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Dynacast Finance Inc., et al. – ‘S-4’ on 2/13/12

On:  Monday, 2/13/12, at 5:29pm ET   ·   Private-to-Public:  Document/Exhibit ¶  –  Release Delayed   ·   Accession #:  1193125-12-56752   ·   File #s:  333-179497, -01, -02, -03, -04, -05, -06

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/13/12  Dynacast Finance Inc.             S-4¶                  48:10M                                    Donnelley … Solutions/FA
          Dyncast US I LLC
          Dynacast International LLC
          Dynacast International Inc.
          KDI Acquisition LLC
          Dynacast MFG, Inc.
          Dynacast Inc.

Document/Exhibit                   Description                      Pages   Size 

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                Business-Combination Transaction                                 
48: CORRESP   ¶ Comment-Response or Other Letter to the SEC         HTML     12K 
 2: EX-2.1      Plan of Acquisition, Reorganization, Arrangement,   HTML    212K 
                Liquidation or Succession                                        
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12: EX-3.10     Articles of Incorporation/Organization or By-Laws   HTML     42K 
13: EX-3.11     Articles of Incorporation/Organization or By-Laws   HTML     24K 
14: EX-3.12     Articles of Incorporation/Organization or By-Laws   HTML     42K 
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16: EX-3.14     Articles of Incorporation/Organization or By-Laws   HTML     30K 
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11: EX-3.9      Articles of Incorporation/Organization or By-Laws   HTML     24K 
17: EX-4.1      Instrument Defining the Rights of Security Holders  HTML    636K 
18: EX-4.3      Instrument Defining the Rights of Security Holders  HTML     25K 
19: EX-5.1      Opinion re: Legality                                HTML     25K 
20: EX-10.1     Material Contract                                   HTML    173K 
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21: EX-10.2     Material Contract                                   HTML     27K 
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23: EX-10.4     Material Contract                                   HTML    114K 
24: EX-10.5     Material Contract                                   HTML   1.84M 
25: EX-10.6     Material Contract                                   HTML    292K 
26: EX-10.7     Material Contract                                   HTML    127K 
27: EX-10.8     Material Contract                                   HTML    141K 
28: EX-10.9     Material Contract                                   HTML     80K 
40: EX-21.1     Subsidiaries                                        HTML     21K 
42: EX-23.2     Consent of Experts or Counsel                       HTML     16K 
43: EX-25.1     Statement re: Eligibility of Trustee -- Form T-1|2  HTML     32K 
44: EX-99.1     Miscellaneous Exhibit                               HTML     88K 
45: EX-99.2     Miscellaneous Exhibit                               HTML     34K 
46: EX-99.3     Miscellaneous Exhibit                               HTML     22K 
47: EX-99.4     Miscellaneous Exhibit                               HTML     28K 
39: EX-12.1     Statement re: Computation of Ratios                 HTML     40K 
41: EX-16.1     Letter re: Change in Certifying Accountant          HTML     15K 

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As filed with the Securities and Exchange Commission on February 13, 2012

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

FOR ADDITIONAL REGISTRANTS, SEE “TABLE OF ADDITIONAL REGISTRANTS” BELOW

14045 Ballantyne Corporate Place, Suite 300

Charlotte, North Carolina 28277

(704) 927-2790

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrants’ Principal Executive Offices)

Adrian D. Murphy

Dynacast International Inc.

14045 Ballantyne Corporate Place, Suite 300

Charlotte, North Carolina 28277

(704) 927-2790

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

Copies to:

Elizabeth G. Wren, Esq.

McGuireWoods LLP

201 N. Tryon Street, 28^th Floor

Charlotte, NC 28202

(704) 343-2000

Approximate date of commencement of proposed exchange offer: As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) 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.  ¨

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

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ¨

CALCULATION OF REGISTRATION FEE

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants 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 the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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TABLE OF ADDITIONAL REGISTRANTS

The address, including zip code and telephone number, including area code, for each Additional Registrant’s principal executive offices is c/o Dynacast International Inc., 14045 Ballantyne Corporate Place, Suite 300, Charlotte, North Carolina 28277, (704) 927-2790.

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The information in this prospectus is not complete and may be changed. We may not complete this exchange offer or issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and or the solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 13, 2012

PROSPECTUS

Dynacast International LLC

Dynacast Finance Inc.

Exchange Offer for All Outstanding

9.25% Senior Secured Second Lien Notes due 2019 and Related Guarantees

We are offering to exchange, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal (the “exchange offer”), up to $350,000,000 aggregate principal amount of our new 9.25% Senior Secured Second Lien Notes due 2019 (the “Exchange Notes”) and related guarantees, that have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for any and all of our outstanding 9.25% Senior Secured Second Lien Notes due 2019 (the “Outstanding Notes” and together with the Exchange Notes, the “Notes”) and related guarantees, to satisfy our obligations under a registration rights agreement that we entered into in connection with the sale of the Outstanding Notes and related guarantees in a private placement transaction.

The terms of the Exchange Notes and related guarantees are identical in all material respects to the terms of the Outstanding Notes, except that the Exchange Notes are registered under the Securities Act and will not be subject to restrictions on transfer or contain provisions relating to additional interest, will bear a different CUSIP number from the Outstanding Notes and will not entitle the holders to registration rights. The Exchange Notes will evidence the same debt as the Outstanding Notes, and the Exchange Notes and related guarantees will be issued under the same indenture as the Outstanding Notes and related guarantees.

The Exchange Notes will be guaranteed, jointly and severally, on a senior secured basis by Dynacast International Inc., our parent company, and all of its domestic subsidiaries that guarantee the senior secured first lien credit facilities under which Dynacast International LLC is the borrower (the “Senior Credit Facilities”). The guarantee of the Exchange Notes by Dynacast International Inc. will be full and unconditional and the guarantees of the subsidiary guarantors will be full and unconditional subject to customary release provisions. The Exchange Notes will be secured by second priority liens on substantially all of our assets and the assets of the guarantors (whether now owned or hereafter arising or acquired), subject to certain exceptions, permitted liens and encumbrances.

