Tredegar Corporation (NYSE:TG, also “Tredegar”) today reported that its approximate 18% ownership interest in kaleo, Inc (“kaléo”) is expected to be sold pursuant to an agreement dated November 28, 2021, whereby Marathon Asset Management will be providing kaléo shareholders a full liquidity event opportunity (the “Transaction”). Closing of the Transaction, which is contingent upon the satisfaction of customary conditions, is anticipated to occur by December 31, 2021.
Tredegar owns 3,382,473 shares of kaléo. Closing of the Transaction as of December 31, 2021, is projected to result in cash proceeds for Tredegar of $45.8 million ($13.33 per kaléo share plus approximately $0.7 million in accrued preferred stock dividends). Tredegar has the potential to receive additional cash consideration within approximately six months of closing of up to $1.4 million ($0.41 per kaléo share) in certain post-closing adjustments. Tredegar also has the opportunity to receive cash consideration of up to $5.5 million ($1.63 per kaléo share) in 2023 and $8.3 million ($2.44 per kaléo share) in 2024, contingent upon kaléo achieving certain net revenue targets in 2022 and 2023, respectively. There can be no assurance as to how much Tredegar will actually receive, if any, in post-closing payments, including with respect to the amounts based on kaléo’s net revenue results in future years.
The estimated fair value of Tredegar’s investment in kaléo as of September 30, 2021, as reported in its financial statements, was $35.5 million ($10.49 per kaléo share). Tredegar made its investments in kaléo in August 2007 and December 2008 with an aggregate cost basis of $7.5 million. Tredegar received a cash dividend of $17.6 million from kaléo on April 30, 2019. The tax basis of Tredegar’s investment in kaléo is $15.4 million and Tredegar expects for tax purposes to utilize capital loss carryforwards of approximately $25 million to partially offset the capital gains anticipated from the closing of the Transaction.
Tredegar Corporation is an industrial manufacturer with three primary businesses: custom aluminum extrusions for the North American building & construction, automotive and specialty end-use markets; surface protection films for high-technology applications in the global electronics industry; and specialized polyester films primarily for the Latin American flexible packaging market. Tredegar had 2020 sales from continuing operations of $755 million. With approximately 2,400 employees, the Company operates manufacturing facilities in North America, South America, and Asia.
https://ir.tredegar.com/news-releases/news-release-details/tredegar-agrees-sell-ownership-interest-kaleo