Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83

As submitted confidentially to the Securities and Exchange Commission on January 15, 2021 pursuant to the Jumpstart Our Business Startups Act of 2012. This draft registration statement has not been publicly filed with the Securities and Exchange Commission and all information herein remains strictly confidential.

No. 333-         ​

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Diversey Holdings, Ltd.

(Exact name of registrant as specified in its charter)​

1300 Altura Road, Suite 125
Fort Mill, South Carolina 29708
Telephone: (803) 746-2200

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)​

Philip Wieland
Chief Executive Officer
1300 Altura Road, Suite 125
Fort Mill, South Carolina 29708
Telephone: (803) 746-2200

(Name, address, including zip code, and telephone number, including area code, of agent for service)​

Copies of all communications, including communications sent to agent for service, should be sent to:

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐

If this Form is filed to registered additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE

​

(1)

Includes the aggregate offering price of shares of ordinary shares subject to the underwriters’ option to purchase additional shares.

​

(2)

Estimated solely for purposes of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities act of 1933, as amended.

​

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. The preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer and sale is not permitted.

Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83

Subject to Completion
Preliminary Prospectus dated            , 2021.

            Ordinary Shares

Diversey Holdings, Ltd.

This is an initial public offering of ordinary shares of Diversey Holdings, Ltd.

Prior to this offering, there has been no public market for our ordinary shares. It is currently estimated that the initial public offering price per share will be between $      and $      . We have applied to list our ordinary shares on the                   under the symbol “           .”

See “Risk Factors” beginning on page 18 to read about factors you should consider before buying our ordinary shares.

Immediately after this offering, assuming an offering size as set forth above, investment funds controlled by our equity sponsor, Bain Capital Private Equity, will own approximately    % of our outstanding ordinary shares (or    % of our outstanding ordinary shares if the underwriters’ option to purchase additional shares is exercised in full). As a result, we expect to be a “controlled company” within the meaning of the corporate governance standards of the             . See “Management — Corporate Governance — Controlled Company Status.”

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

(1)

See “Underwriting” for a description of compensation payable to the underwriters.

​

To the extent that the underwriters sell more than                ordinary shares, the underwriters have the option to purchase up to an additional                ordinary shares at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the ordinary shares to purchasers on            , 2021.

Prospectus dated            , 2021

TABLE OF CONTENTS

Neither we nor any of the underwriters have authorized anyone to provide any information or make any representations other than those contained in this prospectus or in any free writing prospectus filed with the Securities and Exchange Commission (the “SEC”). We take no responsibility for, and can provided no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, ordinary shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ordinary shares. Our business, financial condition, results of operations, and prospects may have changed since such date.

For investors outside of the United States, neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States.

No offer or invitation to subscribe for any securities may be made to the public in the Cayman Islands.

 

i

Trademarks and Service Marks

This prospectus includes our trademarks and service marks which are protected under applicable intellectual property laws and are the property of Diversey Holdings, Ltd. or its subsidiaries. This prospectus also contains trademarks, service marks, trade names and copyrights, of other companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

Basis of Presentation

On September 6, 2017, Diamond (BC) B.V. (“Diamond”), our subsidiary and a private limited liability company incorporated under the laws of the Netherlands, acquired the Diversey Care division and the food hygiene and cleaning business of Sealed Air Corporation (the “Predecessor Diversey Business” or “Predecessor”), including certain assets and all of the capital stock of certain entities engaged in such businesses (the “2017 Acquisition”), pursuant to a purchase agreement entered into on March 25, 2017 between Sealed Air Corporation and Diamond. The purchase price for the 2017 Acquisition was funded by (i) an indirect equity contribution of $850.0 million into Diamond by certain investment funds controlled by our equity sponsor. Bain Capital Private Equity (“Bain Capital,” “Bain Capital Private Equity” or our “Sponsor”) and its affiliates, (ii) proceeds from borrowings under senior secured credit facilities, including a $900.0 million term loan facility and a €970.0 million term loan facility (together, the “Term Loan Facility”) and a $250.0 million revolving credit facility (the “Revolving Credit Facility,” and together with the Term Loan Facility, the “Senior Secured Credit Facilities”) and (iii) proceeds from the issuance of €450.0 million aggregate principal amount of 5.625% senior notes due 2025 (the “Senior Notes”). The Senior Secured Credit Facilities and the Senior Notes are more fully described in “Description of Certain Indebtedness.”

Diversey Holdings, Ltd. (the “issuer”) was formed on November 3, 2020 for the purpose of completing the offering contemplated by this prospectus and related transactions in order to carry on the business of Constellation (BC) 2 S.a.r.l. (“Constellation”) and its subsidiaries. Prior to the consummation of this offering, the issuer will consummate certain reorganization transactions pursuant to which existing equity holders of Constellation, including Bain Capital, will contribute their interests in Constellation to the issuer in exchange for ordinary shares of the issuer (the “Reorganization Transactions”).

Unless the context requires otherwise, references in this prospectus to the “Company,” “we,” “us,” “our,” and “Diversey” ​(i) for periods through September 6, 2017, refer to the Predecessor Diversey Business, (ii) for periods from September 6, 2017 until prior to the Reorganization Transactions refer to Constellation and its subsidiaries, and (iii) after giving effect to the Reorganization Transactions, refer to the issuer and its consolidated subsidiaries. The financial results of Constellation and its subsidiaries will be consolidated in the financial statements of the issuer following this offering. We have not included the historical financial statements of the issuer in this prospectus because the issuer was formed after the periods covered by the financial statements included in this prospectus, has engaged to date only in activities in contemplation of this offering and has had no operations or assets prior to the completion of the Reorganization Transactions. Following the completion of this offering, the issuer will be a holding company, and its principal asset will be equity of Constellation. Accordingly, following the completion of this offering, we intend to include the financial statements of the issuer in our periodic reports and other filings as required by applicable law and the rules and regulations of the SEC.

 

ii

​

1

​	Our Customer Engagement Model	​	​	Where Diversey Adds Value – End-to-End Cleaning, Hygiene, and Infection Prevention Solutions	​
​		​	​		​
​					​

2

​

3

​

4

​	By Segment	​	​	By Region	​
​		​	​		​
​	​	​	​	​	​

​	By Region	​	​	By Sector	​
​		​	​		​
​	​	​	​	​	​

5

​	By Region	​	​	By Sector	​
​		​	​		​

6

7

​

8

​

​

9

​

10

11

12

​

13

​

​

​

Successor (consolidated)

​

​

​

Predecessor (combined)

​

​

​

​

Years end December 31,

​

​

For the period March 15 – December 31

​

​

​

For the period January 1 – September 5

​

(in millions, except per share amounts)

​

​

2019

​

​

2018

​

​

2017

​

​

​

2017

​

Statements of Operations Data:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net sales

​

​

​

$

2,623.9

​

​

​

​

$

2,688.1

​

​

​

​

$

870.2

​

​

​

​

​

$

1,681.3

​

​

Cost of sales

​

​

​

​

1,522.1

​

​

​

​

​

1570.6

​

​

​

​

​

518.2

​

​

​

​

​

​

959.0

​

​

Gross profit

​

​

​

​

1,101.8

​

​

​

​

​

1,117.5

​

​

​

​

​

352.0

​

​

​

​

​

​

722.3

​

​

Selling, general and administrative expenses

​

​

​

​

855.6

​

​

​

​

​

883.8

​

​

​

​

​

284.3

​

​

​

​

​

​

641.9

​

​

Transition and transformation costs

​

​

​

​

52.8

​

​

​

​

​

120.6

​

​

​

​

​

53.7

​

​

​

​

​

​

—

​

​

Management fee

​

​

​

​

7.5

​

​

​

​

​

7.5

​

​

​

​

​

2.4

​

​

​

​

​

​

—

​

​

Share-based compensation

​

​

​

​

3.0

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

​

12.3

​

​

Amortization of intangible assets

​

​

​

​

93.7

​

​

​

​

​

91.2

​

​

​

​

​

19.4

​

​

​

​

​

​

40.6

​

​

Impairment of goodwill

​

​

​

​

—

​

​

​

​

​

68.5

​

​

​

​

​

—

​

​

​

​

​

​

—

​

​

Restructuring costs

​

​

​

​

19.8

​

​

​

​

​

24.9

​

​

​

​

​

—

​

​

​

​

​

​

0.1

​

​

Merger and acquisition-related costs

​

​

​

​

0.3

​

​

​

​

​

7.3

​

​

​

​

​

38.0

​

​

​

​

​

​

—

​

​

Operating income (loss)

​

​

​

​

69.1

​

​

​

​

​

(86.3)

​

​

​

​

​

(45.8)

​

​

​

​

​

​

27.4

​

​

Interest expense

​

​

​

​

141.0

​

​

​

​

​

135.2

​

​

​

​

​

42.7

​

​

​

​

​

​

9.0

​

​

Gain on sale of business investment

​

​

​

​

(13.0)

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

​

—

​

​

Bridge commitment fees

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

7.5

​

​

​

​

​

​

—

​

​

Foreign currency loss related to Argentina subsidiaries

​

​

​

​

11.4

​

​

​

​

​

2.4

​

​

​

​

​

—

​

​

​

​

​

​

—

​

​

Loss on settlement of foreign currency contract

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

121.3

​

​

​

​

​

​

—

​

​

Other (income) expense, net

​

​

​

​

6.0

​

​

​

​

​

0.8

​

​

​

​

​

(2.7)

