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Nonwovens/​Converting

PGI to be acquired by Blackstone

Polymer Group has announced it has entered into a definitive agreement to be acquired by an affiliate of Blackstone Capital Partners V L.P. The transaction is the result of the strategic review process initiated by PGI on April 7, 2010, and is expected to close prior to the end of the first quarter of 2011. PGI's chief executive officer, Veronica (Ronee) M. Hagen, stated, "The sale to Blackstone is the culmination of our strategic review process and we believe th

4th October 2010

Innovation in Textiles
 |  Charlotte, NC

Medical/Hygiene, Industrial, Packaging

PGI logoPolymer Group has announced it has entered into a definitive agreement to be acquired by an affiliate of Blackstone Capital Partners V L.P. The transaction is the result of the strategic review process initiated by PGI on April 7, 2010, and is expected to close prior to the end of the first quarter of 2011.

PGI's chief executive officer, Veronica (Ronee) M. Hagen, stated, "The sale to Blackstone is the culmination of our strategic review process and we believe that this transaction represents the best value alternative available to our stockholders.  Blackstone is committed to supporting our strategy of continued growth and investment in proprietary capabilities in our markets around the globe.

The leadership team and all of the employees of PGI are excited to begin the next chapter at PGI and to maintain our position as a global industry leader."

Chinh E. Chu, a Senior Managing Director of Blackstone, added, "Polymer Group is an attractive company because of its leading position in the nonwovens industry and its strong footprint in high growth developing markets. The company has a talented management team, which we believe has much to achieve with our support and financial resources."

As a result of the transaction, each holder of outstanding shares of PGI common stock will be entitled to receive up to $18.16 in cash for each share.  A portion of the aggregate purchase consideration totaling $64.5 million, or approximately $2.91 per share, will be deposited in an escrow account at closing and will be available to cover potential tax liabilities, costs and expenses related to the application of the "personal holding company" (PHC) rules of the Internal Revenue Code of 1986 in accordance with the definitive agreement. 

PGI's most recent financial statements reflected a liability for uncertain tax positions associated with the PHC issue of approximately $24.5 million. 

However, PGI has initiated discussions with the IRS to request a series of rulings on the PHC issue, and the actual tax liability related to the PHC issue, whether higher or lower than the amount reflected on PGI's financial statement, will be determined based on the results of such process. 

As a result of the reserve of the escrow funds, each holder of outstanding shares of PGI common stock will be entitled to receive approximately $15.25 at closing, and will be entitled to receive its ratable share of any additional amounts if and when released from the escrow fund in accordance with the definitive agreement.

The board of directors of PGI, acting on the recommendation of a special committee consisting of independent members of PGI's board of directors, has unanimously approved and declared advisable the definitive agreement and the transactions contemplated thereby. 

MatlinPatterson Global Opportunities Partners L.P. and certain of its affiliates, the holders of approximately 63.4% of the voting power of the outstanding shares of PGI common stock, executed a written consent adopting and approving the definitive agreement and the transaction shortly after the execution of the definitive agreement by the parties thereto.  No additional stockholder action is required.

The transaction will be financed through a combination of debt and equity commitments, and is not conditioned upon the consummation of such financing.  Completion of the transaction is subject to certain closing conditions, including, among other things, expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and receipt of consents required under certain foreign merger control laws.

Cravath, Swaine and Moore LLP and Blackstone Advisory Partners L.P. acted as legal and financial advisor, respectively to PGI.  Janney Montgomery Scott LLC acted as financial advisor to PGI's special committee and issued a fairness opinion with respect to the transaction. Richards, Layton & Finger, P.A. acted as legal advisor to PGI's special committee.  Simpson Thacher & Bartlett LLP acted as legal advisor to Blackstone.

 

The Blackstone Group is one of the world's leading investment and advisory firms. Its alternative asset management businesses include the management of private equity funds, real estate funds, hedge funds, credit-oriented funds, collateralized loan obligation vehicles (CLOs) and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com.

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