Trinseo's Strategic Debt Refinancing: Enhancing Financial Flexibility

Trinseo PLC (NYSE: TSE), a leading specialty material solutions provider, has launched a previously announced exchange offer and consent solicitation, aiming to refinance its near-term debt maturities and increase liquidity. This strategic move, supported by a significant majority of its creditors, is expected to extend the company's nearest debt maturity to 2028 and capture a discount from an exchange of its 2029 senior notes.

The exchange offer involves the exchange of any and all of the outstanding 5.125% Senior Notes due 2029 for new 7.625% Second Lien Senior Secured Notes due 2029. For each $1,000 principal amount of Existing Notes validly tendered, holders will be eligible to receive $850 principal amount of New Notes. The New Notes will have a coupon of 7.625% and will mature on May 3, 2029.

Simultaneously, the company is conducting a solicitation of consents to amend the indenture governing the Existing Notes. The proposed amendments will eliminate or waive substantially all of the restrictive covenants contained in the indenture, eliminate certain events of default, release existing guarantees, and modify or eliminate certain other provisions. The supplemental indenture is expected to be executed promptly after the deadline for withdrawal.



The exchange offer and consent solicitation are subject to certain conditions, including the participation of more than 50% of the aggregate principal amount of the Existing Notes. Trinseo has secured the support of holders of approximately 74% of the aggregate principal amount outstanding of the Existing Notes, who have agreed to tender their Existing Notes in exchange for New Notes and deliver their consents for the Proposed Amendments.

The discount rate offered for the exchange of 5.125% Senior Notes due 2029 for new 7.625% Second Lien Senior Secured Notes due 2029 is 15%. This discount rate is calculated as the difference between the new notes' coupon rate and the existing notes' coupon rate, divided by the existing notes' coupon rate.



The elimination or waiver of restrictive covenants in the indenture governing the Existing Notes enhances Trinseo's financial flexibility. This move allows the company to better manage its debt obligations and cash flow, potentially enabling it to invest in strategic initiatives, optimize its portfolio, and solidify its financial position. By eliminating or waiving these covenants, Trinseo gains more freedom to make decisions that support its ongoing transformation as a leading provider of specialty materials and sustainable solutions.

The exchange of 5.125% Senior Notes for 7.625% Second Lien Senior Secured Notes increases Trinseo's interest expenses, as the new notes have a higher coupon rate. However, the company expects to capture at least $49 million of discount from Supporting Creditors, which should offset some of the additional interest expenses. Additionally, the exchange extends the company's nearest debt maturity to 2028, providing more financial flexibility and reducing the need for frequent debt refinancing.

The elimination or modification of restrictive covenants and events of default in the indenture governing the Existing Notes significantly enhances Trinseo's operational flexibility and strategic decision-making capabilities. By eliminating or waiving these covenants, Trinseo gains the freedom to pursue new opportunities, invest in growth initiatives, and optimize its capital structure without the constraints imposed by the original indenture. This increased flexibility allows Trinseo to better adapt to market conditions, respond to competitive pressures, and ultimately drive long-term value for shareholders.

In conclusion, Trinseo's strategic debt refinancing through the exchange offer and consent solicitation is a crucial step in enhancing the company's financial flexibility and solidifying its long-term prospects. By extending its debt maturities, capturing a discount, and eliminating restrictive covenants, Trinseo is well-positioned to continue its transformation as a leading provider of specialty materials and sustainable solutions.