Kronos Worldwide Announces €75 Million Private Offering of 9.50% Senior Secured Notes Due 2029

Kronos Worldwide is raising €75 million through a private offering of 9.50% Senior Secured Notes due 2029. The notes will have the same terms as existing notes, except for date of issuance and issue price. Proceeds will be used to pay amounts due under 3.75% Senior Secured Notes due September 15, 2025 at maturity, or to repay amounts drawn under its global revolving credit facility. Remaining proceeds will be used for general corporate purposes.

Kronos Worldwide (NYSE: KRO) has announced a private offering of €75 million in additional 9.50% Senior Secured Notes due 2029 through its subsidiary, Kronos International, Inc. This offering supplements the existing €351,174,000 in notes issued in February and July 2024 [1].

The new notes will maintain identical terms with the existing ones, including a 9.50% interest rate, but will be issued at a different date and price. The proceeds from this offering will primarily be used to pay amounts due under the company's 3.75% Senior Secured Notes due September 15, 2025, or to repay any draws from its Wells Fargo credit facility used for the same purpose [1].

This move by Kronos Worldwide is a refinancing operation rather than a new capital raising for growth initiatives. The significantly higher interest rate on the new notes (9.50% versus 3.75% on the maturing debt) reflects the substantially higher interest rate environment compared to when the original notes were issued. This increased borrowing cost will negatively impact interest expense and cash flow going forward [1].

The notes will carry the same security package as the existing notes, indicating reasonable market acceptance despite the high-yield nature of the offering. The transaction structure as an add-on to existing notes rather than a new standalone issuance suggests efficiency in execution and potential for slightly better pricing than a new issue would command. Maintaining the company's existing debt maturity schedule without creating a new maturity date demonstrates prudent liability management [1].

The completion of the offering depends on several factors, including market conditions. Any remaining net proceeds after paying fees and expenses will be used for the company's general corporate purposes [1].

References:
[1] https://www.stocktitan.net/news/KRO/kronos-worldwide-inc-announces-private-offering-of-an-additional-75-dq52aoqhsn4g.html