Trinseo Strengthens Liquidity and Debt Management Strategies

Trinseo Enhances Financial Stability through Strategic Agreement

Trinseo PLC (NYSE: TSE), a leading provider of specialty material solutions, has announced a pivotal Transaction Support Agreement (TSA) aimed at enhancing its liquidity and extending its debt maturities. This agreement involves the collaboration of the company and several of its subsidiaries with key holders and lenders, referred to as the Supporting Creditors, who collectively manage a significant portion of Trinseo's outstanding senior notes and loans. This strategic move underscores Trinseo's commitment to streamline its financial structure and position itself for future growth.

Key Features of the Transaction Support Agreement

According to the provisions outlined in the TSA, Trinseo aims to initiate a series of financial maneuvers that will not only refinance imminent debt obligations but also bolster its operational liquidity. The highlights of the transaction include:

Refinancing Existing Notes

The plan involves redeeming and refinancing the existing $115 million 2025 Senior Notes. By issuing new $115 million 2028 Refinance Term Loans, the company will maintain similar terms to its prior credit facility established in September 2023.

New Credit Facility

In a bid to enhance its capital access, Trinseo is set to enter into a new $300 million revolving credit facility. This facility comes with a reset springing covenant and will mature in February 2028. The new agreement will immediately replace the current revolving credit line that is scheduled to mature in May 2026, providing the company with increased financial flexibility.

Exchange Offer for Senior Notes

Additionally, Trinseo intends to conduct an exchange offer where holders of its 2029 Senior Notes can exchange their existing notes for new 2029 Second Lien Senior Secured Notes at a discount. This initiative is expected to generate significant liquidity, allowing the company to capture at least $49 million from the Supporting Creditors.

Implications of the Transaction

Upon completing the transactions proposed under the TSA, Trinseo will enjoy a robust financial structure with no debt obligations maturing until 2028. This strategic clarity will empower the company to innovate and implement initiatives to solidify its leading position in the specialty materials sector.

Frank Bozich, President and CEO of Trinseo, commented on the importance of this agreement, stating, "This transaction significantly strengthens our ability to implement key strategic initiatives that support our ongoing transformation as a leading provider of specialty materials and sustainable solutions. The added financial flexibility gives us more runway to thoughtfully focus on optimizing our portfolio, invest in our leading circular technologies, and further solidify our financial position. Combined, these help us add value to our customers, our shareholders, and our colleagues around the world."

Supporting Creditors and Their Role

The Supporting Creditors involved in this transaction hold approximately 74% of the aggregate principal of the 5.125% Senior Notes due 2029, along with 89% of the revolving commitments under Trinseo's existing Credit Agreement, which was originally established in September 2017. Furthermore, they manage about 58% of the existing term loans under the company’s recent credit facility initiated in September 2023.

This vital backing demonstrates a strong commitment among key stakeholders to support Trinseo through its transitional phase, ensuring that the company has the necessary resources to navigate market challenges.

Next Steps for Trinseo

As part of the TSA, Trinseo will move forward with an exchange offer for all holders of its 5.125% Senior Notes due 2029. In exchange for the specified notes, participants will receive the new 7.625% Second Lien Senior Secured Notes due in 2029, further enhancing the company’s ability to manage its debt portfolio effectively. The culmination of these transactions is anticipated to take place in January 2025, positioning Trinseo for a solid future.

About Trinseo

Trinseo, listed on NYSE as TSE, is dedicated to providing innovative specialty material solutions that enable companies to turn imaginative concepts into reality while maintaining a strong commitment to sustainability. By leveraging high-level expertise, novel innovations, and top-notch materials, Trinseo delivers unparalleled value across diverse industries ranging from building and construction to consumer goods, medical, and mobility.

With a strong global workforce, Trinseo is constantly pushing the boundaries of creative possibilities, firmly establishing its reputation as a go-to partner for businesses across North America, Europe, and Asia Pacific. In 2023, the company reported impressive net sales of approximately $3.7 billion. For further information on Trinseo’s offerings and updates, potential clients and stakeholders are encouraged to visit www.trinseo.com and connect with the company on various social media platforms.

Frequently Asked Questions

What is the purpose of the Transaction Support Agreement?

The TSA aims to improve Trinseo's financial liquidity and extend debt maturities to enhance its operational flexibility.

What are the main components of the transaction?

The transaction involves refinancing existing notes, obtaining a new revolving credit facility, and initiating an exchange offer for existing senior notes.

What benefits does Trinseo expect from this agreement?

By implementing the TSA, Trinseo anticipates enhanced financial stability and increased capacity to invest in strategic initiatives and sustainable solutions.

When is the expected completion of the transactions?

The transactions are expected to close in January 2025.

How does Trinseo plan to communicate future updates?

Trinseo will keep stakeholders informed through its filings with the Securities and Exchange Commission and other official communications.

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