Grupo Kaltex, S.A. de C.V. Announces Expiration and Results of its Exchange Offer for up to US$118 Million Aggregate Principal Amount of its Outstanding 8.875% Senior Notes due 2022

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Dec 13, 2022, 08:17 ET

MEXICO CITY, Dec. 13, 2022 /PRNewswire/ -- Grupo Kaltex S.A. de C.V. ("Kaltex", the "Company" or "we") today announces the expiration and the results of its previously announced exchange offer (the "Exchange Offer") for up to US$118 million of its outstanding 8.875% Senior Notes due 2022 (CUSIP Nos. 40054FAA5 / P4953VAJ2; ISIN Nos. US40054FAA57 / USP4953VAJ28) (the "Existing Notes"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Company's Exchange Offer Memorandum dated November 14, 2022 in respect of the Exchange Offer (the "Exchange Offer Memorandum").

According to the information received from D.F. King & Co., Inc., the Information and Exchange Agent for the Exchange Offer, as of 11:59 p.m., New York City time on December 12, 2022, US$126,056,000 in aggregate principal amount of the Existing Notes had been validly tendered and not withdrawn.

Pursuant to the terms of the Exchange Offer, subject to satisfaction of the conditions of the Exchange Offer and upon acceptance by the Company of the Existing Notes for exchange for New Notes (as defined below) on the Settlement Date (as defined below), Holders who validly tendered Existing Notes that are accepted for exchange will receive, for each US$1,000 in principal amount of Existing Notes, on a date promptly following the Expiration Date (the "Settlement Date") (i) US$1,000 in principal amount of our newly issued 14.500% Senior Notes due 2025 guaranteed by certain of our subsidiaries (the "New Notes"), (ii) a cash payment in U.S. Dollars equal to the amount of interest accrued on the Existing Notes at the interest rate of 8.875% from, and including, October 11, 2022 to, but excluding, the Settlement Date (the "Accrued Interest Payment") (which will be calculated in the same manner as the accrued interest payable on the Existing Notes pursuant to the Existing Notes Indenture), and (iii) a cash payment in an amount equal to US$15.00 (the "Exchange Premium"). The Company currently expects that the Settlement Date will occur within six business days following the Expiration Date, on December 20, 2022 (the "Settlement Date").

The Exchange Offer is subject to certain conditions, which Kaltex may waive in full or in part in its sole discretion, but subject to the terms of the Transaction Support Agreement, including (i) the condition that at least US$98,000,000 in aggregate outstanding principal amount of the Existing Notes is validly tendered and not validly withdrawn at or prior to the Expiration Date (the "Minimum Tender Condition") and (ii) the availability of cash on hand, borrowings under the Concurrent Loan Facility and proceeds from the issue, if any, of New Notes for cash to the New Money Notes Funding Parties in an amount sufficient to fund the Accrued Interest Payment, the Exchange Premium, the payment of estimated fees and expenses relating to the Exchange Offer, the Concurrent Loan Facility and the Funding Commitment Letter, and the repayment in full on the Settlement Date of any Existing Notes that are not exchanged in the Exchange Offer, including any Existing Notes validly tendered and not accepted for exchange as a result of proration (the "Financing Condition"). The Minimum Tender Condition has been satisfied as of the Expiration Date and the Company currently expects that the Financing Condition will be satisfied on or before the Settlement Date.

Pursuant to the terms of the Exchange Offer, in the event that the aggregate principal amount of Existing Notes validly tendered (and not validly withdrawn) prior to the Expiration Date in the Exchange Offer exceeded US$118 million, then tenders of Existing Notes shall be accepted for exchange by the Company on a prorated basis, with the prorated aggregate principal amount of each Eligible Holder's validly tendered Existing Notes accepted for exchange rounded down to the nearest US$1,000. Accordingly, tenders of Existing Notes accepted for exchange by the Company will be accepted on a prorated basis. If proration causes the Company to return less than the minimum denomination to any Eligible Holder, then the Company will, at its option, either accept all or reject all of the tendered amount of such Eligible Holder's Existing Notes such that either no Existing Notes from such Eligible Holder are accepted for exchange or at least the minimum denomination of such Existing Notes is accepted for exchange.

As previously disclosed, the issuance of the New Notes pursuant to the Exchange Offer is conditioned upon, and is expected to occur simultaneously with, the redemption in full of any Existing Notes that are not exchanged in the Exchange Offer. Therefore, upon consummation of the Exchange Offer, all Existing Notes shall either be (i) exchanged for New Notes pursuant to the Exchange Offer (and immediately cancelled by the Company) or (ii) redeemed in full (including accrued and unpaid interest on such Existing Notes from, and including, October 11, 2022 to, but excluding, the Settlement Date) by the Company on the Settlement Date and all other obligations under the Existing Notes Indenture shall be discharged. This announcement shall not constitute a notice of redemption under the Existing Notes Indenture, and no assurances can be given that the Exchange Offer (including the repayment of all or any portion of the Existing Notes) will be consummated in its terms or at all. See "Risk Factors—Risks Relating to the Exchange Offer" in the Exchange Offer Memorandum.