​

​

​

​

​

​

(0.9)

​

​

Income (loss) before income tax provision (benefit)

​

​

​

​

(76.3)

​

​

​

​

​

(224.7)

​

​

​

​

​

(214.6)

​

​

​

​

​

​

19.3

​

​

Income tax provision (benefit)

​

​

​

​

32.7

​

​

​

​

​

14.4

​

​

​

​

​

(61.6)

​

​

​

​

​

​

23.8

​

​

Net income (loss)

​

​

​

$

(109.0)

​

​

​

​

$

(239.1)

​

​

​

​

$

(153.0)

​

​

​

​

​

$

(4.5)

​

​

Basic and diluted loss per share(1)

​

​

​

$

(1.15)

​

​

​

​

$

(2.54)

​

​

​

​

$

(1.63)

​

​

​

​

​

​

​

​

​

Basic and diluted weighted-average shares outstanding(1)

​

​

​

​

94.40

​

​

​

​

​

94.00

​

​

​

​

​

93.70

​

​

​

​

​

​

​

​

​

Basic and diluted pro forma loss per share(1)(2)

​

​

​

$

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

14

​

​

​

Successor (consolidated)

​

​

​

Predecessor (combined)

​

​

​

​

Years end December 31,

​

​

For the period March 15 – December 31

​

​

​

For the period January 1 – September 5

​

(in millions, except per share amounts)

​

​

2019

​

​

2018

​

​

2017

​

​

​

2017

​

Basic and diluted pro forma weighted-average shares outstanding(1)(2)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance Sheet Data (as of the end of period):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Working capital

​

​

​

$

29.7

​

​

​

​

$

42.3

​

​

​

​

$

382.4

​

​

​

​

​

$

​

​

Cash and cash equivalents

​

​

​

​

128.3

​

​

​

​

​

73.4

​

​

​

​

​

287.0

​

​

​

​

​

​

​

​

​

Property and equipment, net

​

​

​

​

172.2

​

​

​

​

​

206.8

​

​

​

​

​

190.1

​

​

​

​

​

​

​

​

​

Total assets

​

​

​

​

4,213.5

​

​

​

​

​

4,190.0

​

​

​

​

​

4,567.6

​

​

​

​

​

​

​

​

​

Total liabilities

​

​

​

​

4,534.7

​

​

​

​

​

4,546.9

​

​

​

​

​

4,611.9

​

​

​

​

​

​

​

​

​

Total stockholder’s equity

​

​

​

​

(321.2)

​

​

​

​

​

(356.9)

​

​

​

​

​

(44.3)

​

​

​

​

​

​

​

​

​

Other Financial Data:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

EBITDA(3)

​

​

​

$

242.7

​

​

​

​

$

76.9

​

​

​

​

$

(131.4)

​

​

​

​

​

$

116.9

​

​

Non-GAAP consolidated Adjusted EBITDA(1)

​

​

​

$

339.8

​

​

​

​

$

321.6

​

​

​

​

$

113.8

​

​

​

​

​

$

196.0

​

​

Dosing and dispensing equipment expenditures

​

​

​

$

(93.4)

​

​

​

​

$

(83.2)

​

​

​

​

$

(24.5)

​

​

​

​

​

$

(38.5)

​

​

Capital expenditures

​

​

​

$

(29.0)

​

​

​

​

$

(44.2)

​

​

​

​

$

(4.1)

​

​

​

​

​

$

(12.3)

​

​

15

​

​

​

Successor (consolidated)

​

​

​

Predecessor (combined)

​

​

​

​

Years Ended December 31,

​

​

For the period March 15 – December 31,

​

​

​

For the period January 1 – September 5

​

(in millions)

​

​

2019

​

​

2018

​

​

2017

​

​

​

2017

​

Income (loss) before income tax provisions (benefit)

​

​

​

$

(76.3)

​

​

​

​

$

(224.7)

​

​

​

​

$

(214.6)

​

​

​

​

​

$

19.3

​

​

Interest expense

​

​

​

​

141.0

​

​

​

​

​

135.2

​

​

​

​

​

42.7

​

​

​

​

​

​

9.0

​

​

Interest income

​

​

​

​

(7.5)

​

​

​

​

​

(5.8)

​

​

​

​

​

(1.4)

​

​

​

​

​

​

(3.3)

​

​

Amortization expense of intangible assets acquired

​

​

​

​

93.7

​

​

​

​

​

91.2

​

​

​

​

​

19.4

​

​

​

​

​

​

40.6

​

​

Depreciation expense included in cost of sales

​

​

​

​

84.4

​

​

​

​

​

73.4

​

​

​

​

​

21.5

​

​

​

​

​

​

41.1

​

​

Depreciation expense included in selling, general and administrative expenses

​

​

​

​

7.4

​

​

​

​

​

7.6

​

​

​

​

​

1.0

​

​

​

​

​

​

10.2

​

​

EBITDA

​

​

​

$

242.7

​

​

​

​

$

76.9

​

​

​

​

$

(131.4)

​

​

​

​

​

$

116.9

​

​

Impairment of goodwill(1)

​

​

​

​

—

​

​

​

​

​

68.5

​

​

​

​

​

—

​

​

​

​

​

​

—

​

​

Transition and transformation costs and non-recurring costs(2)

​

​

​

​

52.8

​

​

​

​

​

120.6

​

​

​

​

​

63.3

​

​

​

​

​

​

—

​

​

Restructuring costs(3)​

​

​

​

​

19.8

​

​

​

​

​

24.9

​

​

​

​

​

—

​

​

​

​

​

​

0.1

​

​

Foreign currency loss related to Argentina subsidiaries(4)

​

​

​

​

11.4

​

​

​

​

​

3.4

​

​

​

​

​

—

​

​

​

​

​

​

—

​

​

Loss on foreign currency forward contract(5)​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

121.3

​

​

​

​

​

​

—

​

​

Adjustment of tax indemnification asset(6)​

​

​

​

​

7.1

​

​

​

​

​

31.0

​

​

​

​

​

(3.9)

​

​

​

​

​

​

—

​

​

Merger and acquisition-related cost(7)​

​

​

​

​

0.3

​

​

​

​

​

7.3

​

​

​

​

​

38.0

​

​

​

​

​

​

—

​

​

Acquisition accounting adjustments(8)​

​

​

​

​

1.9

​

​

​

​

​

5.3

​

​

​

​

​

16.0

​

​

​

​

​

​

—

​

​

Bain Capital management fee(9)​

​

​

​

​

7.5

​

​

​

​

​

7.5

​

​

​

​

​

2.4

​

​

​

​

​

​

—

​

​

Non-cash pension and other post-employment benefit plan(10)

​

​

​

​

(8.8)

​

​

​

​

​

(10.5)

​

​

​

​

​

(2.9)

​

​

​

​

​

​

(5.9)

​

​

Foreign currency loss (gain)(11)​

​

​

​

​

10.8

​

​

​

​

​

(16.3)

​

​

​

​

​

0.8

​

​

​

​

​

​

0.1

​

​

Factoring fees(12)​

​

​

​

​

3.4

​

​

​

​

​

0.6

​

​

​

​

​

—

​

​

​

​

​

​

—

​

​

Share-based incentive compensation

​

​

​

​

3.0

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

​

12.3

​

​

Charges related to sale of Diversey(13)​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

​

23.1

​

​

Bridge commitment fees(14)​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

7.5

​

​

​

​

​

​

—

​

​

Stand-alone adjustment(15)​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

​

40.3

​

​

Gain on sale of business and investments(16)​

​

​

​

​

(13.0)

​

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

​

—

​

​

Non-cash items

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

​

1.8

​

​

​

​

​

​

4.2

​

​

Other items

​

​

​

​

0.9

​

​

​

​

​

2.4

​

​

​

​

​

0.9

​

​

​

​

​

​

4.9

​

​

Non-GAAP consolidated Adjusted EBITDA

​

​

​

$

339.8

​

​

​

​

$

321.6

​

​

​

​

$

113.8

​

​

​

​

​

$

196.0

​

​

​

16

​

17

RISK FACTORS

This offering and an investment in our ordinary shares involve a high degree of risk. You should carefully consider the risks described below, together with the financial and other information contained in this prospectus, before you decide to purchase our ordinary shares. If any of the following risks actually occurs, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected. As a result, the trading price of our ordinary shares could decline and you could lose all or part of your investment in our ordinary shares.

Risks Related to Our Business

Our business may be adversely affected by the novel coronavirus (“COVID-19”) pandemic and we may face risks related to COVID-19 which could significantly disrupt our operations, customer demand, and our suppliers’ ability to support us, resulting in material adverse impacts to our business, financial condition, operating results, and cash flows.

We are closely monitoring the outbreak of respiratory illness caused by COVID-19. The virus has spread to many countries and has been declared by the World Health Organization to be a pandemic, resulting in action from governments that have significantly affected virtually all facets of global economies. Governments have implemented enhanced screenings, quarantine requirements, and travel restrictions in connection with the COVID-19 outbreak.

