Eastman Chemical Company Announces Early Tender Results for 3.800% Notes Due 2025

Rhea-AI Summary

Eastman Chemical Company (NYSE: EMN) announced the early tender results for its cash tender offer to purchase up to $250,000,000 of its outstanding 3.800% Notes due 2025. As of the Early Tender Deadline on August 9, 2024, $276,887,000 aggregate principal amount of Notes had been validly tendered. Due to oversubscription, the Notes will be purchased on a pro rata basis with a Proration Factor of 90.28%.

The Total Consideration for each $1,000 principal amount of Notes includes an early tender premium of $30. The Early Settlement Date is expected to be August 14, 2024. Since the offer was fully subscribed at the Early Tender Deadline, Eastman will not accept any Notes tendered after this date.

Positive

• Strong demand for the tender offer, with $276,887,000 of Notes tendered, exceeding the $250,000,000 Tender Cap
• Successful debt management strategy, potentially reducing interest expenses

Negative

• Oversubscription led to proration, with only 90.28% of tendered Notes accepted
• Potential increase in short-term cash outflow due to the tender offer

Insights

Financial Analyst

Eastman Chemical's tender offer for its 3.800% Notes due 2025 is a strategic move to manage its debt profile. The oversubscription ($276.89 million tendered vs. $250 million cap) indicates strong investor interest, likely due to the attractive early tender premium of $30 per $1,000 principal. This could result in lower interest expenses for Eastman if they refinance at more favorable rates. However, the 90.28% proration factor means some investors will have their tenders partially rejected, which might cause short-term market volatility. The early settlement on August 14 could positively impact Eastman's Q3 financials, potentially improving its debt-to-equity ratio.

Bond Market Specialist

The tender offer's success reflects current market conditions where investors are seeking to offload bonds ahead of potential interest rate changes. The fixed spread of 22.5 basis points over the 1.750% UST due 03/15/2025 suggests Eastman is offering a competitive price. This could be seen as a positive signal for Eastman's credit outlook. The company's ability to refinance $250 million of its $699.99 million outstanding notes may indicate strong cash flow or access to favorable financing. However, investors should monitor how Eastman plans to address the remaining $449.99 million in notes due 2025, as this could impact future financial flexibility.

KINGSPORT, Tenn.--(BUSINESS WIRE)-- Eastman Chemical Company (the “Company” or “Eastman”) (NYSE: EMN) today announced the early tender results for the previously announced cash tender offer (the “Tender Offer”) to purchase up to an aggregate principal amount of $250,000,000 (the “Tender Cap”) of the Company’s outstanding 3.800% Notes due 2025 (the “Notes”).

The following table sets forth some of the terms of the Tender Offer:

Title of Security	CUSIP / ISIN Number	Principal Amount Outstanding	Tender Cap (Principal Amount)	U.S. Reference Treasury Security	Fixed Spread	Principal Amount Tendered at Early Tender Deadline	Principal Amount Accepted	Proration Factor(1)
3.800% Notes due 2025	277432AR1 / US277432AR19	$ 699,992,000	$ 250,000,000	1.750% UST due 03/15/2025	22.5 bps	$ 276,887,000	$ 250,000,000	90.28%
(1) Rounded to nearest hundredth of a percentage point.

The Tender Offer commenced on July 29, 2024, and will expire at 5:00 p.m., New York City time, on August 26, 2024, unless extended or earlier terminated by the Company (the “Expiration Date”). The terms and conditions of the Tender Offer are described in the Offer to Purchase, dated July 29, 2024 (the “Offer to Purchase”).

As of 5:00 p.m., New York City time, on August 9, 2024 (the “Early Tender Deadline”), according to information provided by D.F. King & Co., Inc., the tender agent and information agent for the Tender Offer (the “Tender and Information Agent”), $276,887,000 aggregate principal amount of the Notes had been validly tendered and not validly withdrawn in the Tender Offer. Withdrawal rights for the Notes expired at 5:00 p.m., New York City time, on August 9, 2024.

The “Total Consideration” for each $1,000 principal amount of Notes validly tendered and accepted for purchase pursuant to the Tender Offer will be determined in the manner described in the Offer to Purchase by reference to the fixed spread for the Notes specified in the table above and on the front cover of the Offer to Purchase plus the yield to maturity based on the bid side price of the U.S. Treasury Reference Security at 10:00 a.m., New York City time, today, and includes an early tender premium of $30 per $1,000 principal amount of the Notes accepted for purchase. The Company expects to announce the pricing of the Tender Offer and the amount of Notes accepted for purchase later today.

Only holders of Notes who validly tendered and did not validly withdraw their Notes at or prior to the Early Tender Deadline are eligible to receive the Total Consideration for the Notes accepted for purchase. Holders of Notes purchased will also be paid accrued and unpaid interest (rounded to the nearest cent) on such Notes validly tendered and accepted for purchase from and including the most recent interest payment date up to, but not including, the Early Settlement Date.

On August 14, 2024, the Company expects to pay for the Notes that were validly tendered at or prior to the Early Tender Deadline and that are accepted for purchase (such date, the “Early Settlement Date”).

The purchase of all of the Notes validly tendered and not validly withdrawn in the Tender Offer would cause the Company to purchase Notes with an aggregate principal amount in excess of the Tender Cap. Accordingly, the Notes will be purchased on a pro rata basis up to the Tender Cap in the manner described in the Offer to Purchase by reference to the “Proration Factor” specified in the table above. Since the Tender Offer was fully subscribed as of the Early Tender Deadline, the Company will not accept for purchase any Notes validly tendered after the Early Tender Deadline.

