Algeco Announces Entry Into an Agreement to Commence an Exchange Offer and Consent Solicitation for Any and All of Its Outstanding PIK Loans

BALTIMORE, MD--(Marketwired - Feb 3, 2017) -  Algeco/Scotsman Holding S.à r.l. ("AS Holding" and together with its subsidiaries, the "Algeco Group"), the leading global business services provider of modular space, secure portable storage solutions and remote workforce accommodations, today announced that its subsidiary, Algeco Scotsman PIK S.A. ("AS PIKCo"), and certain of its affiliates (collectively with AS PIKCo, the "Offerors") have signed a restructuring support agreement (the "Restructuring Agreement") with holders (the "Ad Hoc Committee") of approximately 72% in aggregate principal amount of those certain payment-in-kind loans (the "PIK Loans") made to AS PIKCo pursuant to that certain PIK Loan Agreement, dated as of May 1, 2013 (the "PIK Loan Agreement"), among, inter alios, AS PIKCo, as borrower, AS Holding, as parent and guarantor, the several lenders and holders from time to time parties thereto (each a "PIK Lender" and, collectively, the "PIK Lenders"), and Wilmington Trust (London) Limited, as administrative agent. The Restructuring Agreement provides that the Offerors will launch an exchange offer and consent solicitation (the "Exchange Offer") for all outstanding PIK Loans in exchange for the consideration described below. The Offerors are seeking to acquire 100% of the PIK Loans in the Exchange Offer; if less than 100% (but more than 75%) of the PIK Loans are tendered, and more than half of the PIK Lenders participate in the Exchange Offer, the exchange will be implemented by means of an English scheme of arrangement or another alternative restructuring method (collectively with the Exchange Offer, the "Restructuring").

Highlights:

• Holders will be invited to exchange any and all outstanding interests in their PIK Loans for a pro rata portion (based on the principal amount of PIK Loans exchanged by such PIK Lender relative to the aggregate principal amount of all PIK Loans outstanding on the settlement date of the Exchange Offer (the "Settlement Date")) of the following consideration (the "Exchange Consideration"):
  • aggregate cash consideration of $95.0 million (the "Cash Consideration"); and
  • class B limited partnership interests (the "Class B Partnership Interests") to be issued on the Settlement Date by a newly formed partnership (the "Partnership") that will be a direct subsidiary of AS Holding and will hold almost all of the equity interests in Algeco Scotsman Global S.à r.l. ("AS Global").
• A successful Exchange Offer will:
  • serve as an initial step towards right-sizing the Algeco Group's capital structure;
  • relieve the Algeco Group of the substantial debt burden associated with the PIK Loans, which mature in May 2018; and
  • provide the PIK Lenders with an immediate return on their PIK Loans in the form of the Cash Consideration, and the ability to participate in the future economic upside of the Algeco Group through the Class B Partnership Interests and certain co-investment rights.
• As part of the Exchange Offer, an affiliate of TDR Capital LLP has committed to (i) procure that the Cash Consideration is paid on the Settlement Date and (ii) invest an additional $250 million into AS Global over a several month period in 2017 after the Settlement Date by contributing cash, indebtedness of the Algeco Group, or other investments as agreed with holders of a majority of the Class B Partnership Interests. This commitment may be terminated should AS Global commence certain insolvency proceedings. If the commitment terminates, a majority of Class B Partnership Interest holders may elect (i) to retain the Class B Partnership Interests; or (ii) for the Class B Limited Partners who, in the aggregate repay the Cash Consideration, to exercise a pro rata option to obtain the remaining interests in the Partnership.

To facilitate the implementation of the Restructuring, and as a condition to receiving the Exchange Consideration, PIK Lenders that decide to participate in the Exchange Offer will be required to: (i) tender 100% of the PIK Loans they hold for exchange in the Exchange Offer, (ii) consent to certain amendments to the PIK Loan Agreement, (iii) submit an instruction to implement the Restructuring through an English scheme of arrangement in the event the 100% participation threshold is not met in the Exchange Offer, (iv) agree to become a party to (a) a mutual release agreement whereby the PIK Lenders, certain members of the Algeco Group and TDR Capital LLP and its affiliates will release certain claims that such persons may have against each other, and (b) an assignment agreement to effectuate the exchange of PIK Loans for the Exchange Consideration; (v) agree to waive certain potential defaults under the PIK Loan Agreement, and (vi) agree to become a party to, or be bound as if a party to, the documents governing the Partnership and the Class B Partnership Interests. These agreements and consents are subject to, and will not become effective until, the Settlement Date (or the date on which the Restructuring is effectuated pursuant to an English scheme or alternative restructuring).