No established market currently exists for the Outstanding Notes or the Exchange Notes. We do not intend to list the Exchange Notes on any securities exchange or quotation system.

The exchange offer will expire at 5:00 p.m. New York City time on                     , 2012, which is the 21^st business day after the date of this prospectus, unless extended (such date and time, as extended, the “Expiration Date”). Tenders of Outstanding Notes may be withdrawn prior to the Expiration Date. Upon the terms and conditions of the exchange offer, we will exchange all Outstanding Notes that are validly tendered on or prior to the Expiration Date and not validly withdrawn for an equal principal amount of Exchange Notes. See “The Exchange Offer” for further information on how to exchange Outstanding Notes for Exchange Notes.

See “Risk Factors” beginning on page 20 for a discussion of risk factors that you should consider prior to participating in the exchange offer.

Each broker-dealer that receives Exchange Notes for its own account must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Outstanding Notes where such Outstanding Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 90 days after the Expiration Date, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

Neither the Securities and Exchange Commission (“SEC”) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

                    , 2012

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You should rely only on the information contained in this prospectus or in any additional written communication prepared by or authorized by us. We have not authorized anyone to provide you with any information or to represent anything about us, our financial results or the exchange offer that is not contained in this prospectus or in any additional written communication prepared by or on behalf of us. If given or made, any such other information or representation should not be relied upon as having been authorized by us. We are not making an offer to exchange the Outstanding Notes in any jurisdiction where the offer or sale is not permitted. You should assume that the information in this prospectus or in any additional written communication prepared by or on behalf of us is accurate only as of the date on its cover page.

PRESENTATION OF FINANCIAL INFORMATION

As more fully described in this prospectus, on July 19, 2011, Dynacast International Inc. (formerly KDI Holdings, Inc.), an entity then recently formed by affiliates of Kenner & Company, Inc. (“Kenner”) and their co-investors, acquired from Melrose plc and certain of its subsidiaries (“Melrose”) the outstanding equity of the entities (the “Dynacast Group”) that prior thereto had conducted the business of Dynacast International Inc. and its subsidiaries described in this prospectus (the “Dynacast business”). For financial reporting purposes, we refer to the Dynacast Group prior to the acquisition as the “Predecessor” and we refer to Dynacast International Inc. and its consolidated subsidiaries, including Dynacast International LLC and Dynacast Finance Inc., the co-issuers of the Notes, following the acquisition as the “Successor.” The financial statements included in this prospectus

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consist of (i) the combined financial statements of the Predecessor as of and for the periods prior to the completion of the acquisition on July 19, 2011 and (ii) the consolidated financial statements of the Successor, as of and for periods after completion of the acquisition. In this prospectus, references to the “Predecessor 2011 Period” refer to the period from January 1, 2011 to July 19, 2011 and references to the “Successor 2011 Period” refer to the period from July 20, 2011 to September 30, 2011. We refer to the combined financial statements of the Predecessor and the consolidated financial statements of the Successor in this prospectus as “our financial statements.”

Prior to the acquisition of the Dynacast Group by Dynacast International Inc. (the “Acquisition”), the Dynacast business was not owned by a single legal entity and, accordingly, historical consolidated financial information did not exist. Instead, the financial information for the Predecessor presented herein represents an aggregation of the financial information of the Dynacast Group. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and are derived from the accounting records of Melrose by aggregating the historical results of operations, and the historical basis of assets and liabilities, of the Dynacast Group. The consolidated financial statements of the Successor present its financial condition, results of operations and cash flows on a successor basis, reflecting the impact of the preliminary purchase price allocation made in accordance with accounting guidance for business combinations using the acquisition method of accounting, based on the preliminary estimated fair values of the assets and liabilities acquired as of July 19, 2011. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Matters Affecting Comparability of Results.”

The fiscal year of the Predecessor ended, and the fiscal year of the Successor ends, on December 31 of each year. The first and third fiscal quarters of the Predecessor ended on the Sunday nearest the end of the relevant calendar quarter and the second fiscal quarter ended on June 30 of each year. The fiscal quarters of the Successor are calendar quarters.

MARKET, RANKING AND OTHER INDUSTRY DATA

This prospectus includes market share, ranking and industry data and forecasts that we obtained from industry publications and surveys, public filings and internal company sources. Statements as to our market position and ranking are based on market data currently available to us, management’s estimates and assumptions we have made regarding the size of our markets within our industry. While we are not aware of any misstatements regarding this type of industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus.

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RISK FACTORS

You should carefully consider the risk factors set forth below as well as the other information contained in this prospectus before deciding to participate in the exchange offer. If any of those risks actually occurs, our business, financial condition and results of operations would suffer. The risks discussed below also include forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” in this prospectus.

Risks Related to Our Business

The recent global financial crisis may have effects on our customers and suppliers that would result in material adverse effects on our business, financial condition and results of operations.

The recent global financial crisis included, among other things, significant reductions in available capital and liquidity from banks and other providers of credit, substantial reductions and fluctuations in equity and currency values worldwide, and concerns that the worldwide economy may enter into a prolonged recessionary period or a prolonged period of volatile macro-economic results. These and related factors may materially adversely affect our customers’ access to capital or willingness to spend capital on our products or their ability to pay for products that they will order or have already ordered from us. In addition, the recent global financial crisis may materially adversely affect our suppliers’ access to capital and liquidity with which to maintain their inventories, production levels and product quality, which could cause them to raise prices or lower production levels.

These potential lasting effects of the recent global financial crisis are difficult to forecast and mitigate. As a consequence, our operating results for a particular period are difficult to predict and, therefore, prior results are not necessarily indicative of results to be expected in future periods. Any of the foregoing effects could have a material adverse effect on our business, financial condition and results of operations.

Any inability on our part to borrow or to meet our financial maintenance covenants in our Senior Credit Facilities would affect our financing flexibility and could have a material adverse effect on our business, financial condition and results of operations.

The future availability of bank borrowings under the revolving credit facility portion of the Senior Credit Facilities is based on our ability to meet financial maintenance covenants, which could be materially impacted by negative economic trends. Failure to meet the financial maintenance covenants could materially impact the availability and interest rate of future borrowings.