Shelter-in-place orders and other measures, including work-from-home and social distancing policies implemented to protect employees, may result in reduced workforce availability at product manufacturing sites, construction delays, and reduced capacity at some of our vendors and suppliers. Restrictions on our access to or operation of manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, can impact our ability to meet customer demand and could have a material adverse effect on our financial condition and results of operations, particularly if prolonged. Similarly, current and future restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, can also impact our ability to meet demand and could materially adversely affect us. Our customers have experienced, and may continue to experience, disruptions in their operations and supply chains, which can result in delayed, reduced, or canceled orders, or collection risks, and which may adversely affect our results of operations.

Our business may be more adversely impacted by the effects of COVID-19 in the future. We source materials from different parts of the world that have been affected by the virus which could have an adverse impact on our supply chain operations and ability to get materials needed to produce our products. Additionally, the disruption to global markets that has occurred due to the epidemic has adversely impacted the demand for our goods and services particularly in the hotel, restaurant and office cleaning sectors. It is possible that the current outbreak and continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession. There is a significant degree of uncertainty and lack of visibility as to the extent and duration of any such slowdown or recession. Given the significant economic uncertainty and volatility created by the pandemic, it is difficult to predict the nature and extent of impacts on demand for our products. These expectations are subject to change without warning and investors are cautioned not to place undue reliance on them. The prolonged occurrence of COVID-19 could result in a significant downturn in the food service, hospitality, office cleaning and travel industries and a significant drop in demand for some of our products and services, which could materially adversely affect our business.

The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, cancellation of physical participation in meetings, events and conferences, and social distancing measures), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers. Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our product development, validation, and qualification, customer support, and other activities, which could have an adverse effect on our operations. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions.

 

18

The extent of the impact of COVID-19 on our operational and financial performance will depend on future developments, including, but not limited to, the duration and spread of the outbreak, related travel advisories and restrictions and the timing and development of a vaccine, all of which are highly uncertain and cannot be predicted. Government shutdown orders may result in a closure of operations for an uncertain duration impacting our business results. Preventing the effects from and responding to any market disruptions from COVID-19, or any other public health threat related or otherwise, may further increase costs of our business and may have a material adverse effect on our business, financial condition, and results of operations.

While we have taken steps to minimize the potential for COVID-19 exposure in the workplace, the potential for a COVID-19 outbreak within our facilities occurring and significantly disrupting operations remains possible. Increased infection rates in geographic locations in which we operate have the potential to result in disruptions to our operations at an increased rate than we currently experience.

There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the impacts on our business, our operations or the global economy as a whole. However, the effects could materially heighten many of our known risks described herein.

Uncertain global economic conditions have had and could continue to have an adverse effect on our consolidated financial condition and results of operations.

Uncertain global economic conditions have had and may continue to have an adverse impact on our business in the form of lower net sales due to weakened demand, unfavorable changes in product price/mix, or lower profit margins. For example, global economic downturns have adversely impacted some of our end-users and customers, such as food processors, distributors, supermarket retailers, hotels, restaurants, retail establishments, business service contractors, e-commerce fulfillment firms, and other end-users that are particularly sensitive to business and consumer spending.

During economic downturns or recessions, there can be a heightened competition for sales and increased pressure to reduce selling prices as our customers may reduce their volume of purchases from us. If we lose significant sales volume or reduce selling prices significantly, then there could be a negative impact on our consolidated financial condition or results of operations, profitability and cash flows.

Reduced availability of credit may also adversely affect the ability of some of our customers and suppliers to obtain funds for operations and capital expenditures. This could negatively impact our ability to obtain necessary supplies as well as our sales of materials and equipment to affected customers. This could additionally result in reduced or delayed collections of outstanding accounts receivable.

The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and results of operations.

We operate in approximately 57 countries, and our products are distributed in those countries as well as approximately 25 countries in other parts of the world. A large portion of our manufacturing operations are located outside of the U.S. and a majority of our net sales are generated outside of the U.S. These operations, particularly in developing regions, are subject to various risks that may not be present or as significant for our U.S. operations. Economic uncertainty in some of the geographic regions in which we operate, including developing regions, could result in the disruption of commerce and negatively impact cash flows from our operations in those areas.

Risks inherent in our international operations include:

•

non-U.S. currency exchange controls and tax rates;

​

•

non-U.S. currency exchange rate fluctuations, including devaluations;

​

•

the potential for changes in regional and local economic conditions, including local inflationary pressures;

​

 

19

•

restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including anti-dumping duties, tariffs, embargoes and prohibitions or restrictions on acquisitions or joint ventures;

​

•

changes in laws and regulations, including the laws and policies of the U.S. affecting trade and foreign investment;

​

•

the difficulty of enforcing agreements and collecting receivables through certain non-U.S. legal systems;

​

•

variations in protection of intellectual property and other legal rights;

​

•

more expansive legal rights of workers outside the U.S., unions, collective bargaining agreements or works councils;

​

•

changes in labor conditions and difficulties in staffing and managing international operations;

​

•

import and export delays;

​

•

social plans and regulations that prohibit or increase the cost of certain restructuring actions;

​

•

the potential for nationalization of enterprises or facilities; and

​

•

unsettled political conditions and possible terrorist attacks against the countries in which we operate or other interests.

​

In addition, there are potential tax inefficiencies and tax costs in repatriating funds from the various jurisdictions in which we do business.

These and other factors may have a materially adverse effect on our international operations and. consequently, on our consolidated financial condition or results of operations.

Fluctuations between non-U.S. currencies and the U.S. dollar could materially impact our consolidated financial condition or results of operations.

A significant portion of our net sales during the year ended December 31, 2019 were generated outside the United States. We translate sales and other results denominated in non-U.S. currency into U.S. dollars for our consolidated combined financial statements included elsewhere in this prospectus. As a result, we are exposed to currency fluctuations both in receiving cash from our international operations and in translating our financial results back to U.S. dollars. During periods of a strengthening U.S. dollar, our reported international sales and net income could be reduced because non-U.S. currencies may translate into fewer U.S. dollars. We cannot predict the effects of exchange rate fluctuations on our future operating results. As exchange rates vary, our results of operations and profitability may be harmed. While we may use financial instruments to hedge certain non-U.S. currency exposures, this does not insulate us completely from non-U.S. currency effects and exposes us to counterparty credit risk for non-performance. Such hedging activities may be ineffective or may not offset more than a portion of the adverse financial effect resulting from non-U.S. currency variations. The gains or losses associated with hedging activities may harm our results of operations.

In all jurisdictions in which we operate, we are also subject to laws and regulations that govern non-U.S. investment. non-U.S. trade and currency exchange transactions. These laws and regulations may limit our ability to repatriate cash as dividends or otherwise to the U.S. and may limit our ability to convert non-U.S. currency cash flows into U.S. dollars.

We have recognized foreign currency exchange gains and losses related to the currency devaluations in Argentina in 2019 and 2018 as a result of the country being designated as highly inflationary under U.S. GAAP.

Political and economic instability and risk of government actions affecting our business and our customers or suppliers may adversely impact our business, results of operations and cash flows.

We are exposed to risks inherent in doing business in each of the countries or regions in which we, our customers, or suppliers operate, including: civil unrest, acts of terrorism, sabotage, epidemics, force majeure,

 

20

war or other armed conflict and related government actions, including sanctions/embargoes, the deprivation of contract rights, the inability to obtain or retain licenses required by us to operate our plants or import or export our goods or raw materials, the expropriation or nationalization of our assets, and restrictions on travel, payments or the movement of funds. As some of our customers operate in the hospitality industry that supports both domestic and international tourism, their business and indirectly ours, could be exposed to the negative consequences of travel pattern disruptions due to major terrorist threats. Also, if additional restrictions on trade with China and Russia were adopted by the U.S., the European Union or the United Nations, and were applicable to our products, we could lose sales and experience lower growth rates in the future.

Raw material pricing, availability and allocation by suppliers as well as energy-related costs may negatively impact our results of operations, including our profit margins and net sales.

We use petrochemical-based raw materials to manufacture many of our products and oil-based materials for our packaging. The prices for these raw materials are cyclical, and increases in market demand or fluctuations in the global trade for petrochemical-based raw materials and energy could increase our costs. In addition, the prices of many of the other key raw materials used in our businesses, such as caustic soda, solvents, waxes, phosphates, surfactants, polymers and resins, chelates and fragrances, are cyclical based on numerous supply and demand factors that are beyond our control. Furthermore, the usage of certain chemical components used in the manufacturing of our products, such as chemicals used in our surfactants, may be limited or restricted by government regulations, which could restrict our sourcing options. If we are unable to minimize the effects of increased raw material costs through sourcing, pricing or other actions, our business, consolidated financial condition or results of operations may be materially adversely affected. We also have some sole-source suppliers, and the lack of availability of supplies could have a materially adverse effect on our consolidated financial condition or results of operations.

Natural disasters such as hurricanes, as well as political instability and terrorist activities, may negatively impact the production or delivery capabilities of refineries and natural gas and petrochemical suppliers and suppliers of other raw materials in the future. These factors could lead to increased prices for our raw materials, curtailment of supplies and allocation of raw materials by our suppliers, which could reduce revenues and profit margins and harm relations with our customers, which could have a materially adverse effect on our consolidated financial condition or results of operations.