The Company has retained BCP Securities, Inc. to serve as the dealer manager for the Exchange Offer. Questions regarding the Exchange Offer may be directed to BCP Securities, Inc at Attn: James Harper, (203) 629-2186, Email: [email protected].

None of the Company, the Dealer Manager, The Bank of New York Mellon as trustee under the Existing Notes Indenture or the Information and Exchange Agent made any recommendation as to whether or not Eligible Holders of the Existing Notes should tender Existing Notes in the Exchange Offer.

This announcement is not an offer to sell or a solicitation of an offer to buy any security. The Exchange Offer is not being made to persons in any jurisdiction in which it is unlawful to make such offer, or to tender Existing Notes for exchange. Each Holder of Existing Notes must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases, offers, sells or exchanges the Existing Notes and the New Notes and must obtain any consent, approval or permission required by any such jurisdiction for such purchase, offer, sale or exchange under the laws and regulations in force in any jurisdiction to which such Holder is subject or in which it makes such purchases, offers, sales or exchanges, and we will not have any responsibility therefor.

The New Notes offered pursuant to the Exchange Offer Memorandum have not been and will not be registered under the Securities Act, or any state securities laws. The New Notes are being offered for exchange only (1) in the United States, to holders of Existing Notes who are "qualified institutional buyers" as defined in Rule 144A under the Securities Act, in a private transaction in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof and (2) outside the United States, to holders of Existing Notes other than "U.S. persons" (as defined in Rule 902 under the Securities Act) who are not acquiring New Notes for the account or benefit of a U.S. person and who are "non-U.S. qualified offerees" (as defined under "Transfer Restrictions of New Notes" in the Exchange Offer Memorandum), in offshore transactions in compliance with Regulation S under the Securities Act.

THE NEW NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE NATIONAL SECURITIES REGISTRY MAINTAINED BY THE COMISIÓN NACIONAL BANCARIA Y DE VALORES (NATIONAL BANKING AND SECURITIES COMMISSION OF MEXICO, OR THE "CNBV") AND THEREFORE THE NEW NOTES MAY NOT BE OFFERED OR SOLD PUBLICLY IN MEXICO ABSENT AN AVAILABLE EXEMPTION UNDER THE LEY DEL MERCADO DE VALORES (MEXICAN SECURITIES MARKET LAW). THE EXCHANGE OFFER IS NOT BEING MADE IN MEXICO. AS REQUIRED UNDER THE LEY DEL MERCADO DE VALORES (MEXICAN SECURITIES MARKET LAW), KALTEX WILL GIVE NOTICE TO THE CNBV OF THE EXCHANGE OFFER FOR INFORMATIONAL PURPOSES ONLY. THE DELIVERY TO, AND RECEIPT BY, THE CNBV OF SUCH NOTICE DOES NOT CERTIFY THE INVESTMENT QUALITY OF THE NEW NOTES OR OUR SOLVENCY. THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT AND THE EXCHANGE OFFER MEMORANDUM IS OUR SOLE RESPONSIBILITY. THIS ANNOUNCEMENT AND THE EXCHANGE OFFER MEMORANDUM HAVE NOT BEEN FILED WITH THE CNBV, AND THE CNBV HAS NOT REVIEWED OR AUTHORIZED THE CONTENT OF THIS ANNOUNCEMENT OR THE EXCHANGE OFFER MEMORANDUM.

Forward-Looking Statements

This announcement contains forward-looking statements. Forward-looking statements are information of a non-historical nature or which relate to future events and are subject to risks and uncertainties. No assurance can be given that the Financing Condition will be satisfied or that the Exchange Offer or the other transactions described herein will be consummated. Kaltex undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason.

About Kaltex

We believe we are one of the largest textile companies in Mexico and in the Americas, measured by volume. We also estimate that we are among the largest textile companies in the world measured by volume. To our knowledge, we are one of the few vertically integrated textile companies in the Americas and in the world. We are engaged in the design, manufacturing and commercialization of yarn, fabric, apparel and home products. We believe we are currently one of the top producers of denim in the world and one of the top purchasers of cotton in the Americas.

Our business commenced operations in 1925 by six brothers of the Kalach family, who began selling and buying textile products in Mexico. After more than 97 years, the Company continues to be controlled and operated by members of the Kalach family.

SOURCE Grupo Kaltex, S.A. de C.V.