The Company has retained Barclays Capital Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC as dealer managers (the “Dealer Managers”) for the Tender Offer.

For additional information regarding the terms of the Tender Offer, please contact: Barclays Capital Inc. at (800) 438-3242 (toll-free) or (212) 528-7581 (collect); J.P. Morgan Securities LLC at (866) 834-4666 (toll-free) or (212) 834-3554 (collect); or Morgan Stanley & Co. LLC at (800) 624-1808 (tollfree) or (212) 761-1057 (collect). Requests for documents and questions regarding the tendering of Notes may be directed to the Tender and Information Agent at (800) 967-4614 (toll-free), (212) 269-5550 (toll) or email at EMN@dfking.com.

THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT AN OFFER OR SOLICITATION TO PURCHASE NOTES. THE TENDER OFFER IS BEING MADE SOLELY PURSUANT TO THE OFFER TO PURCHASE, WHICH SETS FORTH THE COMPLETE TERMS OF THE TENDER OFFER THAT HOLDERS OF THE NOTES SHOULD CAREFULLY READ PRIOR TO MAKING ANY DECISION.

THE OFFER TO PURCHASE AND THIS PRESS RELEASE DO NOT CONSTITUTE AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL NOTES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE TENDER OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE TENDER OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF THE COMPANY BY THE DEALER MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.

NONE OF THE COMPANY, THE DEALER MANAGERS, THE TENDER AND INFORMATION AGENT, OR THE TRUSTEE, NOR ANY OF THEIR RESPECTIVE AFFILIATES, IS MAKING ANY RECOMMENDATION AS TO WHETHER HOLDERS SHOULD TENDER NOTES IN RESPONSE TO THE TENDER OFFER. EACH HOLDER MUST MAKE HIS, HER OR ITS OWN DECISION AS TO WHETHER TO TENDER NOTES AND, IF SO, AS TO WHAT AGGREGATE PRINCIPAL AMOUNT OF NOTES TO TENDER. HOLDERS SHOULD CONSULT THEIR OWN TAX, ACCOUNTING, FINANCIAL AND LEGAL ADVISORS AS THEY DEEM APPROPRIATE REGARDING THE SUITABILITY OF THE TAX, ACCOUNTING, FINANCIAL AND LEGAL CONSEQUENCES OF PARTICIPATING OR DECLINING TO PARTICIPATE IN THE TENDER OFFER.

About Eastman Chemical Company

Founded in 1920, Eastman is a global specialty materials company that produces a broad range of products found in items people use every day. With the purpose of enhancing the quality of life in a material way, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. The Company’s innovation-driven growth model takes advantage of world-class technology platforms, deep customer engagement, and differentiated application development to grow its leading positions in attractive end markets such as transportation, building and construction, and consumables. As a globally inclusive and diverse company, Eastman employs approximately 14,000 people around the world and serves customers in more than 100 countries. The Company had 2023 revenue of approximately $9.2 billion and is headquartered in Kingsport, Tennessee, USA.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act (Section 27A of the Securities Act of 1933, as amended and Section 21E of the Exchange Act). Forward-looking statements address a variety of subjects, including, for example, the terms and timing for completion of the Tender Offer, including the acceptance for purchase of any Notes validly tendered and the expected settlement of payment for Notes validly tendered and accepted for purchase in the Tender Offer. Forward-looking statements are all statements, other than statements of historical fact, that may be made by the Company from time to time. In some cases, you can identify forward-looking statements by terminology such as “anticipates”, “believes”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “forecasts”, “will”, “would”, “could”, and similar expressions, or expressions of the negative of these terms. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: the risks and uncertainties described in the Offer to Purchase.

Forward-looking statements are based upon certain underlying assumptions as of the date such statements were made. Such assumptions are based upon internal estimates and other analyses of current market conditions and trends, management expectations, plans, and strategies, economic conditions, and other factors. Forward-looking statements and the assumptions underlying them are necessarily subject to risks and uncertainties inherent in projecting future conditions and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions and expectations proves to be inaccurate or is unrealized. The most significant known factors, risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements are identified and discussed under “Risk Factors” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Other factors, risks or uncertainties of which management is not aware, or presently deems immaterial, could also cause actual results to differ materially from those in the forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240812261529/en/

Media: Tracy Kilgore Addington

423-224-0498 / tracy@eastman.com

Investors: Greg Riddle

212-835-1620 / griddle@eastman.com

Source: Eastman Chemical Company

FAQ

What is the Tender Cap for Eastman Chemical Company's (EMN) 3.800% Notes due 2025?

The Tender Cap for Eastman Chemical Company's (EMN) 3.800% Notes due 2025 is $250,000,000 in aggregate principal amount.

When is the Early Settlement Date for Eastman Chemical Company's (EMN) tender offer?

The Early Settlement Date for Eastman Chemical Company's (EMN) tender offer is expected to be August 14, 2024.

What is the Proration Factor for Eastman Chemical Company's (EMN) tender offer?

The Proration Factor for Eastman Chemical Company's (EMN) tender offer is 90.28%, due to oversubscription.

What is the early tender premium for Eastman Chemical Company's (EMN) 3.800% Notes due 2025?

The early tender premium for Eastman Chemical Company's (EMN) 3.800% Notes due 2025 is $30 per $1,000 principal amount of Notes accepted for purchase.