Unfavorable consumer responses to price increases could have a material adverse impact on our sales and earnings.

From time to time, and especially in periods of rising raw material costs, we increase the prices of our products. Significant price increases could impact our earnings depending on, among other factors, the pricing by competitors of similar products and the response by our customers to higher prices. Such price increases may result in lower volume of sales and a subsequent decrease in gross margin and adversely impact earnings.

If we do not develop new and innovative products or if such products are not accepted by customers in our markets or fail to meet sales or margin expectations, our results could be negatively affected.

Our products must be kept current to meet our customers’ needs, overcome competitive products and meet evolving regulatory requirements. To remain competitive, we therefore must develop new and innovative products on an ongoing basis, and we invest significantly in the research and development of new products. If we do not successfully develop innovative products, it may be difficult to differentiate our products from our competitors’ products and satisfy regulatory requirements, and our sales and results could suffer.

Our competitive advantage is due in part to our ability to develop and introduce new products in a timely manner at favorable margins. The development and introduction cycle of new products can be lengthy and involve high levels of investment. New products may not meet sales or margin expectations due to many factors, including our inability to (i) accurately predict demand, end-user preferences and evolving industry standards, (ii) resolve technical and technological challenges in a timely and cost-effective manner or (iii) achieve manufacturing efficiencies.

 

21

Cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business, could have a materially adverse effect on our business, consolidated financial condition and results of operations.

We rely to a large extent upon automation, software and infrastructure, both internally and with third-parties, to operate our business. The size and complexity of our information technology systems make them increasingly vulnerable to breakdown, malicious intrusion and random attack, which may pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber-attacks or security breaches of our networks or systems, could result in the loss of customers and business opportunities, legal liability, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensatory costs, and additional compliance costs, any of which could materially adversely affect our business, consolidated financial condition and results of operations. While we take reasonable measures to mitigate these risks, due to continually evolving threats, our systems, networks, products, solutions and services remain potentially vulnerable to advanced and persistent threats.

We also maintain and have access to sensitive, confidential or personal data or information in some of our businesses that is subject to privacy and security laws, regulations and customer controls of the U.S., the European Union and other non-U.S. jurisdictions. Despite our efforts to protect such sensitive, confidential or personal data or information, our facilities and systems and those of our customers and third-party service providers may be vulnerable to security breaches, theft, misplaced or lost data, programming and/or human errors that could lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks, unauthorized access, use disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions, which in turn could result in liabilities and penalties and could damage our reputation, cause us to incur substantial costs and adversely affect our business and our results of operations. Additionally, we could be subject to litigation and government enforcement actions as a result of any such failure.

Furthermore, data privacy is subject to frequently changing rules and regulations. Our failure to adhere to or successfully implement appropriate responses in this area could result in legal liability or impairment to our brands’ reputations.

The introduction of the Organization for Economic Co-operation and Development’s (“OECD”) Base Erosion and Profit Shifting (“BEPS”) may adversely affect our effective rate of tax in future periods.

Changes in tax laws, which have become more rapid in recent years, or tax rulings related thereto could affect our financial position and results of operations. For example, in light of continuing global fiscal challenges, various levels of government and international organizations such as the Organization for Economic Co-operation and Development (“OECD”) and the European Union are increasingly focused on tax reform and other legislative or regulatory action to increase tax revenue. These tax reform efforts, such as the OECD-led Base Erosion and Profit Shifting project (“BEPS”), are designed to ensure that corporate entities are taxed on a larger percentage of their earnings. Although some countries have passed tax laws based on findings from the BEPS project, the final nature, timing and extent of any such tax reforms or other legislative or regulatory actions is unpredictable, and it is difficult to assess their overall effect. These tax reforms, or any other changes in tax laws, could increase our effective tax rate and adversely impact our financial results.

The consolidation of customers may adversely affect our business, consolidated financial condition or results of operations.

Customers in the food service, food and beverage processing, building care, lodging, industrial distribution and healthcare sectors have been consolidating in recent years, and we believe this trend may continue. Such consolidation could have an adverse impact on the pricing of our products and services and our ability to retain customers, which could in turn adversely affect our business, consolidated financial condition or results of operations.

 

22

We experience competition in the markets for our products and services and in the geographic areas in which we operate.

Our products compete with similar products made by other manufacturers and with a number of other types of materials or products. We compete on the basis of performance characteristics of our products, service, price and innovations in technology. A number of competing U.S. and non-U.S. companies are well-established.

The market for our products is highly competitive. Our products face significant competition from global, national, regional and local companies within some or all of our product lines in each sector that we serve.

Our inability to maintain a competitive advantage could result in lower prices or lower sales volumes for our products. Additionally, we may not successfully implement our pricing actions. These factors may have an adverse impact on our consolidated financial condition or results of operations.

Instability and uncertainty in the credit and financial markets could adversely impact the availability of credit that we and our customers need to operate our or their businesses.

We depend upon the availability of credit to operate our business. Our customers and suppliers also require access to credit for their businesses. Instability and uncertainty in the credit and financial markets could adversely impact the availability of future financing and the terms on which it might be available to us, our customers and our suppliers. Inability to access credit markets, or a deterioration in the terms on which financing might be available to us or our customers, could have an adverse effect on our business, financial condition and results of operations.

New and stricter legislation and regulations may affect our business and consolidated financial condition and results of operations.

Our business requires compliance with many laws and regulations. Increased legislative and regulatory activity and burdens, and a more stringent manner in which they are applied, could significantly impact our business and the economy as a whole. Failure to comply with these laws and regulations could subject us to lawsuits and other proceedings, and could also lead to damage awards, fines and penalties. We may become involved in a number of legal proceedings and audits, including government and agency investigations, and consumer, employment, tort and other litigation. The outcome of some of these legal proceedings, audits, and other contingencies could require us to take, or refrain from taking, actions that could harm our operations or require us to pay substantial amounts of money, harming our financial condition. Additionally, defending against these lawsuits and proceedings may be necessary, which could result in substantial costs and diversion of management’s attention and resources, harming our financial condition. There can be no assurance that any pending or future legal or regulatory proceedings and audits will not harm our business, financial condition and results of operations.

Furthermore, the regulatory environment in which we operate is still developing, and the potential exists for future legislation and regulations to be adopted. These developments may adversely affect the customers to whom, and the markets into which, we sell our products, increase our costs, require additional expenditures to ensure continued regulatory compliance and otherwise negatively affect our business, consolidated financial condition or results of operations, including in ways that cannot yet be foreseen.

Severe public health outbreaks not limited to COVID-19 may adversely impact our business.

Our business could be adversely affected by the effect of a future public health epidemic. The United States and other countries have experienced, and may experience in the future, public health outbreaks such as Zika virus, Avian Flu, SARS, H1N1 influenza, and most recently COVID-19. A prolonged occurrence of a contagious disease such as these could result in a significant downturn in the food service, hospitality and travel industries and also may result in health or other government authorities imposing restrictions on travel further impacting our end-markets. Any of these events could result in a significant drop in demand for some of our products and services and adversely affect our business.

 

23

Our annual effective income tax rate can change materially as a result of changes in our mix of U.S. and non-U.S. earnings and other factors, including changes in tax laws and changes made by regulatory authorities.

Our overall effective income tax rate is equal to our total tax expense as a percentage of total earnings before tax. However, income tax expense and benefits are not recognized on a global basis but rather on a jurisdictional or legal entity basis. Losses in one jurisdiction may not be used to offset profits in other jurisdictions and may cause an increase in our tax rate. Changes in the mix of earnings (or losses) between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a significant effect on our overall effective income tax rate.

We are subject to taxation in multiple jurisdictions. As a result, any adverse development in the tax laws of any of these jurisdictions or any disagreement with our tax positions could have a material adverse effect on our business, consolidated financial condition or results of operations.

We are subject to taxation in, and to the tax laws and regulations of multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. We are also subject to transfer pricing laws with respect to our intercompany transactions, including those relating to the flow of funds among our companies. Adverse developments in these laws or regulations, or any change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, consolidated financial condition or results of our operations. In addition, the tax authorities in any applicable jurisdiction may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions. If any applicable tax authorities were to successfully challenge the tax treatment or characterization of any of our transactions, it could have a material adverse effect on our business, consolidated financial condition or results of operations.

A major loss of or disruption in our manufacturing and distribution operations or our information systems and telecommunication resources could adversely affect our business, consolidated financial condition or results of operations.

If we experienced a natural disaster, such as a hurricane, tornado, earthquake or other severe weather event, or a casualty loss from an event such as a fire or flood, at one of our larger strategic facilities or if such an event affected a key supplier, our supply chain or our information systems and telecommunication resources, then there could be a material adverse effect on our consolidated financial condition or results of operations. We are dependent on internal and third party information technology networks and systems, including the internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for fulfilling and invoicing customer orders, applying cash receipts, and placing purchase orders with suppliers, making cash disbursements, and conducting digital marketing activities, data processing and electronic communications among business locations.

We also depend on telecommunication systems for communications between company personnel, our customers and our suppliers. Future system disruptions, security breaches or shutdowns could significantly disrupt our operations or result in lost or misappropriated information and may have a materially adverse effect on our business, consolidated financial condition or results of operations.

