KRONOS WORLDWIDE, INC. ANNOUNCES ACQUISITION OF JOINT VENTURE INTEREST, AMENDMENT TO REVOLVING CREDIT FACILITY AND QUARTERLY DIVIDEND
DALLAS, TEXAS – July 17, 2024 – Kronos Worldwide, Inc. (NYSE: KRO) made the following announcements today:
Acquisition of Remaining Joint Venture Interest in LPC
Effective July 16, 2024, Kronos Worldwide, Inc. (“Kronos”) has acquired the 50% joint venture interest in Louisiana Pigment Company, L.P. (“LPC”) previously held by Venator Investments, Ltd. Prior to the acquisition, Kronos, through a wholly-owned subsidiary, held a 50% joint venture interest in LPC. Following the acquisition, LPC is an indirect, wholly-owned subsidiary of Kronos. Kronos acquired the 50% joint venture interest that it did not already own for an upfront cash payment of $185 million (subject to working capital adjustments) and a potential earn-out payment of up to $15 million based on Kronos’ aggregate consolidated net income before interest expense, income taxes and depreciation and amortization expense, or EBITDA, during a two-year period comprising calendar years 2025 and 2026.
“This acquisition is a one-of-a-kind opportunity for Kronos to add value to our customers and better serve the North American market,” said James M. Buch, Kronos Chief Executive Officer. “With full ownership of the LPC facility, Kronos will expand its product offerings and increase sales to new and existing customers while recognizing significant synergies including commercial, overhead and supply chain optimization. By implementing process innovations to increase capacity and improve efficiency using proven technology utilized at other Kronos facilities, we will be better positioned to serve our customers. LPC is the newest chloride-process TiO2 production facility operating in the Western world and we are excited to fully integrate LPC as part of Kronos and to invest in the future of this world class facility.”
Kronos previously operated LPC as a joint venture with Venator Materials or predecessors of Venator Materials since 1993. LPC is located near Lake Charles, LA with a current estimated annual production capacity of 156,000 metric tons. The acquisition was financed with cash on-hand and borrowings under Kronos’ global revolving credit facility. Kronos will report LPC as a wholly-owned subsidiary beginning with its third quarter Form 10-Q filing. Kronos may continue to evaluate and explore additional financing opportunities, subject to market conditions.
Amendment to the Revolving Credit Facility
In connection with its acquisition of the 50% joint venture interest and to support Kronos’ general liquidity needs, Kronos has also completed an amendment to its $225 million global revolving credit facility with Wells Fargo. Among other things, the amendment increases the maximum borrowing amount from $225 million to $300 million, extends the maturity date to 2029 and expands the facility to include LPC and LPC’s receivables and certain of its inventories in the borrowing base.
Third Quarter Dividend
Kronos’ board of directors has declared a quarterly dividend of five cents ($0.05) per share on its common stock, a decrease of fourteen cents ($0.14) per share as compared to the second quarter of 2024, payable on September 19, 2024, to stockholders of record at the close of business on September 6, 2024. Commenting on the dividend Mr. Buch said, “The reduced dividend rate will allow Kronos to focus on maintaining a strong balance sheet while continuing to evaluate strategic investment opportunities. In addition to strengthening liquidity and providing the flexibility to absorb increased debt service costs, working capital needs and capital improvements from the acquisition