Eastman Chemical Company Announces Pricing of Tender Offer for 3.800% Notes Due 2025

Rhea-AI Summary

Eastman Chemical Company (NYSE: EMN) has announced the pricing details for its cash tender offer to purchase up to $250,000,000 of its outstanding 3.800% Notes due 2025. The Total Consideration for each $1,000 principal amount of Notes is $993.26, which includes an early tender premium of $30. The offer was fully subscribed by the Early Tender Deadline of August 9, 2024, resulting in a proration factor of 90.28%. The Early Settlement Date is expected to be August 14, 2024. Due to full subscription, Eastman will not accept any Notes tendered after the Early Tender Deadline. The company has retained D.F. King & Co., Inc. as the tender agent and Barclays Capital Inc., J.P. Morgan Securities , and Morgan Stanley & Co. as dealer managers for the Tender Offer.

Positive

• Successful completion of the tender offer, indicating strong investor interest
• Proactive management of debt obligations, potentially improving the company's financial structure

Negative

• The tender offer was oversubscribed, resulting in a proration factor of 90.28%, which may disappoint some investors who couldn't fully participate

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 company is offering to purchase up to $250 million of these notes at a premium of $993.26 per $1,000 principal amount, including a $30 early tender premium. This action suggests Eastman is taking advantage of current market conditions to refinance its debt at potentially more favorable terms.

The 90.28% proration factor indicates high investor interest, as the offer was oversubscribed. This strong demand could be seen as a positive signal about Eastman's creditworthiness. However, the company's willingness to pay a premium also implies a desire to reduce its debt load, which could be driven by various factors such as improving its balance sheet or preparing for future financial needs.

Overall, this tender offer demonstrates proactive financial management but also raises questions about Eastman's motivations and future capital structure plans.

Market Research Analyst

The tender offer's pricing reveals interesting market dynamics. The fixed spread of 22.5 basis points over the reference U.S. Treasury yield of 4.751% suggests investors are demanding a relatively modest premium for Eastman's credit risk. This could indicate market confidence in the company's financial stability.

However, the early tender deadline strategy and the substantial early tender premium of $30 per $1,000 principal amount highlight Eastman's eagerness to ensure high participation. This approach successfully led to oversubscription, as evidenced by the 90.28% proration factor.

The timing of this offer, with notes due in 2025, suggests Eastman is proactively managing its near-term debt maturities. This could be in anticipation of potential market volatility or to optimize its debt structure. The market's strong response to this offer may open doors for Eastman to consider similar strategies for other outstanding debt in the future.

KINGSPORT, Tenn.--(BUSINESS WIRE)-- Eastman Chemical Company (the “Company” or “Eastman”) (NYSE: EMN) today announced the consideration payable in connection with 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”), as described in the table below.

Title of Security	CUSIP / ISIN Number	Principal Amount Outstanding	Tender Cap (Principal Amount)	Proration Factor(1)	U.S. Reference Treasury Security	Reference Yield	Fixed Spread	Early Tender Premium (per $1,000)	Total Consideration (per $1,000)
3.800% Notes due 2025	277432AR1 / US277432AR19	$ 699,992,000	$ 250,000,000	90.28 %	1.750% UST due 03/15/2025	4.751%	22.5 bps	$ 30	$ 993.26
(1) Rounded to nearest hundredth of a percentage point.

The Tender Offer was made on the terms and conditions described in the Offer to Purchase, dated July 29, 2024 (the “Offer to Purchase”).

The “Total Consideration” for each $1,000 principal amount of Notes validly tendered and accepted for purchase pursuant to the Tender Offer was 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.

Only holders of Notes who validly tendered and did not validly withdraw their Notes at or prior to 5:00 p.m., New York City time, on August 9, 2024 (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 the most recent interest payment date up to, but not including, the Early Settlement Date. Withdrawal rights for the Notes expired at 5:00 p.m., New York City time, on August 9, 2024.

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 D.F. King & Co., Inc. as the tender agent and information agent (the “Tender and Information Agent”) for the Tender Offer. 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 (toll-free) 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/20240812582396/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 total consideration per $1,000 principal amount for Eastman Chemical's (EMN) 3.800% Notes due 2025 in the tender offer?

The Total Consideration for each $1,000 principal amount of Eastman Chemical's (EMN) 3.800% Notes due 2025 in the tender offer is $993.26, which includes an early tender premium of $30.

What is the proration factor for Eastman Chemical's (EMN) tender offer for its 3.800% Notes due 2025?

The proration factor for Eastman Chemical's (EMN) tender offer for its 3.800% Notes due 2025 is 90.28%, as the offer was oversubscribed.

When is the Early Settlement Date for Eastman Chemical's (EMN) tender offer of its 3.800% Notes due 2025?

The Early Settlement Date for Eastman Chemical's (EMN) tender offer of its 3.800% Notes due 2025 is expected to be August 14, 2024.

What was the Tender Cap for Eastman Chemical's (EMN) tender offer of its 3.800% Notes due 2025?

The Tender Cap for Eastman Chemical's (EMN) tender offer of its 3.800% Notes due 2025 was $250,000,000 in aggregate principal amount.