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Solvay's Split: Extension of the Early Deadlines
Laurent Vergnault – Senior Analyst - European Chemicals and Paper & Packaging
Felicity Juckes – Analyst - European Chemicals and Paper & Packaging
EXECUTIVE SUMMARY
- On 23 August, Solvay announced the extension of the early deadlines of the consent solicitation process and the tender offer related to its 5.869% €500 mn hybrid bond from 22 August to 31 August and 5 September 2023 respectively. Other conditions of the liability management process as part of its split plan have remained unchanged.
- While the company has not increased the early participation fee (0.25%), the extension of the early deadline is a way to incentivise bondholders to take part in the consent solicitation process. Solvay needs to obtain at least 75% of the votes in favour of its proposals.
- The upside / downside on the 29s remains attractive following the recent repricing at c.€89. Holders of the 29s can potentially be repaid at par plus accrued interest (potential gain of at least 11 points), whereas one of the downside cases could see the bond repricing down to the low 80s (potential loss of up to 9 points).
FINANCIAL METRICS
Solvay (SOLBBB, Baa2, On Watch ▼/BBB▼/NR) announced on 23 August 2023 that it was extending the early deadlines of the consent process and the tender offer related to its 5.869% €500 mn hybrid bond that had been announced on 4 August 2023 as part of the company’s split plan.
The early instruction deadline of the consent solicitation process was extended from 22 August to 31 August 2023. Both the consent expiration deadline (31 August) and the early participation fee (0.25%) have remained unchanged. The consent meetings are still to be held on 5 September 2023. Solvay needs to obtain at least 75% of the votes in favour of its proposals. While the company has not increased the early participation fee, the extension of the early deadline is a way to incentivise bondholders to take part in the consent solicitation process.
The early tender deadline relating to the hybrid was extended from 22 August to 5 September 2023, with the expiration date remaining on 5 September 2023. Other conditions of the offer have remained unchanged (purchase price of 100% and early tender fee of 1.75%).
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