Product liability claims or regulatory actions could adversely affect our financial results or harm our reputation or the value of our brands.

Claims for losses or injuries purportedly caused by some of our products arise in the ordinary course of our business. In addition to the risk of substantial monetary judgments, product liability claims or regulatory actions could result in negative publicity that could harm our reputation in the marketplace or adversely impact the value of our brands or our ability to sell our products in certain jurisdictions. We could also be required to recall possibly defective products, or voluntarily do so which could result in adverse publicity and significant expenses. Although we maintain product liability insurance coverage, potential product liabilities claims could be excluded or exceed coverage limits under the terms of our insurance policies or could result in increased costs for such coverage.

 

24

If we are unable to retain key employees and other personnel, our consolidated financial condition or results of operations may be adversely affected.

Our success depends largely on the efforts and abilities of our management team and other key personnel. Their experience and industry contacts significantly benefit us and we need their expertise to execute our business strategies. If any of our senior management or other key personnel cease to work for us and we are unable to successfully replace any departing senior management or key personnel, our business, consolidated financial condition or results of operations may be materially adversely affected.

As a result of the substantial workers council and labor union representation in certain jurisdictions in which we operate, we will need to consult or negotiate with employee representatives on operational matters concerning the organization or our labor force, salary inflation or other benefits and re-organizations, which may lead to reduced flexibility in managing our operations and labor force to respond to opportunities, market changes or cost challenges, and we may not be able to negotiate mutually acceptable new collective bargaining agreements, which could materially affect our business.

In Europe and Latin America, most of our employees are represented by either labor unions or workers councils and are covered by collective bargaining agreements that are generally renewable on an annual basis. As is the case with any negotiation, we may not be able to negotiate acceptable new collective bargaining agreements, which could result in strikes or work stoppages by affected workers. Renewal of collective bargaining agreements could also result in higher wages or benefits paid to union members. A disruption in operations or higher ongoing labor costs could materially affect our business.

In addition, in certain jurisdictions we are required to consult with, and seek the consent or advice of these labor unions or workers councils for any changes to our activities or employee benefits. This requirement could have a significant impact on our flexibility in managing costs and responding to market changes. As is the case with any negotiation or consultation, we may not be able to negotiate mutually acceptable new collective bargaining agreements, which could result in delays, strained employee relations and after escalation, potential strikes or work stoppages by affected workers, each of which could materially affect our business.

We are subject to a variety of environmental and product registration laws that expose us to potential financial liability and increased operating costs.

Our operations are subject to a number of federal, state, local and non-U.S. environmental health and safety laws and regulations that govern, among other things, the manufacturing of our products, the discharge of pollutants into the air, soil and water and the use handling, transportation, storage and disposal of hazardous materials.

Many jurisdictions require us to have operating permits for our production and warehouse facilities and operations. Any failure to obtain, maintain or comply with the terms of these permits could result in fines or penalties, revocation or nonrenewal of our permits, or orders to cease certain operations, and may have a material adverse effect on our business, financial condition, results of operations and cash flows.

We generate, use and dispose of hazardous materials in our manufacturing processes. In the event our operations result in the release of hazardous materials into the environment, we may become responsible for the costs associated with the investigation and remediation of sites at which we have released pollutants, or sites where we have disposed or arranged for the disposal of hazardous wastes, even if we fully complied with environmental laws at the time of disposal. We have been, and may continue to be, responsible for the cost of remediation at some locations.

Many jurisdictions have laws and regulations that govern the registration, labeling and sale of some of our products. Throughout the world, such regulations continue to increase both in number and in stringency, resulting in, among others, extra charges for single use packaging in Europe, duplicative regulations as a result of Brexit, regulatory-driven and customer-driven ingredient bans requiring reformulation, ingredient disclosure requirements in the U.S., Asia and potentially Europe, and the incurrence of plastic levies under the European Union Multiannual Financial Framework 2021 – 2027 and Recovery Fund, all of which create a risk of increased costs and a need to modify our products.

 

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We cannot predict with reasonable certainty the future cost to us of environmental compliance, product registration, or environmental remediation. Environmental laws have become more stringent and complex overtime. Our environmental costs and operating expenses will be subject to evolving regulatory requirements and will depend on the scope and timing of the effectiveness of requirements in these various jurisdictions. As a result of such requirements, we may be subject to an increased regulatory burden, and we expect significant future environmental compliance obligations in our operations. Increased compliance costs, increasing risks and penalties associated with violations, or our inability to market some of our products in certain jurisdictions may have a materially adverse effect on our business, consolidated financial condition or results of operations.

Our insurance policies may not cover all operating risks and a casualty loss beyond the limits of our coverage could adversely impact our business.

Our business is subject to operating hazards and risks relating to handling, storing, transporting and the use of the products we sell. We maintain insurance policies in amounts and with coverage and deductibles that we believe are reasonable and prudent. Nevertheless, our insurance coverage may not be adequate to protect us from all liabilities and expenses that may arise from claims for personal injury, death or property damage arising in the ordinary course of business, and our current levels of insurance may not be maintained or available in the future at economical prices. If a significant liability claim is brought against us that is not adequately covered by insurance, we may have to pay the claim with our own funds, which could have a material adverse effect on our business, consolidated financial condition or results of operations.

We may be exposed to liabilities under applicable anti-corruption laws and any determination that we violated these laws could have a materially adverse effect on our business.

We are subject to various anti-corruption laws that prohibit improper payments or offers of payments to non-U.S. governments and their officials for the purpose of obtaining or retaining business. We conduct business in countries and regions which are less developed and are generally recognized as potentially more corrupt business environments. Activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of various anti-corruption laws, including the Foreign Corrupt Practices Act (the “FCPA”). We have implemented safeguards and policies to discourage these practices by our employees and agents. If our employees or agents violate our policies or we fail to maintain adequate record keeping and internal accounting practices to accurately record our transactions we may be subject to regulatory sanctions. Violations of the FCPA or other anti-corruption laws may result in severe criminal or civil sanctions and penalties, and we may be subject to other liabilities which could adversely effect on our business, consolidated financial condition and results of operations.

If we are not able to protect our trade secrets or maintain our trademarks, patents and other intellectual property, we may not be able to prevent competitors from developing similar products or from marketing their products in a manner that capitalizes on our trademarks, and this loss of a competitive advantage could decrease our profitability and liquidity.

Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our owned and licensed intellectual property. If we were unable to maintain the proprietary nature of our intellectual property and our significant current or proposed products, this loss of a competitive advantage could result in decreased sales or increased operating costs, either of which could have a materially adverse effect on our business, consolidated financial condition or results of operations.

We rely on trade secrets to maintain our competitive position, including protecting the formulation and manufacturing techniques of many of our products. As such, we have not sought U.S. or international patent protection for some of our principal product formulas and manufacturing processes. Accordingly, while we seek to use our protected trade secrets to defend our continued right to sell products against those seeking to assert patents on innovation that is similar to or competitive with our trade secrets, we may not be able to prevent others from developing products that are similar to or competitive with our products.

We own, or have licenses to use a large number of patents and pending patent applications on our products, aspects thereof, methods of use and/or methods of manufacturing. There is a risk that our owned

 

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and licensed patents may not provide meaningful protection and patents may never be issued for our pending patent applications.

We own, or have licenses to use the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our major products where our products are principally sold. Trademark and trade name protection is important to our business. Although most of our trademarks are registered in the countries in which we operate, we may not be successful in asserting trademark or trade name protection. In addition, the laws of some non-U.S. countries may not protect our intellectual property rights to the same extent as the laws of the U.S. The costs required to protect our trademarks and trade names may be substantial.

We cannot be certain that we will be able to assert these intellectual property rights successfully in the future or that they will not be invalidated, circumvented or challenged. Other parties may infringe on or misappropriate our intellectual property rights and may thereby dilute the value of our intellectual property in the marketplace. Third parties, including competitors, may assert intellectual property infringement, misappropriation or invalidity claims against us that could be upheld. Intellectual property litigation, which could result in substantial costs to and a diversion of effort by us may be necessary to protect our intellectual property rights, including trade secrets, proprietary technology or for us to defend against claimed infringement or misappropriation of the rights of others and to determine the scope and validity of our or others’ intellectual property or proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may be subject to monetary liability and injunctive or equitable relief, which may prevent our use of others’ intellectual property or proprietary rights if we are not able to obtain necessary licenses on reasonable terms or at all. Any failure by us to protect our trademarks and other intellectual property rights may have a materially adverse effect on our business, consolidated financial condition or results of operations.

Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products.

Many of our competitors have a substantial amount of intellectual property that we must continually strive to avoid infringing. Although it is our policy and intention not to infringe valid patents of which we are aware and we conduct patent clearance analyses to identify patents that our new products and services might infringe as well as make necessary product or process changes to avoid infringement, we cannot provide assurances that our processes and products and other activities do not and will not infringe issued patents (whether present or future) or other intellectual property rights belonging to others. We may also be subject to indemnity claims by our business partners arising out of claims of their alleged infringement of the patents, trademarks and other intellectual property rights of third parties in connection with their use of our products and services. If we were to discover that any of our processes, technologies or products infringe on the valid intellectual property rights of others, we might determine to obtain licenses from the owners of these rights or to modify our processes or technologies or re-engineer our products in order to avoid infringement. We may not be able to obtain the necessary licenses on acceptable terms, or be able to modify our processes or technologies or re-engineer our products in a manner that is successful in avoiding infringement. Moreover, if we are sued for infringement and lose, we could be required to pay substantial damages and/or be enjoined from using or selling the infringing products or technology. Any of the foregoing could cause us to incur significant costs and prevent us from selling our products and could have an adverse effect on our financial condition and results of operations.

