On December 4, 2019, Owens-Illinois, Inc. (“O-I”
or the “Company”) issued a press release (the “Press Release”) announcing that the Board of Directors of
the Company authorized the commencement of (1) consent solicitations to amend and waive certain provisions in the indentures governing
the outstanding senior notes issued by certain of the Company’s subsidiaries and (2) an amendment to the Company’s
Third Amended and Restated Credit Agreement and Syndicated Facility Agreement (the “Credit Agreement”). The purpose
of the consent solicitations and the amendment to the Credit Agreement is to facilitate the implementation of the Corporate Modernization
(as defined below), which, if implemented, would be expected to be completed by the end of 2019.
The Company believes the Corporate Modernization would improve
the Company’s operating efficiency and cost structure, while ensuring the Company remains well-positioned to address its
legacy liabilities.
It is not expected that the Corporate Modernization would
result in a change in the directors, executive officers, management or business of the public company, or impact the
timing of the declaration and payment of regular quarterly dividends. In addition, from a credit perspective, the Corporate
Modernization is not expected to affect cash flow support from subsidiaries or change the credit group for purposes of the
senior notes issued by the Company's subsidiaries or the Credit Agreement.
As contemplated, the Corporate Modernization would be
implemented pursuant to Section 251(g) of the Delaware General Corporation Law, which permits the creation of a holding
company through a merger with a direct or indirect wholly owned subsidiary of the constituent corporation without stockholder
approval. The Corporate Modernization, if implemented, would involve a series of transactions (together with certain related
transactions, the “Corporate Modernization”) pursuant to which (1) O-I will form a new holding company, which will
be a Delaware corporation, O-I Glass, Inc. (“O-I Glass”), as a direct wholly owned subsidiary of O-I and a sister
company to Owens-Illinois Group, Inc. (“OI Group”); (2) O-I Glass will form a new Delaware limited liability
company (“Paddock Enterprises, LLC”), as a direct wholly owned subsidiary of O-I Glass; (3) O-I will merge with and into Paddock Enterprises, LLC, with Paddock Enterprises, LLC continuing as the surviving entity, as a result of which Paddock Enterprises, LLC will be a direct
wholly owned subsidiary of O-I Glass; and (4) Paddock Enterprises, LLC will distribute 100% of the capital stock of OI Group to O-I
Glass, as a result of which OI Group will be a direct wholly owned subsidiary of O-I Glass and sister company to Paddock Enterprises, LLC.
O-I Glass would replace O-I as the public company trading on
the New York Stock Exchange under O-I’s current ticker symbol, “OI” In connection with the merger described above,
each outstanding share of O-I’s common stock would automatically convert into the right to receive a share of common stock
of O-I Glass on a one-for-one basis. It is intended that the Corporate Modernization, if implemented, should be a tax-free transaction
for U.S. federal income tax purposes for O-I and O-I’s stockholders.
A copy of the Press Release is filed herewith as Exhibit 99.1
and incorporated by reference.
Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking”
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and Section 27A of the Securities Act of 1933. These forward-looking statements relate to a variety of matters, including, without
limitation, statements regarding the approval, consummation and potential impact of the Corporate Modernization. Forward-looking
statements reflect the Company’s current expectations and projections about future events at the time, and thus involve uncertainty
and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,”
“would,” “should,” “may,” “plan,” “estimate,” “intend,”
“predict,” “potential,” “continue,” and the negatives of these words and other similar expressions
generally identify forward-looking statements.
It is possible that the Company’s future financial performance
may differ from expectations due to a variety of factors including, but not limited to the following: (1) the anticipated timing
of the implementation and consummation of the Corporate Modernization, (2) the potential impact of the Corporate Modernization
on the Company’s branding and business, (3) the potential costs of the Corporate Modernization, (4) the Company’s ability
to manage its cost structure, including its success in implementing restructuring or other plans aimed at improving the Company’s
operating efficiency and working capital management, achieving cost savings, and remaining well-positioned to address the Company’s
legacy liabilities, (5) the Company’s ability to acquire or divest businesses, acquire and expand plants, integrate operations
of acquired businesses and achieve expected benefits from acquisitions, divestitures or expansions, (6) the Company’s ability
to achieve its strategic plan, (7) foreign currency fluctuations relative to the U.S. dollar, (8) changes in capital availability
or cost, including interest rate fluctuations and the ability of the Company to refinance debt at favorable terms, (9) the general
political, economic and competitive conditions in markets and countries where the Company has operations, including uncertainties
related to Brexit, economic and social conditions, disruptions in the supply chain, competitive pricing pressures, inflation or
deflation, and changes in tax rates and laws, (10) the Company’s ability to generate sufficient future cash flows to ensure
the Company’s goodwill is not impaired, (11) consumer preferences for alternative forms of packaging, (12) cost and availability
of raw materials, labor, energy and transportation, (13) consolidation among competitors and customers,
(14) unanticipated expenditures with respect to data privacy, environmental, safety and health laws, (15) unanticipated operational
disruptions, including higher capital spending, (16) the Company’s ability to further develop its sales, marketing and product
development capabilities, (17) the failure of the Company’s joint venture partners to meet their obligations or commit additional
capital to the joint venture, (18) the ability of the Company and the third parties on which it relies for information technology
system support to prevent and detect security breaches related to cybersecurity and data privacy, (19) changes in U.S. trade policies,
and the other risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and
any subsequently filed Quarterly Reports on Form 10-Q or the Company’s other filings with the Securities and Exchange Commission.