At the conclusion of the Restructuring, if successful, the PIK Loans will be cancelled.

Class B Partnership Interests

The Class B Partnership Interests delivered in the Exchange Offer will entitle the holders thereof to receive a minority portion of distributions by AS Global and its subsidiaries in the form of dividends or of the proceeds of certain exit events, based on a ratchet and subject to dilution by TDR Capital LLP and its affiliates and potentially other stakeholders of the Algeco Group in certain cases. The Class B Partnership Interests, in addition to other customary minority shareholder rights and obligations, will be subject to customary drag rights and a right of first refusal in favor of AS Holding on transfers, and will benefit from certain debt and equity co-investment rights together with debt purchase rights in certain scenarios as well as pre-emption and tag-along rights. The holders of a majority of the Class B Partnership Interests will be entitled to appoint an observer to the main operating board of the Algeco Group.

Early Tender Fee

PIK Lenders that validly tender their PIK Loans and deliver consents prior to 5:00 p.m., London time, on the date that is ten business days after the launch of the Exchange Offer and that do not validly withdraw such PIK Loans prior to the expiration of the Exchange Offer, will receive an early tender fee, payable on settlement, of a cash amount equal to 2.00% of the principal amount of such PIK Lender's tendered PIK Loans (the "Early Tender Fee"). The aggregate amount of Cash Consideration will be reduced by an amount equal to 1.75% of the aggregate principal amount of PIK Loans tendered by PIK Lenders receiving the Early Tender Fee.

Conditions Precedent

Consummation of the Exchange Offer is subject to a number of conditions, including the valid tender of 100% in aggregate principal amount of the PIK Loans prior to the expiration of the Exchange Offer, and the absence of certain adverse legal and other developments.

Eligibility to Participate
The Exchange Offer is being made, and the new securities are being offered and issued, only (a) in the United States, to holders of the PIK Loans who are "qualified institutional buyers" (as that term is defined in Rule 144A under the U.S. Securities Act) and institutional "accredited investors" (as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the U.S. Securities Act), in each case, transacting in a private transaction in reliance upon an exemption from the registration requirements of the U.S. Securities Act, and (b) outside of the United States, to holders that are not "U.S. persons" (as that term is defined in Rule 902 under the U.S. Securities Act) and that are also "non-U.S. qualified offerees" (as defined below) in reliance on Regulation S under the U.S. Securities Act. We refer to the holders of PIK Loans who have certified to the Company that they are eligible to participate in the Offering Memorandum pursuant to at least one of the foregoing conditions as "eligible holders." Only eligible holders are authorized to participate in the Exchange Offer. "Non-U.S. qualified offerees" means (i) any legal entity in a Relevant Member State (as defined in the Offering Memorandum) which is a qualified investor as defined in the Prospectus Directive (as defined in the Offering Memorandum); (ii) legal entities in any Relevant Member State fewer in number than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the existing trustee; (iii) any other legal entity in a Relevant Member State that in any other circumstances falls within Article 3(2) of the Prospectus Directive; and (iv) any entity outside the United States and the European Economic Area to whom the offers related to the new securities may be made in compliance with any applicable laws and regulations.

If any holder of the PIK Loans does not meet the eligibility requirements to qualify as a PIK Lender eligible to participate in the Exchange Offer, it should contact the Offerors to determine whether it can participate in the Consent Solicitation.

Timing

The Exchange Offer will expire at 5:00 p.m., London time, on the date that is fifteen business days after the Exchange Offer is launched, unless extended or earlier terminated by us.