Disruptions, uncertainty or volatility in the credit markets may adversely impact the availability of credit already arranged and the availability and cost of credit in the future. These market conditions may limit our ability to replace, in a timely manner, maturing liabilities and access the capital necessary to grow and maintain our business. Accordingly, we may be forced to delay raising capital or pay unattractive interest rates, which could increase our interest expense, decrease our profitability and significantly reduce our financial flexibility.

We generally do not have long-term customer agreements and, to the extent one or more of our sales to particular industry end markets are impacted by sector downturns in that industry, we will experience reduced sales volumes.

The industry in which we compete is generally characterized by specialized, individual orders from customers. A significant portion of our customers are not contractually obligated to purchase products or services from us. Most customer orders are for specific product runs, and repeat business largely depends on our customers’ satisfaction with our products. Although our business does not depend on any one customer, we cannot be sure that any particular customer will continue to do business with us for any period of time. We also depend to some extent on sales to certain industries; to the extent these industries experience downturns, the business, financial condition and results of operations may be adversely affected.

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We are dependent on key customers, the loss of which may adversely affect our business.

We rely on several customers. Our top 10 customers accounted for approximately 34% of our revenue (inclusive of pass-through metal costs) during the nine months ended September 30, 2011. Due to competitive pressures, there is always the risk of losing key customers. Customer order volumes are dependent upon their markets and may be subject to delays or cancellations.

As a result of dependence on our key customers, we could experience a material adverse effect on our business, financial condition and results of operations if any of the following were to occur:

If any of our key customers become insolvent or file for bankruptcy, our ability to recover accounts receivable from that customer would be adversely affected and any payments we received in the preference period prior to a bankruptcy filing may be potentially recoverable by the bankruptcy estate of such customer. That scenario, as well as any one or more of the other factors enumerated above, could adversely impact our business, financial condition and results of operations.

We operate in a highly competitive industry.

The markets in which we sell our products are highly competitive. We believe that our principal competitive factors include an approach reflecting long-term business partnership and reliability, innovative specialized solutions, product quality and conformity to customer specifications, design and engineering capabilities, product development, timeliness of delivery and price. If we cannot remain at the forefront of these areas in our markets, our ability to remain competitive will be eroded. We will be adversely affected if our competitors develop products that are superior to our products or adapt more quickly than we do to evolving customer requirements.

Competitive pressures arise from existing competitors, other companies that may enter our existing or future markets and, in some cases, our customers, which may decide to internally produce items we sell. We cannot assure you that we will be able to compete successfully with existing or new competitors. Failure to compete successfully could have a material adverse effect on our business, financial condition and results of operations.

The loss of key executives could adversely impact our ability to successfully compete globally and may adversely impact our business, financial condition and results of operations.

Our success depends upon the efforts, abilities and expertise of our executive officers and other senior managers, including Simon J. Newman, our President and Chief Executive Officer, Adrian Murphy, our Chief Financial Officer and David Angell, our Executive Vice President-Asia. The loss of the services of Messrs. Newman, Murphy or Angell could have a material adverse effect on our business, financial condition and results of operations.

If we pursue strategic acquisitions or investments, we may not be able to successfully consummate favorable transactions or successfully integrate acquired businesses.

From time to time we may evaluate potential acquisition or investment opportunities in complementary businesses, products or technologies. Such transactions, if any, will be accompanied by the risks commonly encountered in acquisitions of businesses, including, among other things, integration costs, significant managerial challenges and lack of synergies. We may not successfully overcome these risks or any other problems

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encountered in connection with such transactions, including the inability to integrate an acquired business’s operations, IT technologies, services and products into our business, diversion of management’s attention, the assumption of unknown liabilities, increases in our indebtedness, the failure to achieve the strategic objectives of those acquisitions and other unanticipated problems, some or all of which could materially and adversely affect us. The process of integrating operations could cause an interruption of, or loss of momentum in, key competitive and marketing activities. Any delays or difficulties encountered in connection with any acquisition and the integration of operations could have a material adverse effect on our business, financial condition and results of operations.

The raw materials used in our production processes are subject to price fluctuations that, if we cannot pass along such costs to customers, could adversely affect our business, financial condition and results of operations.

Our supply of raw materials, including zinc, aluminum and magnesium, for our business could be interrupted for a variety of reasons, including pricing. Prices for raw materials necessary for production have fluctuated significantly in the past and significant increases could adversely affect our results of operations and profit margins. We have agreements with the vast majority of our customers to pass through changes in the price of zinc, magnesium and aluminum. Since metal prices are typically set each month proactively based upon the previous month’s metal index, there may be a lag-effect in a rising or falling market. If we are unable to pass along the cost of raw materials to customers for any reason, we will be exposed to potentially significant raw material commodity pricing risks which could materially and adversely affect our business, financial condition and results of operations.

The energy costs involved in our production processes and transportation are subject to fluctuations that are beyond our control and could significantly increase our costs of production.

Our manufacturing process and the transportation of raw materials, components and finished goods are energy intensive. Our manufacturing processes are dependent on adequate supplies of electricity and natural gas. A substantial increase in the cost of transportation fuel, natural gas or electricity could have a material adverse effect on our results of operations. We may experience higher than anticipated fuel and energy costs in the future, which could adversely affect our results of operations. In addition, a disruption or curtailment in fuel and energy supply, for any reason, could have a material adverse effect on our production and sales, and accordingly could materially and adversely affect our business, financial condition and results of operations.

Potential product liability risks exist from the products that we sell.

Our business exposes us to potential product liability risks that are inherent in the design, manufacture and sale of specialized cast and machined mechanical components and, where applicable, the products of third-party vendors that we use. We cannot assure you that we will be able to maintain our insurance on acceptable terms or that our insurance will provide adequate protection against all potential liabilities. In the event of one or more claims against us, a lack of sufficient insurance coverage could have a material adverse effect on our business, financial condition and results of operations. The defense of one or more significant claims, even if successful, would absorb a large amount of management’s time and our resources and distract key personnel from the day to day running of our operations. Moreover, even if we maintain adequate insurance, any successful claim could have a material adverse effect on our business, financial condition and results of operations.