Our inability to consummate and effectively incorporate acquisitions into our business operations may adversely affect our results of operations.

We invest time and resources into carefully assessing opportunities for acquisitions, and we continue to evaluate potential acquisition opportunities to support, strengthen and grow our business, including potentially in the near term. Despite diligence and integration planning, acquisitions still present certain risks, including the time and economic costs of integrating an acquisition’s technology, control and financial systems, unforeseen liabilities, and the difficulties in bringing together different work cultures and personnel. Although we have completed many acquisitions, there can be no assurance that we will be able to locate suitable acquisition candidates, acquire possible acquisition candidates, acquire such candidates on

 

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commercially reasonable terms, or integrate acquired businesses successfully in the future. Future acquisitions, including those we may consummate in the near term, may require us to incur additional debt and contingent liabilities, which may adversely affect our business, results of operations and consolidated financial condition. The process of integrating acquired businesses into our existing operations may result in operating, contractual and supply chain difficulties, such as the failure to retain customers or management personnel. Such difficulties may divert significant financial, operational and managerial resources from our existing operations, and make it more difficult to achieve our operating and strategic objectives.

Additionally, we may not be able to consummate acquisitions in the future on terms acceptable to us, or at all. Future acquisitions are accompanied by the risk that the obligations and liabilities of an acquired company may not be adequately reflected in the historical financial statements of that company and the risk that those historical financial statements may be based on assumptions that are incorrect or inconsistent with our assumptions or approach to accounting policies. Any of these material obligations, liabilities or incorrect or inconsistent assumptions could adversely impact our results of operations and financial condition.

We will incur significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact our financial performance and could cause our results of operations and financial condition to suffer.

We will incur significant legal, accounting, insurance and other expenses as a result of being a public company. Laws, regulations and standards relating to corporate governance and public disclosure for public companies, including the Dodd-Frank Act, the Sarbanes-Oxley Act, regulations related thereto and the rules and regulations of the SEC and                 , will significantly increase the costs and the time that must be devoted to compliance matters. We expect that compliance with these laws, rules and regulations will substantially increase our expenses, including our legal and accounting costs, and make some activities more time-consuming and costly, and these new obligations will require attention from our senior management and could divert their attention away from the day-to-day management of our business. We also expect these laws, rules and regulations to make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as officers. As a result of the foregoing, we expect a substantial increase in legal, accounting, insurance and certain other expenses in the future, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our subordinate voting shares, fines, sanctions and other regulatory action and potentially civil litigation.

Our management team has limited experience managing a public company.

Many members of our management team have limited experience managing a publicly-traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage us as a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations and financial condition.

Social unrest may materially and adversely impact our business.

In recent months, there has been increasing social unrest throughout the United States and Europe (including looting, protests, strikes and street demonstrations). We have over 85 offices, factories and warehouses located across the United States and Europe, and such social unrest could materially affect the ability of certain of these offices to operate. Prolonged disruptions because of such social unrest in the markets in which we operate could disrupt our relationships with customers, employees and referral sources located in affected areas and, in the case of our corporate office, our ability to provide administrative support services, including billing and collection services. Future civil insurrection, social unrest, protests, looting, strikes or

 

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street demonstrations may adversely affect our reputation, business and consolidated financial condition, results of operations and cash flows.

Risks Related to our Indebtedness

Our substantial indebtedness makes us more sensitive to adverse economic conditions, may limit our ability to plan for or respond to significant changes in our business and requires a significant amount of cash to service our debt payment obligations that we may be unable to generate or obtain.

As of December 31, 2019, we had $2,522.5 million of total debt outstanding and up to $129.3 million of additional borrowing capacity under our revolving credit facility. Specifically our level of indebtedness could have important consequences on our business, including the following:

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making it more difficult for us to satisfy our obligations with respect to our indebtedness;

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requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

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limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

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increasing our vulnerability to general adverse economic and industry conditions;

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exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

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exposing us to volatility between the U.S. dollar and euro as a portion of our borrowings are euro- denominated;

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limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

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placing us at a disadvantage compared to other, less leveraged competitors; and

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increasing our cost of borrowing.

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Our ability to service our indebtedness will depend on our future performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors. Some of these factors are beyond our control. If we cannot service our indebtedness and meet our other obligations and commitments, we might be required to refinance our debt or to dispose of assets to obtain funds for such purposes. We cannot guarantee that refinancing or asset dispositions could be effected on a timely basis or on satisfactory terms, if at all or would be permitted by the terms of our debt instruments.

Despite current indebtedness levels and restrictive covenants, we may still be able to incur substantially more indebtedness or make certain restricted payments, which could further exacerbate the risks associated with our substantial indebtedness.

We may be able to incur significant additional indebtedness in the future. Although the financing documents governing our indebtedness contain restrictions on the incurrence of additional indebtedness and liens, these restrictions are subject to a number of important qualifications and exceptions, and the additional indebtedness and liens incurred in compliance with these restrictions could be substantial.

The financing documents governing our indebtedness permit us to incur certain additional indebtedness, including liabilities that do not constitute indebtedness as defined in the financing documents. We may also consider investments in joint ventures or acquisitions, which may increase our indebtedness. In addition, financing documents governing our indebtedness do not restrict Bain Capital from creating new holding companies that may be able to incur indebtedness without regard to the restrictions set forth in the financing documents governing our indebtedness. If new debt is added to our currently anticipated indebtedness levels, the related risks that we face could intensify.

 

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The terms of the financing documents governing our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

The financing documents governing our indebtedness contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including restrictions on our ability to:

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incur additional indebtedness;

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pay dividends on or make distributions in respect of capital stock or repurchase or redeem capital stock;

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prepay, redeem or repurchase certain indebtedness;

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sell or otherwise dispose of assets, including capital stock of restricted subsidiaries;

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incur liens;

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enter into transactions with affiliates;

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enter into agreements restricting the ability of our subsidiaries to pay dividends; and

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consolidate, merge or sell all or substantially all of our assets.

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You should read the discussion under the heading “Description of Certain Indebtedness” for further information about these covenants.

The restrictive covenants in the financing documents governing our indebtedness require us to maintain a specified financial ratio and our ability to meet that financial ratio can be affected by events beyond our control.

A breach of the covenants or restrictions under the financing documents governing our indebtedness could result in an event of default under such documents. Such a default may allow the creditors to accelerate the related debt, which may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event the holders of our indebtedness accelerate the repayment, we may not have sufficient assets to repay that indebtedness or be able to borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms acceptable to us. As a result of these restrictions, we may be:

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limited in how we conduct our business;

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unable to raise additional debt or equity financing to operate during general economic or business downturns; or

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unable to compete effectively or to take advantage of new business opportunities.

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These restrictions, along with restrictions that may be contained in agreements evidencing or governing other future indebtedness, may affect our ability to grow in accordance with our growth strategy.

Risks Related to Ownership of our Ordinary Shares

An active trading market for our ordinary shares may not develop and the trading price for our ordinary shares may fluctuate significantly.

We have applied to list our ordinary shares on                 . Prior to the completion of this offering, there has been no public market for our ordinary shares, and we cannot assure you that a liquid public market for our ordinary shares will develop. If an active public market for our ordinary shares does not develop following the completion of this offering, the market price and liquidity of our ordinary shares may be materially and adversely affected. The initial public offering price for our ordinary shares was determined by negotiation between us and the underwriters based upon several factors, and we can provide no assurance that the trading price of our ordinary shares after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ordinary shares.

 

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The trading price of our ordinary shares may be volatile, which could result in substantial losses to investors.

The trading price of our ordinary shares may be volatile and could fluctuate widely due to factors beyond our control. In addition to market and industry factors, the price and trading volume for our ordinary shares may be highly volatile for factors specific to our own operations, including the following:

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variations in our revenues, earnings and cash flow;

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announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

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announcements of new products, services and expansions by us or our competitors;

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changes in financial estimates by securities analysts;

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detrimental adverse publicity about us, our products or services or our industry;

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additions or departures of key members of our management team or other personnel;

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release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

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potential litigation or regulatory investigations.

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Any of these factors may result in large and sudden changes in the volume and price at which our ordinary shares will trade.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.

The trading market for our ordinary shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ordinary shares, the market price for our ordinary shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ordinary shares to decline.

The sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.

Sales of substantial amounts of our ordinary shares in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and could materially impair our ability to raise capital through equity offerings in the future. The ordinary shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. There will be                 ordinary shares outstanding immediately after this offering. In connection with this offering, we and each of our directors and officers named in the section “Management,” and certain shareholders, including Bain Capital, have agreed not to sell any ordinary shares for           months from the date of this prospectus without the prior written consent of                 and       , as representatives of the underwriters, subject to certain exceptions. However, the underwriters may release these securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”). We cannot predict what effect, if any,

 

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market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ordinary shares. See “Underwriting” and “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling our securities after this offering.

