Strengthening: Trinseo files for Chapter 11 bankruptcy protection process; Wacker reduces stake in Siltronic

To strengthen its financial foundation, specialty materials solutions producer Trinseo PLC has filed for voluntary Chapter 11 bankruptcy in the US Bankruptcy Court for Texas. According to the pre-packaged plan described in the previously announced Restructuring Support Agreement (RSA), Trinseo aims to

reduce its debt by approximately US$2 billion and reduce its annual interest expense by approximately US$140 million.

Trinseo, which produces acrylonitrile butadiene styrene (ABS), polymethyl methacrylate (PMMA) and styrene butadiene latex, expects to move through this process on an expedited basis, subject to customary regulatory approvals, and emerge with a stronger financial foundation and enhanced flexibility to drive innovation and support growth, it added.

The company says it is continuing to operate as usual. No concessions from employees, customers, vendors or suppliers are part of the RSA.

While the restructuring is expected to benefit the entire Trinseo enterprise, the chapter 11 cases are limited to certain of Trinseo’s US affiliates, and certain non-operating affiliates outside the US No other Trinseo affiliates are included in the chapter 11 cases.

The restructuring will be funded by a fully committed US$158 million debtor-in-possession financing, as well as exit financing. Pursuant to the terms of the previously announced RSA, existing lenders are expected to receive nearly 100% of the equity of the reorganised company. All holders of general unsecured claims, including trade creditors, vendors and suppliers, are expected to be unimpaired.

The company also announced a new US$150 million non-recourse revolving credit facility collateralised by company trade receivables, which replaces its existing financing facility of the same size.

As part of the chapter 11 process, the company has filed customary motions to allow Trinseo to maintain its normal operations, including payment to vendors and suppliers for goods and services provided on or after the filing date under normal terms, ensuring they are unimpaired in the process.

Meanwhile, also in a bid to strengthen its financial position, German firm Wacker Chemie says it has successfully placed 2.1 million shares of Siltronic AG at a price of EUR89.35 per Siltronic share. The placement corresponds to 7% of Siltronic's capital stock and reduces Wacker's shareholding in Siltronic to approximately 24%.

The gross proceeds for Wacker from the placement amount to approximately EUR188 million. The shares were sold as part of a private placement in the form of an accelerated bookbuilding process to qualified investors and to international institutional investors only.

"We are very satisfied with the development of Siltronic AG and remain supportive of the company's strategy,” says Wacker CEO Christian Hartel. "With proceeds from this transaction, we are strengthening our financial position and creating additional scope to invest in future growth. At the same time, Wacker remains the largest shareholder of Siltronic,” Hartel continues.

The company undertook vis-à-vis the bank acting for it on the transaction not to dispose of any further Siltronic shares in the 90 days following launch of the placement, subject to certain exemptions and waiver. Rothschild & Co acted as financial advisor to Wacker.

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