Some of our employees belong to labor unions, and strikes or work stoppages, as well as labor protection laws in various countries in which we operate, which could adversely affect our operations.

Some of the countries in which we operate, or may in the future operate, may have laws favorable to organized labor, which may make it difficult for us to rationalize or downsize operations. Some of our employees outside the United States belong to labor unions. Accordingly, we could be subject to, among other things, strikes, work stoppages or other slowdowns by these workers and increased operating costs as a result of higher

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wages or benefits paid to union members. If the unionized workers were to engage in a strike, work stoppage or other slowdown, or other employees were to become unionized, we could experience a significant disruption of our operations and higher ongoing labor costs, which could have a material adverse effect on our business, financial condition and results of operations.

We operate and source internationally, which exposes us to the risks of doing business abroad.

Our operations are subject to the risks of doing business abroad, including the following:

In addition, we may face obstacles in the People’s Republic of China, including a cumbersome bureaucracy and significant political, economic and legal risks which may adversely affect our operations in that country. We also could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws. The FCPA and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. We operate in many parts of the world that have experienced governmental corruption to a greater or lesser degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices and impact our ability to compete as effectively in these regions. We cannot assure you that our internal controls and procedures always will protect us from the reckless or criminal acts committed by our employees or agents. If we are found to be liable for FCPA violations (either due to our own acts or our inadvertence or due to the acts or inadvertence of others), we could be subject to United States federal criminal or civil penalties or other sanctions, which could have a material adverse effect on our business.

Any of the events enumerated above could have an adverse effect on our operations in the future by reducing the demand for our products and services, decreasing the prices at which we can sell our products or otherwise having an adverse effect on our business, financial condition and results of operations.

We are subject to regulations governing the export of our products.

Our export activities are subject to regulation. While we believe we are in compliance with these regulations, we may currently or in the future be in violation of these regulations. Any violations may subject us to government scrutiny, investigation and civil and criminal penalties and may limit our ability to export our products.

We are subject to various environmental, health and safety laws and regulations and have related compliance expenditures and liabilities which may result in significant costs.

Our operations and properties are subject to foreign, federal, state and local environmental, health and safety laws and regulations, particularly with respect to the use, handling, treatment, storage, discharge and disposal of wastes and other regulated materials used or generated in our manufacturing processes, release of pollutants into

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the air, soil and water, and the remediation of contaminated sites. Our failure to comply with applicable environmental laws and regulations and permit requirements could result in civil or criminal fines or penalties or enforcement actions, including regulatory or judicial orders enjoining or curtailing operations or requiring corrective measures, installation of pollution control equipment or remedial actions.

We may be required to incur costs relating to the investigation or remediation of property, including property where we have disposed of our waste, and for claims alleging personal injury or damages to property or natural resources. Some environmental laws and regulations impose strict, and in some cases joint and several liability on present and former owners, operators or users of sites for costs of investigation and remediation of contaminated sites, as well as those entities that send regulated materials to the sites. We cannot assure you that we have been or will be at all times in complete compliance with such laws, regulations and permits. In addition, we occasionally evaluate various alternatives with respect to our facilities, including possible dispositions or closures. Investigations undertaken in connection with these activities may lead to discoveries of contamination that must be remediated, and closures of facilities may trigger compliance requirements that are not applicable to operating facilities. Consequently, we cannot assure you that existing or future circumstances, the development of new facts or the failure of third parties to address contamination at current or former facilities or properties will not require significant expenditures by us.

Environmental laws are complex, change frequently and have historically become more stringent over time. Although our costs of complying with environmental, health and safety laws, and our liabilities arising from releases of, or exposure to, regulated materials have not to date had a materially adverse effect on our business, financial position, results of operations or cash flows, there can be no assurance that this will continue to be the case in the future. Enactment of new laws and regulations, stricter enforcement of existing requirements, discovery of presently unknown conditions or accidental releases of regulated materials could cause us to incur costs which could be material.

Operating problems in our business may adversely affect our business, financial condition and results of operations.

We are subject to the usual hazards associated with manufacturing and the related storage and transportation of raw materials, products and waste, including explosions, fires, leaks, discharges, inclement weather, natural disasters, personnel injuries or fatalities, mechanical failure, unscheduled downtime and transportation interruption or calamities. The occurrence of material operating problems at one or more of our facilities may have a material adverse effect on our operations as a whole, both during and after the period of operational difficulties.

Adverse credit market conditions may significantly affect our access to capital, cost of capital and ability to meet liquidity needs.

Disruptions, uncertainty or volatility in the credit markets may adversely impact our ability to access credit already arranged and the availability and cost of credit to us in the future. These market conditions may limit our ability to replace, in a timely manner, maturing liabilities and access the capital necessary to grow and maintain our business. Accordingly, we may be forced to delay raising capital or pay unattractive interest rates, which could increase our interest expense, decrease our profitability and significantly reduce our financial flexibility. Longer-term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could adversely affect our access to liquidity needed for our business. Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures could include deferring capital expenditures and reducing or eliminating future share repurchases or other discretionary uses of cash. Overall, our business, financial condition and results of operations could be materially adversely affected by disruptions in the credit markets.

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Our Predecessor financial information and our unaudited pro forma condensed financial information are not representative of our future financial condition, future results of operations or future cash flows nor do they reflect what our financial condition, results of operations or cash flows would have been as a stand-alone company during the periods presented.

Our Predecessor financial information included in this prospectus is not representative of our future financial condition, future results of operations or future cash flows nor does it reflect what our financial condition, results of operations or cash flows would have been as a stand-alone company during the periods presented. This is primarily because:

Our unaudited pro forma condensed financial information elsewhere in this prospectus is not representative of our future financial condition, future results of operations or future cash flows nor do they reflect what our financial condition, results of operations or cash flows would have been as a stand-alone company during the periods presented. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Unaudited Pro Forma Condensed Financial Information” and our financial statements and the related notes thereto included elsewhere in this prospectus.

We have only a limited history as a stand-alone company and we may be unable to make the changes necessary to operate effectively.