Because we do not expect to pay dividends in the foreseeable future after this offering, you must rely on price appreciation of our ordinary shares for return on your investment.

We currently intend to retain all of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ordinary shares as a source for any future dividend income.

Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ordinary shares will likely depend entirely upon any future price appreciation of our ordinary shares. There is no guarantee that our ordinary shares will appreciate in value after this offering or even maintain the price at which you purchased our ordinary shares. You may not realize a return on your investment in our ordinary shares and you may even lose your entire investment.

You must rely on the judgment of our management as to the use of the net proceeds from this offering, and such use may not produce income or increase our share price.

Our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not improve our efforts to achieve or maintain profitability or increase our share price. The net proceeds from this offering may be placed in investments that do not produce income or that lose value.

We may be a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. Holders.

Under the United States Internal Revenue Code of 1986, as amended (the “Code”), a non-U.S. corporation (such as ourselves) will be classified as a passive foreign investment company(a “PFIC”) for any taxable year if, for such year after the application of certain look-through rules with respect to subsidiaries, either

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At least 75% of our gross income for the year is “passive income” ​(as described below); or

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•

The average percentage of our assets (determined at the end of each quarter) during the taxable year which produces “passive income” or which are held for the production of “passive income” is at least 50%.

​

“Passive income” generally includes dividends, interest, rents, royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

Based on the nature of our business, our financial statements, our expectations about the nature and amount of our income, assets and activities and the expected price of our ordinary shares in this offering, we do not expect to be a PFIC for our current taxable year. If it is determined that we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our ordinary shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

In addition, we may, directly or indirectly, hold equity interests in other PFICs. Whether we or any of our subsidiaries will be a PFIC in 2020 or any future year is a factual determination that must be made annually at the close of each taxable year, and, thus, is subject to significant uncertainty, because, among

 

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other things, a determination of whether a company is a PFIC must be made annually after the end of each taxable year and will depend on the composition of our income and assets and the market value of our assets from time to time. Accordingly, there can be no assurance that we (or any of our subsidiaries) will not be a PFIC in 2020 or any future taxable year.

If we are a PFIC for any taxable year during which a U.S. Holder (as defined in “Certain Material Income Tax Considerations — U.S. Federal Income Tax Considerations”) holds our ordinary shares, we generally would continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during which the U.S. Holder holds our ordinary shares even if we ceased to meet the threshold requirements for PFIC status, unless certain exceptions apply. Such a U.S. Holder may be subject to adverse U.S. federal income tax consequences, including (i) the treatment of all or a portion of any gain on disposition as ordinary income, (ii) the application of a deferred interest charge on such gain and the receipt of certain dividends and (iii) compliance with certain reporting requirements. There is no assurance that we will provide information that will enable investors to make a qualified electing fund election, also known as a “QEF Election,” that could mitigate the adverse U.S. federal income tax consequences should we be classified as a PFIC.

For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. Holders if we were determined to be a PFIC, see “Certain Material Income Tax Considerations — Material U.S. Federal Income Tax Consideration — Passive Foreign Investment Company.”

The amended and restated memorandum and articles of association that we intend to adopt contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares.

We intend to adopt an amended and restated memorandum and articles of association immediately prior to the completion of this offering. Our proposed amended and restated memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. In addition, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preferred shares could be issued quickly with terms having the effect of delaying or preventing a change in control of our company or making removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ordinary shares may fall and the voting and other rights of the holders of our ordinary shares underlying the ordinary shares may be materially and adversely affected.

Our principal shareholders have substantial influence over our company. Their interests may not be aligned with the interests of our other shareholders, and they could prevent or cause a change of control or other transactions.

Following the completion of this offering, affiliates of Bain Capital will beneficially own an aggregate of    % of our outstanding ordinary shares (or    % of our outstanding ordinary shares if the underwriters exercise in full their option to purchase additional shares). Bain Capital could have a significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions. In cases where Bain Capital’s interests are aligned and they vote together, Bain Capital will also have the power to prevent or cause a change in control. Without the consent of some or all of these principal shareholders, we may be prevented from entering into transactions that could be beneficial to us or our minority shareholders. In addition, our directors and officers could violate their fiduciary duties by diverting business opportunities from us to themselves or others. The interests of our largest shareholders may differ from the interests of our other shareholders. The concentration in the ownership of our ordinary shares may cause a material decline in the value of our ordinary shares. For more information regarding our principal shareholders and their affiliated entities, see “Principal Shareholders.”

 

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You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our memorandum and articles of association, the Companies Law (2020 Revision) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law differ from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more prescriptive and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the U.S. Currently, we do not plan to rely on home country practice with respect to any corporate governance matter. However, if we choose to follow our home country practice in the future, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Law of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Comparison of Cayman Islands Corporate Law and U.S. Corporate Law.”

We will incur significantly increased costs and devote substantial management time as a result of the listing of our ordinary shares.

We will incur additional legal, accounting and other expenses as a public reporting company. For example, we will be required to comply with the additional requirements of the rules and regulations of the SEC and the listing standards of                 , including applicable corporate governance practices. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. We cannot predict or estimate the number of additional costs we may incur as a result of becoming a public company or the timing of such costs.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidelines are provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations

 

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and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may also initiate legal proceedings against us and our business may be adversely affected.

We are a “controlled company” and, as a result, we are exempt from obligations to comply with certain corporate governance requirements.

Upon the completion of this offering, Bain Capital will own approximately           million of our ordinary shares, or approximately    % of our outstanding ordinary shares (or    % of our outstanding ordinary shares if the underwriters exercise in full their option to purchase additional shares). Accordingly, we will be a “controlled company” for purposes of the           listing requirements. As such, we will be exempt from the obligation to comply with certain corporate governance requirements, including the requirements that a majority of our board of directors consists of independent directors, and that we have nominating and compensation committees that are each composed entirely of independent directors. These exemptions do not modify the requirement for a fully independent audit committee, which is permitted to be phased-in as follows: (1) one independent committee member at the time of our initial public offering; (2) a majority of independent committee members within 90 days of our initial public offering; and (3) all independent committee members within one year of our initial public offering. Similarly, once we are no longer a “controlled company,” we must comply with the independent board committee requirements as they relate to the nominating and compensation committees, on the same phase-in schedule as set forth above, with the trigger date being the date we are no longer a “controlled company” as opposed to our initial public offering date. Additionally, we will have 12 months from the date we cease to be a “controlled company” to have a majority of independent directors on our board of directors.

In addition, our amended and restated memorandum and articles of association that will become effective upon or prior to the completion of this offering will contain a provision that provides Bain Capital the right to designate: (i) all of the nominees for election to our board of directors for so long as Bain Capital beneficially owns    % or more of the total number of ordinary shares then outstanding; (ii) a number of directors (rounded up to the nearest whole number) equal to    % of the total directors for so long as Bain Capital beneficially owns at least    % and less than    % of the total number of ordinary shares then outstanding; (iii) a number of directors (rounded up to the nearest whole number) equal to    % of the total directors for so long as Bain Capital beneficially owns at least    % and less than    % of the total number of ordinary shares then outstanding; (iv) two directors for so long as Bain Capital beneficially owns at least    % and less than    % of the total number of ordinary shares then outstanding; and (v) one director for so long as Bain Capital beneficially owns at least    % and less than    % of the total number of ordinary shares then outstanding. This provision will also provide that Bain Capital may assign such right to an affiliate of Bain Capital. Our amended and restated memorandum and articles of association will prohibit us from increasing or decreasing the size of our board of           directors without the prior written consent of Bain Capital for so long as it has nomination rights.

You will incur immediate dilution as a result of this offering.

If you purchase ordinary shares in this offering, you will pay more for your shares than the pro forma net tangible book value of your shares. As a result, you will incur immediate dilution of $      per share, representing the difference between the initial public offering price of $      per share and our pro forma net tangible book deficit per share as of                 of $      . Accordingly, should we be liquidated at our book value, you would not receive the full amount of your investment. In addition, you may also experience additional dilution upon future equity issuances or the exercise of stock options to purchase ordinary shares granted to our employees, consultants and directors under our equity compensation plans. See “Dilution.”

The issuance of preferred shares could adversely affect holders of ordinary shares.

Our board of directors is authorized to issue preferred shares without any action on the part of holders of our ordinary shares. Our board of directors also has the power, without shareholder approval, to

 

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set the terms of any such preferred shares that may be issued, including voting rights, dividend rights, preferences over our ordinary shares with respect to dividends or if we liquidate, dissolve or wind up our business and other terms. If we issue preferred shares in the future that have preference over our ordinary shares with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred shares with voting rights that dilute the voting power of our ordinary shares, the rights of holders of our ordinary shares or the price of our ordinary shares could be adversely affected.

Certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands company and a portion our assets are located outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us in the United States in the event that you believe that your rights have been infringed under U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands may render you unable to enforce a judgment against our assets. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.