The Settlement Date will be the date on which the Participating PIK Lenders receive the PIK Exchange Consideration in full satisfaction of any amounts outstanding under the PIK Loans, which date will be (i) promptly following the expiration of the Exchange Offer, or (ii) upon the successful completion of the English scheme of arrangement (or an alternative restructuring); provided that, in each case, all conditions to the occurrence of the Settlement Date have been satisfied or waived.

The Offering Memorandum will be distributed to PIK Lenders, and made available to PIK Lenders, through the exchange and information agent, who can also answer any queries about the tender mechanics: Lucid Issuer Services Limited, Tankerton Works, 12 Argyle Walk, London WC1H 8HA United Kingdom; Attn: Sunjeeve Patel / David Shilson; Telephone: +44 (0) 20 7704 0880; Facsimile: +44 (0)20 3004 1590; Email: algecoscotsman@lucid-is.com.

Additional Terms

This press release is a summary of the Offering Memorandum only. It highlights selected information contained in the Offering Memorandum and does not contain all of the information that you should consider before making a determination in respect of the Exchange Offer. The Offering Memorandum sets forth full details of the transactions summarized in this press release and holders of the PIK Loans are urged to read the Offering Memorandum in its entirety.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities. In particular, this announcement is not an offer of securities for sale in the United States. The new securities to be issued in connection with the Exchange Offer have not been approved or recommended by any U.S. federal, state or foreign jurisdiction or regulatory authority. Furthermore, those authorities have not been requested to confirm the accuracy or adequacy of the Offering Memorandum. Any representation to the contrary is a criminal offence. The new securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state or foreign securities laws. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act. Accordingly, the new securities will be subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the U.S. Securities Act and other applicable securities laws, pursuant to registration or exemption therefrom. Eligible holders of the PIK Loans should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time.

The Offering Memorandum is only addressed to and only directed at persons in member states of the European Economic Area who are Qualified Investors (within the meaning of the Prospectus Directive). In addition, in the United Kingdom, the Offering Memorandum is being distributed only to and is directed only at Qualified Investors: (1) who are persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"); or (2) who are high net worth entities falling within Article 49 of the Order, and other persons to whom it may otherwise lawfully be communicated under the Order (all such persons together referred to as "relevant persons"). Any investment or investment activity to which the Offering Memorandum relates is available only to: (i) in the United Kingdom, relevant persons and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified Investors, and will be engaged in only with such persons. In the case of any securities being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the securities acquired by it in such offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, any person in circumstances which may give rise to an offer of such securities to the public other than their offer or resale in a relevant member state to Qualified Investors as so defined. Neither the new securities nor the Offering Memorandum has been approved by an authorized person in the United Kingdom. The securities may not be offered or sold other than to persons whose ordinary activities involve these persons in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the securities would otherwise constitute a contravention of Section 19 of the Financial Services and Markets Act 2000 (the "FSMA") by us. In addition, no person may communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the securities other than in circumstances in which Section 21(1) of the FSMA does not apply to us.

Holders of the PIK Loans must make their own decision with regard to participating in the Exchange Offer. Holders of the PIK Loans are urged to consult with their own legal and financial advisors as to the appropriateness of participating in the Exchange Offer based on their individual circumstances.

Cautionary Notice Regarding Forward Looking Statements

This press release includes forward-looking statements within the meaning of the securities laws of certain applicable jurisdictions, which reflect the Algeco Group's expectations regarding its future operational and financial performance. By their nature, the forward-looking events described in this press release may not be accurate or occur at all. Accordingly, you should not place undue reliance on these forward-looking statements, which speak only as of the date on which the statements were made. Although any forward-looking statements contained in this press release reflect management's current beliefs based upon information currently available to management and upon assumptions which management believes to be reasonable, actual results may differ materially from those stated in or implied by these forward-looking statements. A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in any forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on any forward-looking statements. Except as required by law, we undertakes no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Algeco Scotsman

Algeco Scotsman is the leading global business services provider focused on modular space, secure portable storage solutions, and remote workforce accommodation management. Headquartered in Baltimore, Algeco Scotsman has operations in 25 countries with a modular fleet of approximately 275,000 units. The company operates as Williams Scotsman and Target Logistics in North America, Algeco in Europe, Elliott in the United Kingdom, Ausco in Australia, Portacom in New Zealand, and Algeco Chengdong in China.