SK Capital Undecided On $922 Million Dividend

SK Capital may not take its mammoth $922 million dividend from its portfolio company, Ascend Performance Materials.

Morgan Stanley has reduced a planned $800 million term loan for Ascend to $500 million while a $275 million revolver has been cut to $150 million, a financing source says. Such a reduction implies that the dividend could be cut in half, the person says. Morgan Stanley is leading the sale of the loan.

Barry Siadat, SK’s co-founder and a managing director, confirmed that Morgan has a mandate to build a book for a $500 million term loan B. Morgan has exceeded that number, he says. The $275 million revolver is closed, Siadat says.

SK Capital hasn’t decided whether to take the dividend this year, Siadat says. “What we will take out and what we will pay out in a dividend is something we haven’t decided on,” he says. “What term loan we take out or don’t take out depends on the market.”

Last month, peHUB reported that SK planned to take a $922 million dividend from Ascend due to tax issues. SK Capital, a private investment firm, bought Ascend in April 2009 for roughly $50 million cash.

SK Capital decided to take the $922 million dividend because the so-called Bush tax cuts are set to expire at the end of 2010 and taxes on dividends may increase, Siadat told peHUB Friday. “If the tax cut is extended we don’t want the dividend.”