 

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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “will”, “should”, “can have”, “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results or our plans and objectives for future operations, growth initiatives, or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

•

the continuation of the COVID-19 pandemic may cause disruptions to our operations, customer demand, and our suppliers’ ability to support us;

​

•

uncertain global economic conditions which have had and could continue to have an adverse effect on our consolidated financial condition and results of operations;

​

•

the global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and results of operations;

​

•

fluctuations between non-U.S. currencies and the U.S. dollar could materially impact our consolidated financial condition or results of operations;

​

•

political and economic instability and risk of government actions affecting our business and our customers or suppliers may adversely impact our business, results of operations and cash flows;

​

•

raw material pricing, availability and allocation by suppliers as well as energy-related costs may negatively impact our results of operations, including our profit margins;

​

•

if we do not develop new and innovative products or if customers in our markets do not accept them, our results would be negatively affected;

​

•

cyber risks and the failure to maintain the integrity of our operational or security systems or infrastructure;

​

•

the introduction of the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting may adversely affect our effective rate of tax in future periods;

​

•

the consolidation of customers may adversely affect our business, consolidated financial condition or results of operations;

​

•

we experience competition in the markets for our products and services and in the geographic areas in which we operate;

​

•

instability and uncertainty in the credit and financial markets could adversely impact the availability of credit that we and our customers need to operate our business;

​

•

new and stricter regulations may affect our business and consolidated condition and results of operations; and

​

•

the other risks described under “Risk Factors”.

​

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from

 

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time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this prospectus are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 

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MARKET AND INDUSTRY DATA

Unless otherwise indicated, information in this prospectus concerning economic conditions, our industry, our markets and our competitive position is based on a variety of sources, including information from independent industry analysts and publications, as well as our own estimates and research. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the information presented in this prospectus is generally reliable, forecasts, assumptions, expectations, beliefs, estimates and projects involve risk and uncertainties and are subject to change based on various factors, including those described under “Forward-Looking Statements” and “Risk Factors”.

 

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USE OF PROCEEDS

We estimate that our net proceeds from this offering will be approximately $      million (or approximately $      million if the underwriters’ option to purchase additional shares is exercised in full), assuming an initial public offering price of $      per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us.

The principal purposes of this offering are to obtain additional capital to fund our operations and growth, create a public market for our ordinary shares and enable access to the public equity markets for us and our shareholders. We expect to use approximately $      million of net proceeds of this offering (or $      million of the net proceeds of this offering if the underwriters exercise their option to purchase additional shares in full) to repay outstanding borrowings, including fees and expenses under our Senior Secured Credit Facilities. See “Use of Proceeds” for additional information. and the remainder for general corporate purposes.

As of December 31, 2019, we had $1,944.5 million of indebtedness outstanding under our Term Loan Facility and $120.0 million outstanding under our Revolving Credit Facility. At December 31, 2019, the interest rate for the U.S. dollar term loan was 4.93%, the interest rate for the Euro term loan was 3.25% and the interest rate associated with the Revolving Credit Facility was 4.37%. See “Description of Certain Indebtedness.”

Each $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $      million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us.

Each 1,000,000 increase or decrease in the number of shares offered would increase or decrease the net proceeds to us from this offering by approximately $      million, assuming that the assumed initial public offering price per share for the offering remains at $      , which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.

The foregoing represents our current intentions with respect to the use and allocation of the net proceeds of this offering based upon our present plans and business conditions, but our management will have significant flexibility and discretion in applying the net proceeds. The occurrence of unforeseen events or changed business conditions could result in application of the net proceeds of this offering in a manner other than as described in this prospectus.

 

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DIVIDEND POLICY

We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness and, therefore, we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our ordinary shares is limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us under the terms of our Senior Secured Credit Facilities and the indenture governing our Senior Notes. Any future determination to pay dividends will be at the discretion of our board of directors, subject to compliance with covenants in current and future agreements governing our and our subsidiaries’ indebtedness, and will depend on our results of operations, financial condition, capital requirements and other factors that our board of directors may deem relevant.

 

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CAPITALIZATION

The following table describes our cash and cash equivalents and capitalization as of September 30, 2020, as follows:

•

on an actual basis; and

​

•

on a pro forma basis, after giving effect to the sale of     ordinary shares in this offering and the application of the net proceeds from this offering as set forth under “Use of Proceeds”, assuming an initial public offering price of $      per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.

​

The pro forma information set forth in the table below is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table in conjunction with our consolidated financial statements and the related notes, “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

A $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization on a pro forma basis by approximately $      million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us.

Similarly, each 1,000,000 increase or decrease in the number of ordinary shares offered in this offering would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization on a pro forma basis by approximately $      million, based on an assumed initial public offering price of $      per share, which is the midpoint of the estimated offering

 

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price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.

Except as otherwise indicated, the above discussion and table are based on      ordinary shares outstanding as of September 30, 2020 and excludes:

•

      ordinary shares issuable upon the vesting and settlement of restricted shares and performance-based shares outstanding as of September 30, 2020; and

​

•

      ordinary shares reserved for future issuance under our 2021 Omnibus Incentive Equity Plan.

​

 

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DILUTION

If you invest in our ordinary shares in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our ordinary shares in this offering and the pro forma net tangible book value per share of our ordinary shares immediately after this offering.

As of September 30, 2020, we had a net tangible book value of $      million, or $      per ordinary share. Net tangible book value per share is equal to our total tangible assets, less total liabilities, divided by the number of our outstanding ordinary shares.

After giving effect to the sale of ordinary shares in this offering, after deducting the underwriting discount and estimated offering expenses payable by us, and the application of the net proceeds of this offering to repay indebtedness as set forth under “Use of Proceeds”, at an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover of this prospectus, our pro forma net tangible book value as of September 30, 2020 would have been $      million, or $      per ordinary share. This represents an immediate increase in net tangible book value of $      per share to our existing shareholders and an immediate dilution in net tangible book value of $      per share to investors participating in this offering at the assumed initial public offering price. The following table illustrates this per share dilution:

A $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase or decrease our pro forma net tangible book value per share after this offering by $      , and would increase or decrease the dilution per share to the investors in this offering by $      , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us. Similarly, each increase or decrease of one million shares in the number of ordinary shares offered by us would increase or decrease our pro forma net tangible book value per share after this offering by $      and would increase or decrease dilution per share to investors in this offering by      , assuming the assumed initial public offering price, which is the midpoint of the price range set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional shares in full, the pro forma net tangible book value per share after this offering would be $      , and the dilution in pro forma net tangible book value per share to new investors in this offering would be $      .

The following table presents, on a pro forma basis as described above, as of September 30, 2020, the differences between our existing shareholders and the investors purchasing ordinary shares in this offering, with respect to the number of shares purchased, the total consideration paid to us, and the average price per share paid by our existing shareholders or to be paid to us by investors purchasing shares in this offering at an assumed offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, before deducting the underwriting discount and estimated offering expenses payable by us.

 

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A $1.00 increase or in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease the total consideration paid by new investors by $      million and increase or decrease the percent of total consideration paid by new investors by    %, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and before deducting the underwriting discount and estimated offering expenses payable by us.

Similarly, each 1,000,000 increase or decrease in the number of shares offered would increase or decrease the net proceeds to us from this offering by approximately $      million, assuming that the assumed initial public offering price per share for the offering remains at $      , which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.

Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters’ option to purchase additional shares. After giving effect to sales of shares in this offering, assuming the underwriters’ option to purchase additional shares is exercised in full, our existing shareholders would own    % and our new investors would own    % of the total number of ordinary shares outstanding after this offering.

In addition, to the extent we issue any additional stock options or any stock options are exercised, or we issue any other securities or convertible debt in the future, investors participating in this offering may experience further dilution.

Except as otherwise indicated, the above discussion and tables are based on      ordinary shares outstanding as of September 30, 2020 and excludes:

•

ordinary shares issuable upon vesting and settlement of restricted shares, or performance-based shares, as of        , 2020; and

​

•

ordinary shares reserved for future issuance under the 2021 Omnibus Incentive Equity Plan.

​

 

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SELECTED CONDENSED CONSOLIDATED AND COMBINED HISTORICAL FINANCIAL DATA

The following tables present the selected condensed consolidated financial data of Diversey and the selected condensed combined financial data of the Predecessor Diversey Business. We have derived the selected condensed consolidated and combined financial data of Diversey as of December 31, 2019 and 2018 and for the fiscal years ended December 31, 2019 and 2018, and the Successor period of March 15, 2017 through December 31, 2017 and the Predecessor period of January 1 through September 5, 2017 from our audited condensed consolidated financial statements for such years, which are included elsewhere in this prospectus. We have derived the selected condensed consolidated and combined financial data as of December 31, 2017, 2016 and 2015 and for the fiscal years ended December 31, 2016 and 2015 from our audited combined financial statements of Diversey and the Predecessor Diversey Business and related notes thereto that do not appear in this prospectus. Our historical results are not necessarily indicative of the results to be expected in any future period.

Diversey Holdings, Ltd. was formed on November 3, 2020 in anticipation of this offering and has not, to date, conducted any activities other than those incident to its formation and the preparation of the prospectus and the registration statement of which this prospectus forms a part.

The information set forth below should be read together with the “Summary Condensed Consolidated and Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated and combined financial statements and the accompanying notes included elsewhere in this prospectus.

 

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