Tekni-Plex starts change-of-control offer for 10 7/8% notes

New York, June 27 - Tekni-Plex, Inc. said it has begun a change-of-control offer to buy its $150 million of 10 7/8% senior secured notes due 2012.

The Somerville, N.J., company will pay 101% of par plus accrued interest through Aug. 22.

Expiration for the offer is 5 p.m. ET on Aug. 19.

The offer is required following the recapitalization that closed on May 30 giving funds managed by Oaktree Capital Management LP and Avenue Capital Group control of more than 80% of the stock. Oaktree and Avenue received the equity in exchange for $246.081 of Tekni-Plex's 12¾% senior subordinated notes due 2010.

Discussions are currently under way with some stockholders over financing for the change-of-control offer. Tekni-Plex added that it is also anticipates seeking financing proposals from third parties, according to an 8-K filing with the Securities and Exchange Commission.

If financing cannot be obtained, Tekni-Plex will not be able to complete the offer.

Tekni-Plex also noted that on June 26 it put its chief financial officer and corporate controller on paid leave pending the outcome of an internal investigation into allegations that during fiscal years ending 2000 to 2006 the company may have incorrectly recorded inventory and accounts receivables in its Colorite Plastics Co. division.

Law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP will lead the investigation and direct forensic accounting consultants.

Tekni-Plex added that it has reported the developments to the United States Attorney's Office for the Southern District of New York and to the staff of the Northeast Regional Office of the Securities and Exchange Commission.

The board also expanded the scope of the investigation beyond Colorite to determine whether any improper accounting practices occurred in other divisions.

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