There is a significant degree of difficulty inherent in the process of transitioning from a subset of a larger corporate parent to becoming a stand-alone company, including effecting this process while carrying on our ongoing operations and separating our corporate infrastructure from Melrose’s, including systems, insurance, accounting, legal, finance and tax.

Given our recent separation from Melrose, there can be no assurance that our need to replace certain administrative and other support functions will not have an adverse impact on our business, financial condition and results of operations. Prior to the transactions, Melrose provided us with IT, treasury, insurance, legal, risk management and other corporate services. Melrose did not charge us for those services in 2008, 2009, or 2010, although our financial statements include a charge of $0.8 million per year, which management believes is a reasonable estimate of the value of their services. As a result of the transactions, apart from services to be provided to us by an affiliate of Kenner and certain co-investors under a management consulting agreement, we

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no longer have financial, operational or organizational assistance provided to us or any of our subsidiaries by Melrose. The actual cost to replace those services may exceed our estimates, which could materially and adversely impact our results of operations.

Our failure to cost-effectively transition to being a stand-alone company could have an adverse effect on our business, financial condition and results of operations. This ongoing process could cause an interruption of, or loss of momentum in, the activities of one or more of our businesses. Members of our senior management may be required to devote considerable amounts of time to this process, which will decrease the time they will have to manage their respective businesses, service existing customers, attract new customers and develop new products or strategies. If our senior management is not able to manage this process effectively, or if any significant business activities are interrupted as a result of this process, our business could suffer.

We will incur higher costs as a result of being an SEC-reporting company following the consummation of the exchange offer, which may be significant. If we fail to accurately predict or effectively manage these costs, our results of operations could be materially and adversely affected.

Following the consummation of the exchange offer, we will become an SEC-reporting company and will be required to file reports with the SEC. As an SEC-reporting company, we will incur higher accounting, treasury, legal, risk management, corporate governance and other expenses, which may be significant. The SEC has imposed substantial requirements on public companies, including requirements related to corporate governance practices and for internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. We expect these rules and regulations to increase our accounting, legal and other costs and to make some activities more time-consuming. We may also need to recruit additional accounting, legal and administrative staff. Moreover, the rules that will be applicable to us after this offering could make it more difficult and expensive for us to attract and retain qualified members of our board of directors and qualified executive officers. In addition, we expect to incur additional costs associated with obtaining new insurance arrangements, including increased premiums and deductible amounts. If we fail to predict these costs accurately or to manage these costs effectively, our results of operations could be adversely affected.

A group of investors, including Kenner, controls us and their interests may conflict with or differ from ours.

Certain affiliates of Kenner and their co-investors have the power to elect all of our directors. Therefore, these stockholders have the ability to prevent any transaction that requires the approval of our board of directors, including the approval of significant corporate transactions such as mergers and the sale of substantially all of our assets. The directors elected by these stockholders have the ability to control decisions affecting our corporate structure, including the issuance of additional capital stock, the implementation of stock repurchase programs and the declaration of dividends. The interests of these stockholders could conflict with, or differ from, the interests of holders of the Notes. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of these stockholders might conflict with your interests as a holder of the Notes. Furthermore, the concentration of ownership held by these stockholders could delay, defer or prevent a change of control or impede a merger, takeover or other business combination which you may otherwise view favorably. Additionally, these stockholders are in the business of making or advising on investments in companies they hold, and may from time to time in the future acquire interests in or provide advice to businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. These stockholders may also pursue acquisitions that may be competitive with, or complementary to, our business, and, as a result, those acquisition opportunities may not be available to us. So long as these stockholders continue to own a significant amount of the outstanding shares of our common stock, they will continue to be able to strongly influence or effectively control our decisions.

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Our business, financial condition and results of operations may be adversely affected by various legal and regulatory proceedings.

We are subject to legal and regulatory proceedings, lawsuits and claims in the normal course of our business and we could become subject to additional proceedings, lawsuits or claims in the future, some of which could be material. Any proceedings, lawsuits or claims initiated by or against us, whether successful or not, may be time consuming and require significant amounts of management time, result in costly litigation and damage awards, require us to change our business practices or products, result in diversion of significant operations resources or otherwise harm our business and future financial results. The outcome of existing proceedings, lawsuits and claims may differ from our expectations because the outcomes of litigation, including regulatory matters, are often difficult to reliably predict. Various factors or developments can lead us to change estimates of liabilities and related insurance receivables where applicable, or make such estimates for matters previously not susceptible to reasonable estimates, such as a significant judicial ruling or judgment, a significant settlement, significant regulatory developments, or changes in applicable law. A future adverse ruling, settlement, or unfavorable development could result in charges that could have a material adverse effect on our business, financial condition or results of operations in any particular period.

Risks Related to our Capital Structure and the Notes

Our substantial indebtedness could adversely affect our financial flexibility and prevent us from fulfilling our obligations under the Notes.

We have a significant amount of consolidated indebtedness. As of September 30, 2011, our total consolidated indebtedness was $405.3 million (excluding Series B redeemable preferred stock and the warrants issued to its purchaser) and $41.6 million was available for available borrowing under our revolving credit facility (after giving effect to $1.9 million of outstanding letters of credit). Our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. Our substantial indebtedness could have other important consequences to you and significant effects on our business.

For example, it could:

In addition, the indenture governing the Exchange Notes contains, and the agreements evidencing or governing our Senior Credit Facilities and our other and future indebtedness may contain, restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interests, dispose of assets or

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cause us to make non-strategic divestitures. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness.

Most of our subsidiaries will not be guarantors, and the Exchange Notes will be structurally subordinated to the indebtedness and other liabilities of our existing and future subsidiaries that do not guarantee the Exchange Notes. Your right to receive payments on the Exchange Notes could be adversely affected if any of these non-guarantor subsidiaries declare bankruptcy, liquidate or reorganize.

