Commercial Metals Company Prices Offering of $600 Million Senior Notes in Two Tranches

Rhea-AI Summary

Commercial Metals Company (CMC) announced a $600 million offering of senior notes, consisting of $300 million in 4.125% Senior Notes due 2030 and $300 million in 4.375% Senior Notes due 2032. The offering size was increased from an initial $300 million. Proceeds will be used to redeem existing 5.375% senior notes due 2027 and for general corporate purposes. The offering is expected to close on or about January 28, 2022, subject to closing conditions. BofA Securities leads the underwriting team.

Positive

• Increased offering size to $600 million from $300 million, indicating strong market demand.
• Proceeds from the note issuance will be used to redeem higher-interest 5.375% senior notes, potentially reducing interest expenses.

Negative

• Dependence on debt financing could increase financial risk, especially in a volatile market.
• Potential for interest rate fluctuations could affect the company's future debt costs.

IRVING, Texas, Jan. 13, 2022 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) ("CMC") announced today that it has agreed to sell $300 million in aggregate principal amount of 4.125% Senior Notes due 2030 ("2030 Notes") and $300 million in aggregate principal amount of 4.375% Senior Notes due 2032 ("2032 Notes") (together, the "Notes Offering") in an underwritten public offering under its effective shelf registration statement. The aggregate offering size was increased to $600 million from the previously announced $300 million aggregate principal amount. The Notes Offering is expected to close on or about January 28, 2022, subject to customary closing conditions.

CMC intends to use the net proceeds from the Notes Offering to fund the redemption of its outstanding 5.375% senior notes due 2027 ("2027 Notes") and for general corporate purposes.

BofA Securities is acting as representative of the underwriters and joint book-running manager along with Citigroup, Wells Fargo Securities, PNC Capital Markets LLC, BMO Capital Markets and Fifth Third Securities. Truist Securities, Capital One Securities, US Bancorp and Regions Securities LLC are acting as co-managers for the Notes Offering.

The Notes Offering is being made under an effective shelf registration statement on file with the U.S. Securities and Exchange Commission (the "SEC"). The Notes Offering may be made only by means of a prospectus supplement and the accompanying prospectus. Copies of the prospectus supplement and accompanying prospectus describing the Notes Offering may be obtained by visiting the SEC's website at www.sec.gov, by contacting BofA Securities, NC1-004-03-43, 200 North College Street, 3rd floor, Charlotte, NC  28255-0001, Attn: Prospectus Department, or by email at dg.prospectus_requests@bofa.com.

The redemption is pursuant to a conditional notice of full redemption of the 2027 Notes dated January 13, 2022, and this press release shall not constitute a notice of redemption under the indenture governing the 2027 Notes.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Commercial Metals Company

Commercial Metals Company and its subsidiaries manufacture, recycle and fabricate steel and metal products, and provide related materials and services through a network of facilities that includes seven electric arc furnace ("EAF") mini mills, two EAF micro mills, one rerolling mill, steel fabrication and processing plants, construction-related product warehouses, and metal recycling facilities in the United States and Poland.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the federal securities laws with respect to CMC's expectations concerning the Notes Offering and the redemption of the 2027 Notes. These forward-looking statements can generally be identified by phrases such as we or our management "expects," "anticipates," "believes," "estimates," "intends," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases. There are inherent risks and uncertainties in any forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements.

Our forward-looking statements are based on management's expectations and beliefs as of the time this press release is issued. Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Except as required by law, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or any other changes. Important factors that could cause actual results to differ materially from our expectations include those described in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2021 and in Part II, Item 1A, Risk Factors of our subsequent Quarterly Reports on Form 10-Q as well as the following: the achievement of closing conditions with respect to the Notes Offering; changes in economic conditions which affect demand for our products or construction activity generally, and the impact of such changes on the highly cyclical steel industry; rapid and significant changes in the price of metals, potentially impairing our inventory values due to declines in commodity prices or reducing the profitability of our downstream contracts due to rising commodity pricing; impacts from COVID-19 on the economy, demand for our products, global supply chain and on our operations, including the responses of governmental authorities to contain COVID-19 and the impact of various COVID-19 vaccines; excess capacity in our industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing; compliance with and changes in existing and future laws, regulations, and other legal requirements and judicial decisions that govern our business, including increased environmental regulations associated with climate change and greenhouse gas emissions; involvement in various environmental matters that may result in fines, penalties or judgments; evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors that may impact amounts accrued for environmental liabilities; potential limitations in our or our customers' abilities to access credit and non-compliance of their contractual obligations, including payment obligations; activity in repurchasing shares of our common stock under our repurchase program; financial covenants and restrictions on the operation of our business contained in agreements governing our debt; our ability to successfully identify, consummate and integrate acquisitions and the effects that acquisitions may have on our financial leverage; risks associated with acquisitions generally, such as the inability to obtain, or delays in obtaining, required approvals under applicable antitrust legislation and other regulatory and third party consents and approvals; operating and startup risks, as well as market risks associated with the commissioning of new projects could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of our investments; lower than expected future levels of revenues and higher than expected future costs; failure or inability to implement growth strategies in a timely manner; impact of goodwill impairment charges; impact of long-lived asset impairment charges; currency fluctuations; global factors, such as trade measures, military conflicts and political uncertainties, including changes to current trade regulations, such as Section 232 trade tariffs and quotas, tax legislation and other regulations which might adversely impact our business; availability and pricing of electricity, electrodes and natural gas for mill operations; ability to hire and retain key executives and other employees; competition from other materials or from competitors that have a lower cost structure or access to greater financial resources; information technology interruptions and breaches in security; ability to make necessary capital expenditures; availability and pricing of raw materials and other items over which we exert little influence, including scrap metal, energy and insurance; unexpected equipment failures; losses or limited potential gains due to hedging transactions; litigation claims and settlements, court decisions, regulatory rulings and legal compliance risks; risk of injury or death to employees, customers or other visitors to our operations; and civil unrest, protests and riots.

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SOURCE Commercial Metals Company

FAQ

What is the significance of CMC's $600 million senior notes offering?

The $600 million senior notes offering allows CMC to refinance its existing debt at a lower interest rate, thereby reducing interest expenses.

When will the CMC senior notes offering close?

The closing of the CMC senior notes offering is expected on or about January 28, 2022.

What are the interest rates and maturity dates for the new senior notes issued by CMC?

The new senior notes include $300 million of 4.125% Senior Notes due in 2030 and $300 million of 4.375% Senior Notes due in 2032.

How will the proceeds from CMC's notes offering be used?

Proceeds will be used to fund the redemption of existing 5.375% senior notes due in 2027 and for general corporate purposes.

Who are the underwriters for CMC's senior notes offering?

BofA Securities is the lead underwriter, with Citigroup, Wells Fargo Securities, PNC Capital Markets, BMO Capital Markets, and Fifth Third Securities also involved.