KP Tissue's Kruger arranges $165M note offering

Executive Summary

• Kruger Products Inc. (KPI) intends to offer $165 million in principal amount of senior unsecured notes via private placement, subject to market conditions.
• The net proceeds will be used to fully repay outstanding borrowings under Kruger Products SB Inc.'s (KPSB) senior credit facilities and for general corporate purposes.
• KPSB will become a restricted subsidiary under KPI’s senior credit facility and note indentures, a move KPI believes will immediately improve the credit profile of the restricted group.

Key Details

• Transaction Structure: Private placement of senior unsecured notes.
• Principal Amount: $165 million.
• Interest Terms: Interest accrues from the issue date and is payable semi-annually.
• Guarantees: The notes are guaranteed by each of KPI's existing and future restricted subsidiaries (consistent with KPI's syndicated credit agreement).
• Corporate Structure Change: Kruger Products SB Inc. (KPSB) will become a restricted subsidiary under KPI's senior credit facility, the indenture governing the new notes, and the indentures governing KPI's outstanding notes.
• Use of Proceeds: Repayment in full of borrowings outstanding under KPSB's senior credit facilities and for general corporate purposes.
• Regulatory/Third-Party Status: KPI has obtained all required third-party consents for the offering.

Notable Quotes

• "KPI believes [the structural change] will immediately improve the credit profile of the restricted group."