The guarantors include only the Issuers’ existing domestic subsidiaries and the Issuers’ future direct or indirect domestic subsidiaries that guarantee the indebtedness under the Senior Credit Facilities or any other indebtedness unless they are designated “unrestricted subsidiaries.” None of the Issuers’ foreign subsidiaries guarantee the Exchange Notes. The Exchange Notes, including the related guarantees, will be structurally subordinated to all of the liabilities of any of the Issuers’ subsidiaries that do not guarantee the Exchange Notes and will be required to be paid before the holders of the Exchange Notes have a claim, if any, against those subsidiaries and their assets. Therefore, if there were a dissolution, bankruptcy, liquidation or reorganization of any such subsidiary, the holders of Exchange Notes would not receive any amounts with respect to the Exchange Notes from the assets of such subsidiary until after the payment in full of the claims of creditors, including trade creditors and preferred stockholders, of such subsidiary.

In addition, the equity interests of other equity holders in any non-wholly-owned non-guarantor subsidiary in any dividend or other distribution made by these entities would need to be satisfied on a proportionate basis with us. These less than wholly-owned subsidiaries may also be subject to restrictions on their ability to distribute cash to us in their financing or other agreements and, as a result, we may not be able to access their cash flow to service our debt obligations, including in respect of the Exchange Notes.

Without giving effect to intercompany eliminations, our non-guarantor subsidiaries accounted for approximately $221.9 million, or 83.1%, of our revenue for the Predecessor 2011 Period and approximately $77.9 million, or 81.2%, of our net sales for the Successor 2011 Period. In addition, as of September 30, 2011, without giving effect to intercompany eliminations, our non-guarantor subsidiaries had approximately $687.2 million, or 85.4%, of our total assets, and approximately $507.2 million, or 78.1%, of our total liabilities (including $282.5 million in redeemable preferred equity issued by a non-guarantor subsidiary to its guarantor subsidiary parent).

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness, including the Notes, and to fund planned capital expenditures, key marketing initiatives and research and development efforts will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, that currently anticipated cost savings and operating improvements will be realized on schedule or that future borrowings will be available to us under the Senior Credit Facilities in an amount sufficient to enable us to pay interest on our indebtedness, including the Notes, or to fund our other liquidity needs. The borrowings under our Senior Credit Facilities bear interest at variable rates and other indebtedness we may incur could likewise be variable-rate indebtedness. If market rates increase, variable-rate indebtedness will create higher debt service requirements, which could further adversely affect our cash flow. If our leverage ratio increases, the aggregate interest rates we are charged under our Senior Credit Facilities could increase by 25 basis points. We do not hedge our interest rate exposure.

In addition, we conduct a substantial portion of our operations through our subsidiaries, most of which will not be guarantors of the Notes or our other indebtedness. Accordingly, repayment of our indebtedness, including the Notes, will be dependent in part on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless such subsidiaries are a guarantor of the Notes or our other indebtedness, such subsidiaries will not have any obligation to pay amounts due on the Notes or our other indebtedness, or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our

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indebtedness, including the Notes. Each subsidiary is a distinct legal entity, and under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the indenture governing the Notes and the agreements governing certain of our other existing indebtedness will limit the ability of certain of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions. In the event that Dynacast International LLC does not receive distributions from its subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the Notes.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures or expansion initiatives, sell material assets or operations, obtain additional equity capital or refinance all or a portion of our indebtedness, including the Notes, on or before maturity. In the absence of such operating results and resources, we could face substantial cash flow problems and might be required to sell material assets or operations to meet our debt service and other obligations. The indenture governing the Notes, the terms of our Senior Credit Facilities and the terms of any future debt instruments we may enter into contain or may contain restrictions on our ability to dispose of assets, which, in addition to prevailing market conditions, may restrict or prohibit our ability to sell assets to generate cash. We cannot assure you as to the timing of such asset sales or the proceeds which we could realize from such sales and we cannot assure you that we will be able to refinance any of our indebtedness, including the Senior Credit Facilities and the Notes, on commercially reasonable terms or at all.

The Notes will mature after a substantial portion of our other indebtedness.

The Notes will mature on July 15, 2019. Substantially all of our existing indebtedness (including under our senior secured credit facilities) will mature prior to July 15, 2019. Therefore, we will be required to repay substantially all of our other creditors before we are required to repay a portion of the interest due on, and the principal of, the Notes. As a result, we may not have sufficient cash to repay all amounts owing on the Notes at maturity. There can be no assurance that we will have the ability to borrow or otherwise raise the amounts necessary to repay or refinance such amounts.

Despite restrictions in the indenture governing the Notes and our Senior Credit Facilities, we and our subsidiaries may still be able to incur substantial additional indebtedness and other obligations. This could create substantial leverage and related risks.

We and our subsidiaries may be able to incur a significant amount of additional indebtedness and other obligations in the future pursuant to the indenture governing the Notes and the terms of our Senior Credit Facilities, including additional secured indebtedness. Although covenants under the indenture governing the Notes and our Senior Credit Facilities limits our ability and the ability of our present and future subsidiaries to incur additional indebtedness, the terms of such indenture permits us to incur significant additional indebtedness. For example, the indenture governing the Notes allows us to issue additional notes under certain circumstances which will also be guaranteed by the guarantors and will share in the collateral for the Notes that will secure the Notes and the related guarantees. In addition, there is no limit under the indenture governing the Notes on the amount of the indebtedness that we and our subsidiaries that are guarantors of the Notes can incur if the Fixed Charge Coverage Ratio (as such term is defined in the indenture), determined on a pro forma basis, is at least 2.00 to 1.00. In addition, the indenture and our Senior Credit Facilities include a number of negotiated exceptions, or “baskets” allowing us or any of our restricted subsidiaries to incur specified additional indebtedness. For example, the indenture includes a basket providing for additional indebtedness up to the greater of $40 million and the credit agreement includes a basket providing for additional indebtedness up to the greater of $25 million. The indenture governing the Notes will also allow us to continue to incur certain other additional secured debt and will allow our foreign subsidiaries to incur additional debt, which would be structurally senior to the Notes. The indenture governing the Notes and our Senior Credit Facilities also do not prohibit us from incurring obligations that do not constitute indebtedness as defined in such indenture and our Senior Credit Facilities, such as trade payables. See “Description of Notes” and “Description of Other

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Indebtedness.” To the extent that we incur additional indebtedness or such other obligations, the risk associated with substantial additional indebtedness described above, including our possible inability to service our debt, will increase.

