of notes. This means that if solicitation change-of-control consents have been submitted in respect of a majority of the aggregate principal amount of the outstanding notes of a series pursuant to the Domtar consent solicitations and, as a result, a change-of-control supplemental indenture has been executed with respect to such series of notes, then the issuer intends to accept for purchase any notes of such series validly tendered (and not validly withdrawn) in the offers.

Noteholders can consent without tending their notes. Consenting noteholders who do not tender their notes for the consent solicitation relating to the change of control will receive $10.00 per $1,000 note. The consent fee has been increased from $2.50 per $1,000 note.

The consent deadline has been moved, also now 5 p.m. ET on Aug. 27.

As of the original early deadline, consents representing $15.2 million of the 2042 notes and $5.8 million of the 2044 notes had been delivered.

Details

Barclays, BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC and Wells Fargo Securities, LLC are the dealer managers for each of the offers and solicitation agents for the consent solicitation.

Global Bondholder Services Corp. is the information agent (212 430-3774, 866 807-2200, contact@gbsc-usa.com).

The offer is conditioned upon the closing of the merger. Payment will be made concurrently with or prior to the closing of the merger. This is expected to take place in the fourth quarter of 2021, but the outside date is Feb. 10, 2022.

Domtar makes paper and other fiber-based products and is based in Fort Mill, S.C. Paper Excellence is a pulp and paper manufacturer with headquarters in Richmond, B.C.

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