ATS Announces Pricing of Upsized $400 Million Senior Unsecured Notes Offering

Rhea-AI Summary

ATS (TSX and NYSE: ATS) has announced the pricing of its upsized $400 million senior unsecured notes offering, increased from the initial $300 million. The notes, due in 2032, will have a 6.50% interest rate, payable semi-annually. They will be issued at C$1,000 per C$1,000 principal amount.

The offering is a private placement in Canada and is being sold in the US to qualified institutional buyers under Rule 144A. ATS plans to use the net proceeds to pay outstanding amounts on its revolving credit line. The closing is expected around August 21, 2024, subject to customary conditions.

Positive

• Successful upsizing of the notes offering from C$300 million to C$400 million
• Debt refinancing potentially improving the company's financial flexibility
• Strong investor interest indicated by the upsized offering

Negative

• Increase in long-term debt obligations
• Higher interest expenses due to the 6.50% interest rate on the new notes

Insights

Financial Analyst

ATS 's upsized C$400 million senior unsecured notes offering is a significant financial move. The 6.50% interest rate for 8-year notes is competitive in the current market, indicating investor confidence in ATS's creditworthiness. This debt issuance will improve the company's liquidity by replacing revolving credit with longer-term financing. However, it's important to note the increased interest expense, which could impact profitability. The upsizing from C$300 million to C$400 million suggests strong demand, potentially reflecting positive market perception of ATS's financial health and growth prospects. Investors should monitor how effectively ATS utilizes this capital for future growth initiatives and its impact on the company's overall debt-to-equity ratio.

Market Research Analyst

The successful upsizing of ATS's notes offering demonstrates robust investor appetite for the company's debt, which is a positive signal for the stock. This move aligns with the trend of companies locking in longer-term financing amid rising interest rates. The private placement nature of the offering allows ATS to avoid public market volatility. The international scope of the offering, including U.S. qualified institutional buyers and offshore investors, indicates broad market interest. This could potentially increase ATS's visibility among global investors, possibly leading to enhanced liquidity for its stock. However, investors should be aware that while this financing provides flexibility, it also increases the company's leverage, which could be a concern if economic conditions deteriorate.

CAMBRIDGE, Ontario--(BUSINESS WIRE)-- ATS Corporation (TSX and NYSE: ATS) (“ATS” or the “Company”) announced today that it has entered into an underwriting agreement to sell, pursuant to a private placement offering (the “Offering”), C$400 million aggregate principal amount of 6.50% senior unsecured notes due 2032 (the “Notes”), which aggregate principal amount of Notes was upsized from the initial deal size of C$300 million. The Notes will be issued at a price of C$1,000 per C$1,000 principal amount of Notes. The Notes will accrue interest at the rate of 6.50% per annum, payable in cash in equal payments semi-annually in arrears on February 21 and August 21 of each year, commencing on February 21, 2025. The Notes will be issued pursuant to an indenture to be entered into between the Company and Computershare Trust Company of Canada, as trustee.

ATS intends to use the net proceeds of the Offering to pay outstanding amounts owed under the revolving line of credit available under its senior syndicated credit facility.

The Notes are being conditionally offered for sale in Canada on a private placement basis pursuant to certain prospectus exemptions. The Notes have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and are being offered and sold in the United States only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act and applicable state securities laws and outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act.

Subject to customary closing conditions, the closing of the Offering is expected to occur on or about August 21, 2024.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall there be any offer or sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About ATS Corporation

ATS Corporation is an industry-leading automation solutions provider to many of the world's most successful companies. ATS uses its extensive knowledge base and global capabilities in custom automation, repeat automation, automation products and value-added solutions including pre-automation and after-sales services, to address the sophisticated manufacturing automation systems and service needs of multinational customers in markets such as life sciences, transportation, food & beverage, consumer products, and energy. Founded in 1978, ATS employs over 7,000 people at more than 65 manufacturing facilities and over 85 offices in North America, Europe, Southeast Asia and Oceania. The Company's common shares are traded on the Toronto Stock Exchange and the NYSE under the symbol ATS.

Forward-looking Statements

This press release contains certain statements that may constitute forward-looking information and forward-looking statements within the meaning of applicable Canadian and United States securities laws (“forward-looking statements”). All such statements are made pursuant to the “safe harbour” provisions of Canadian provincial and territorial securities laws and the U.S. Private Securities Litigation Reform Act of 1995.

Forward-looking statements include all statements that are not historical facts regarding possible events, conditions or results of operations that ATS believes, expects or anticipates will or may occur in the future, including, but not limited to: the anticipated timing for closing of the Offering of the Notes, and the use of proceeds from the Offering of the Notes. Forward-looking statements are inherently subject to significant known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of ATS, or developments in ATS’ business or in its industry, to differ materially from the anticipated results, performance, achievements, or developments expressed or implied by such forward-looking statements. Important risks, uncertainties, and factors that could cause actual results to differ materially from expectations expressed in the forward-looking statements include, but are not limited to, the failure to close the Offering within the timeline expected, or at all, for any reason; general market performance including market conditions and availability and cost of credit; and other risks and uncertainties detailed from time to time in ATS' filings with securities regulators, including, without limitation, the risk factors described in ATS’ annual information form for the fiscal year ended March 31, 2024, which are available on the System for Electronic Data Analysis and Retrieval+ (SEDAR+) at www.sedarplus.com and on the U.S. Securities Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval System (EDGAR) at www.sec.gov. ATS has attempted to identify important factors that could cause actual results to materially differ from current expectations, however, there may be other factors that cause actual results to differ materially from such expectations.

Forward-looking statements are necessarily based on a number of estimates, factors, and assumptions regarding, among others, management's current plans, estimates, projections, beliefs and opinions; the future performance and results of the Company’s business and operations; the ability of ATS to execute on its business objectives, and the closing of the Offering substantially in accordance with the expected timing.

Forward-looking statements included herein are only provided to understand management’s current expectations relating to future periods and, as such, are not appropriate for any other purpose. Although ATS believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and ATS cautions you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. ATS does not undertake any obligation to update forward-looking statements contained herein other than as required by law.

SOURCE: ATS Corporation

View source version on businesswire.com: https://www.businesswire.com/news/home/20240815214036/en/

For more information, contact:

David Galison

Head of Investor Relations

ATS Corporation

730 Fountain Street North

Cambridge, ON, N3H 4R7

(519) 653-6500

dgalison@atsautomation.com



For general media inquiries, contact:

Matthew Robinson

Director, Corporate Communications

ATS Corporation

730 Fountain Street North

Cambridge, ON, N3H 4R7

(519) 653-6500

mrobinson@atsautomation.com

Source: ATS Corporation

FAQ

What is the size and interest rate of ATS 's new notes offering?

ATS (ATS) has priced a C$400 million senior unsecured notes offering with a 6.50% interest rate, due in 2032.

How will ATS use the proceeds from the notes offering?

ATS intends to use the net proceeds from the offering to pay outstanding amounts owed under the revolving line of credit available under its senior syndicated credit facility.

When is the expected closing date for ATS 's notes offering?

Subject to customary closing conditions, the closing of ATS 's notes offering is expected to occur on or about August 21, 2024.

How often will interest be paid on ATS 's new notes?

Interest on ATS 's new notes will be paid semi-annually in arrears on February 21 and August 21 of each year, starting February 21, 2025.