As of September 30, 2011, we had $41.6 million available for borrowing under our revolving credit facility (after giving effect to $1.9 million of outstanding letters of credit).

Restrictive covenants in the indenture governing the Notes and our Senior Credit Facilities may limit our current and future operations, particularly our ability to respond to changes in our business or to pursue our business strategies.

The indenture governing the Notes and our Senior Credit Facilities contain, and any future indebtedness of ours may contain, a number of restrictive covenants that impose significant operating and financial restrictions, including restrictions on our ability to take actions that we believe may be in our interest. Among other things, the indenture governing the Notes limits our ability to:

You should read the discussions under “Description of Notes—Certain Covenants,” for further information about these covenants in the indenture.

In addition to a Fixed Charge Coverage Ratio, our Senior Credit Facilities require us to maintain a maximum total leverage ratio.

A breach of the covenants or restrictions under the indenture governing the Notes could result in a default. Such default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies, including the Senior Credit Facilities. In the event our lenders and noteholders accelerate the repayment of our borrowings, we cannot assure that we and our subsidiaries would have sufficient assets to repay such indebtedness.

The restrictions contained in the indenture governing the Notes could adversely affect our ability to:

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Our ability to obtain future financing or to sell assets could be adversely affected because a very large majority of our assets have been secured as collateral for the benefit of the holders of the Notes and the lenders under our Senior Credit Facilities. In addition, our financial results, our substantial indebtedness and our credit ratings could adversely affect the availability and terms of our financing.

Our ability to meet our obligations under our debt, in part, depends on the earnings and cash flows of our subsidiaries and the ability of our subsidiaries to pay dividends or advance or repay funds to us. Dynacast Finance Inc. has no assets or operations and provides no credit support for the Notes.

We conduct the vast majority of our business operations through our subsidiaries, most of which will not be guarantors of the Notes or our other indebtedness. In servicing payments to be made on the Notes, we will rely, in large part, on cash flows from these subsidiaries, mainly in the form of dividend or payments or intercompany loan arrangements. Unless such subsidiaries are a guarantor of the Notes or our other indebtedness, such subsidiaries will not have any obligation to pay amounts due on the Notes or our other indebtedness, or to make funds available for that purpose. The ability of these subsidiaries to make dividend payments to us will be affected by, among other factors, the obligations of these entities to their creditors, requirements of corporate and other law, and restrictions contained in agreements entered into by or relating to these entities. In addition, our foreign subsidiaries may be subject to currency controls, repatriation restrictions, withholding tax obligations on payments to us and other limits, and we may be subject to U.S. income tax on distributions from our foreign subsidiaries, even after taking into account foreign tax credits. While the indenture governing the Notes and the agreements governing certain of our other existing indebtedness will limit the ability of certain of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions.

Dynacast Finance Inc. has no assets or operations and you should not rely upon Dynacast Finance Inc. to make payments on the Notes.

In the event that Dynacast International LLC does not receive distributions from its subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the Notes.

The imposition of certain permitted liens will cause the assets on which such liens are imposed to be excluded from the collateral securing the Notes and the related guarantees. There are also certain other categories of property that are excluded from the collateral.

The indenture governing the Notes will permit liens in favor of third parties to secure additional debt, including purchase money indebtedness and capitalized lease obligations, and any assets subject to such liens will be automatically excluded from the collateral securing the Notes and the related guarantees to the extent the agreements governing such indebtedness prohibit additional liens. Our ability to incur purchase money indebtedness and capitalized lease obligations is subject to the limitations described in “Description of Notes.” In addition, certain categories of assets are excluded from the collateral securing the Notes and the related guarantees. See “Description of Notes.” Excluded assets include, but are not limited to, among other things, certain real property, vehicles, assets and capital stock (the pledge of which would violate applicable law or contracts existing on the issue date), the assets of our non-guarantor subsidiaries, certain capital stock and other securities of our foreign and unrestricted subsidiaries and the proceeds from any of the foregoing. Under the SEC regulations in effect as of the issue date of the Notes, if the par value, book value as carried by us or market value (whichever is greatest) of the capital stock of other securities of a subsidiary pledged as part of the collateral for any class of securities registered or to be registered is greater than or equal to 20% of the aggregate principal amount of the Notes then outstanding, such a subsidiary would be required to provide separate financial statements in filings with the SEC. Therefore, the indenture and the related collateral documents will provide that any capital stock and other securities of any of our subsidiaries will not be included in the collateral for so long as the pledge of such capital stock or other securities to secure the Notes would cause such subsidiary to be required to file separate financial statements with the SEC pursuant to Rule 3-16 of Regulation S-X (as in effect

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from time to time). See “Description of Notes—Security for the Notes.” If an event of default occurs and the Notes are accelerated, the Notes and the related guarantees will rank equally with the holders of other unsubordinated and unsecured indebtedness of the relevant entity with respect to such excluded property.

There may not be sufficient collateral to pay all or any portion of the amount due under the Notes and the collateral securing the Notes may be reduced or released under certain circumstances. The collateral securing the Notes is subject to first-priority claims by lenders under the Senior Credit Facilities.

No appraisal of the value of the collateral securing the obligations under the Senior Credit Facilities on a first-priority basis and the Notes on a second-priority basis has been made or will be made in connection with the exchange offer, and the value of the collateral at any time will depend on market and other economic conditions, including the availability of suitable buyers for the collateral. By its nature, some or all of the collateral may be illiquid and may have no readily ascertainable market value. The value of the assets pledged as collateral for the Notes could be impaired in the future as a result of changing economic conditions, competition or other future trends. Also, we cannot assure you that the fair market value of the collateral securing the Notes would be sufficient to pay any amounts due under the Notes following their acceleration. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, we cannot assure you that the collateral will be sold in a timely and orderly manner and that the proceeds from any sale or liquidation of the collateral will be sufficient to pay our obligations under the Senior Credit Facilities and pari passu indebtedness we may incur in the future in accordance with the indenture governing the Notes. The Notes will not be repaid from the proceeds of collateral following a default until the Senior Credit Facilities and our other obligations that are secured on a first-priority basis are repaid in full. If the proceeds of any sale of collateral allocable to the Notes are not sufficient to repay all amounts due on the Notes, the holders of the Notes (to the extent not repaid from the proceeds of the sale of the collateral) would have only an unsecured claim against our and the guarantors’ remaining assets and in the context of a bankruptcy case by or against us, the holders of the Notes may not be entitled to receive interest payments or reasonable fees, costs or charges due under the Notes, and may be required to repay any such amounts already received by them. Any claim for the difference between the amount, if any, realized by holders of the Notes from the sale of the collateral securing the Notes and the obligations under the Notes will rank equally in right of payment with all of our other unsecured unsubordinated indebtedness and other obligations, including trade payables.

