Press Room
June 15, 2007
German Version Cognis completes recent refinancing by replacing remaining PIK notes
- Remaining PIK notes redeemed and refinanced by a new PIK loan of 362 million euros
- Further reduction of financing costs of about 14 million euros per year
- Total reduction of financing costs of about 74 million euros per year
- Total refinancing volume (including new PIK loan) approximately 2 billion euros
Cognis has continued to optimize its financial structure. With this latest step the global specialty chemicals company redeemed its outstanding PIK (Pay In Kind) notes worth approximately 348 million euros (including accrued interests), and replaced them with a new PIK loan worth 362 million euros (covering also fees and expenses connected with the transaction), repayable in 2015. By this transaction, Cognis’ financing costs will be reduced further by 14 million euros per year from 2008 on. The coupon on the old PIK notes was 9 percent above Euribor, and this would have risen to 11 percent above Euribor in 2008. In contrast, the interest rate on the new PIK loan is 7 percent above Euribor, with a possible increase in 2010, if Cognis exceeds a certain leverage ratio at that time.
This transaction follows the refinancing of Cognis’ senior bank financing and second-lien debt and the earlier partial repayment of the PIK notes. In May 2007, Cognis issued notes and borrowed loans with a total value equivalent to 1.65 billion euros. The total value of both stages of the refinancing operation is approximately 2 billion euros. As a result, Cognis has achieved a considerable reduction in financing costs and improved its liquidity position going forward. The total interest saving will be about 74 million euros per year. Due to the fact that there is no scheduled amortization on the new financing instruments, the company expects to see a net cash gain of approximately 100 million euros per year.
Comments Cognis CFO Klaus Edelmann: “Just like the first part of our refinancing, the redemption and replacement of the remaining PIK notes went extremely well. The successful conclusion of the refinancing process is a cogent proof of Cognis’ status as a reliable and trustworthy partner in the financial markets.”
The PIK facility was arranged by Goldman Sachs and Deutsche Bank. The 9.5-percent senior notes that mature in 2014 are unaffected by the current refinancing operation. Cognis’ current shareholders will not receive any payment in connection with this transaction.
About Cognis
Cognis is a worldwide supplier of innovative specialty chemicals and nutritional ingredients, with a particular focus on the areas of wellness and sustainability. The company employs about 8,000 people, and it operates production sites and service centers in 30 countries. Cognis has dedicated its activities to a high level of sustainability and delivers natural source raw materials and ingredients for food, nutrition and healthcare markets, and the cosmetics, detergents and cleaners industries. Another main focus is on products for a number of other industries, such as coatings and inks, lubricants, textiles, as well as agriculture and mining. The company holds a 50-percent stake in the joint venture Cognis Oleochemicals, one of the world’s leading manufacturers of oleochemicals. Cognis is owned by private equity funds advised by Permira, GS Capital Partners, and SV Life Sciences. In 2006, Cognis recorded sales of 3.37 billion euros and an Adjusted EBITDA (operating result) of 394 million euros.
Cautionary Statement
The statements we make in this release may include statements about our plans and future prospects for the company and the industry that are forward-looking statements. Our actual performance may differ materially from performance suggested by those statements. We urge you to review the cautionary statements in our financial statements for information on factors that could cause those differences.
Contact
Susanne Sengel, Senior Communications Manager
Phone: +49-2173-4995-220
E-mail: susanne.sengel@cognis.com
Internet: www.cognis.com