The indenture governing the Notes will not require that we maintain the current level of collateral or maintain a specific ratio of indebtedness to asset values. Thus, the issuance of pari passu lien obligations may have the effect of significantly diluting the ability of a holder of Notes to recover payment in full from the then existing pool of collateral.

We will in most cases have control over the collateral, and the sale of particular assets by us could reduce the pool of assets securing the Notes and the related guarantees.

The collateral documents allow us to remain in possession of, retain exclusive control over, freely operate, and collect, invest and dispose of any income from the collateral securing the Notes and the related guarantees. In addition, we will not be required to comply with all or any portion of Section 314(d) of the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act, if we determine, in good faith, that under the terms of that section and/or any interpretation or guidance as to the meaning thereof of the SEC and its staff, including “no action” letters or exemptive orders, all or such portion of Section 314(d) of the Trust Indenture Act is inapplicable to the release of collateral. For example, so long as no default or event of default under the indenture governing the Notes would result therefrom and such transaction would not violate the Trust Indenture Act, we may, among other things, without any release or consent by the trustee under the indenture governing the Notes, conduct certain ordinary course activities with respect to collateral.

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There are circumstances, other than repayment or discharge of the Notes, under which the collateral securing the Notes and the related guarantees will be released automatically, without the consent of the related holders or the consent of the trustee for the Notes.

Under various circumstances, all or a portion of the collateral may be released, including:

In addition, the guarantee of a subsidiary guarantor will be released in connection with a sale or merger of such subsidiary guarantor in a transaction not prohibited by the indenture governing the Notes.

The indenture governing the Notes will permit us to designate one or more of our restricted subsidiaries that is a guarantor of the Notes as an unrestricted subsidiary. If we designate a subsidiary guarantor as an unrestricted subsidiary, all of the liens on any collateral owned by such subsidiary or any of its subsidiaries and any guarantees of the Notes by such subsidiary or any of its subsidiaries will be released under the indenture governing the Notes. Designation of an unrestricted subsidiary will reduce the aggregate value of the collateral securing the Notes to the extent that liens on the assets of the unrestricted subsidiary and its subsidiaries are released. In addition, the creditors of the unrestricted subsidiary and its subsidiaries will have a senior claim on the assets of such unrestricted subsidiary and its subsidiaries. See “Description of Notes—Guarantees.”

The intercreditor agreement in connection with the indenture governing the Notes will limit the rights of holders of the Notes and their control with respect to the collateral securing the Notes.

The rights of the holders of the Notes with respect to the collateral securing the Notes will be substantially limited pursuant to the terms of the intercreditor agreement among the trustee for the Notes and the collateral agent for the Senior Credit Facilities. Under the intercreditor agreement, at any time that obligations that have the benefit of the first-priority liens are outstanding, any actions that may be taken in respect of the collateral, including the ability to cause the commencement of enforcement proceedings against the collateral and to control the conduct of such proceedings, and the approval of the amendments to and waivers of past default under, the collateral documents, will be at the direction of the collateral agent for the Senior Credit Facilities and holders of any other obligations secured by first-priority liens in the collateral. As a result, the trustee for the Notes, on behalf of the holders of the Notes, will not have the ability to control or direct such actions, even if the rights of the holders of the Notes are adversely affected.

Additionally, releases of collateral from the second-priority lien securing the Notes are permitted under some circumstances without the consent of the holders of the Notes. Collateral so released will no longer secure our and the guarantors’ obligations under the Notes and the guarantees. In addition, because the collateral agent for the Senior Credit Facilities and holders of any other obligations secured by first-priority liens in the collateral control the disposition of the first-priority collateral, such holders could decide not to proceed against such

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collateral, regardless of whether there is a default under the documents governing such indebtedness or under the indenture governing the Notes. In such event, the only remedy available to the holders of the Notes would be to sue for payment on the Notes and the related guarantees. In addition, under the intercreditor agreement, the collateral agent for the Notes may not assert any right of marshalling that may be available under applicable law with respect to such collateral. Without this waiver of the right of marshalling, holders of indebtedness secured by first-priority liens in the collateral would likely be required to liquidate collateral on which the Notes did not have a lien, if any, prior to liquidating the collateral securing the Notes, thereby maximizing the proceeds of the collateral that would be available to repay obligations under the Notes. As a result of this waiver, the proceeds of sales of such collateral could be applied to repay any indebtedness secured by first-priority liens in such collateral before applying proceeds of other collateral securing indebtedness, and the holders of Notes may recover less than they would have if such proceeds were applied in the order most favorable to the holders of the Notes.

The indenture and the intercreditor agreement contain certain provisions benefiting holders of indebtedness under the Senior Credit Facilities, including provisions prohibiting the trustee and the Notes collateral agent from objecting following the filing of a bankruptcy petition to a number of important matters regarding the collateral and the financing to be provided to us. After such filing, the value of this collateral could materially deteriorate and holders of the Notes would be unable to raise an objection. In addition, the right of holders of obligations secured by first priority liens to foreclose upon and sell such collateral upon the occurrence of an event of default also would be subject to limitations under applicable bankruptcy laws if we or any of our subsidiaries become subject to a bankruptcy proceeding. The intercreditor agreement also gives the holders of obligations that have the benefit of the first-priority liens in the collateral the right to inspect, repossess, remove and otherwise deal with the collateral that secures the Notes.

Rights of holders of the Notes in the collateral may be adversely affected by bankruptcy proceedings.