Forterra Announces Closing of $500 Million Senior Secured Notes Offering

Rhea-AI Summary

Forterra has successfully closed its offering of $500 million in senior secured notes due 2025, carrying a fixed interest rate of 6.50%, payable semi-annually. The notes are secured by first and second-priority liens on collateral, primarily consisting of assets from the Term Loan Facility and the Asset-Based Revolving Credit Facility. The proceeds from the offering will be utilized to repay a portion of the outstanding Term Loan and cover related fees. Forterra specializes in manufacturing water and drainage products across the U.S. and Eastern Canada.

Positive

• Successful offering of $500 million senior secured notes enhances liquidity.
• Fixed interest rate of 6.50% provides predictable financing costs.
• Proceeds will be used to reduce outstanding Term Loan obligations.

Negative

• Long-term debt increases due to the new notes issuance.
• Fixed interest rate of 6.50% may be high compared to market rates in future.

IRVING, Texas, July 16, 2020 (GLOBE NEWSWIRE) -- Forterra, Inc. (“Forterra” or the “Company”) (NASDAQ: FRTA) today announced the closing of the previously announced offering by Forterra Finance, LLC and FRTA Finance Corp., each a wholly owned subsidiary of the Company, of $500.0 million aggregate principal amount of senior secured notes due 2025 (the “Notes”). 

The Notes have a fixed annual interest rate of 6.50%, which will be paid semi-annually on January 15 and July 15 of each year.  Obligations under the Notes are guaranteed by the Company and the Company’s existing and future subsidiaries (other than the issuers) that guarantee the Company’s senior secured term loan facility (the “Term Loan Facility”) and the obligations of the U.S. borrowers under the Company’s senior secured asset-based revolving credit facility (the “ABL Facility”). The Notes and the related guarantees are secured by first-priority liens on the collateral that secures the Term Loan Facility on a first-priority basis (which is generally all assets other than those that secure the ABL Facility on a first-priority basis as set forth below) and second-priority liens on the collateral that secures the ABL Facility on a first-priority basis (which is generally inventory, accounts receivable, deposit accounts, securities accounts, certain intercompany loans and related assets), which second-priority liens are ratable with the liens on such assets securing the obligations under the Term Loan Facility and junior to the liens on such assets securing the ABL Facility.

The Company expects to use the net proceeds from this offering to repay a portion of the amount outstanding under the Term Loan Facility and to pay related fees and expenses.  

This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes, nor shall there be any sale of the Notes in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction. Any offer, if at all, will be made only pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States in reliance on Regulation S under the Securities Act. The Notes have not been and are not expected to be registered under the Securities Act, or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

About Forterra

Forterra is a leading manufacturer of water and drainage pipe and products in the U.S. and Eastern Canada for a variety of water-related infrastructure applications, including water transmission, distribution, drainage and stormwater systems.  Based in Irving, Texas, Forterra’s product breadth and scale help make it a preferred supplier for water-related pipe and products, serving a wide variety of customers, including contractors, distributors and municipalities.  For more information on Forterra, visit http://forterrabp.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by the use of words such as "anticipate", "believe", "expect", "estimate", "plan", "outlook", and "project" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on historical information available at the time the statements are made and are based on management's reasonable belief or expectations with respect to future events, and are subject to risks and uncertainties, many of which are beyond the Company's control, that could cause actual performance or results to differ materially from the belief or expectations expressed in or suggested by the forward-looking statements. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update any forward-looking statement to reflect future events, developments or otherwise, except as may be required by applicable law. Investors are referred to the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, for additional information regarding the risks and uncertainties that may cause actual results to differ materially from those expressed in any forward-looking statement.

CONTACT:
Simon Chen
Vice President – Treasury and Investor Relations
469.299.9113
IR@forterrabp.com

FAQ

What are the key details of Forterra's recent note offering?

Forterra closed an offering of $500 million in senior secured notes due 2025, with a fixed interest rate of 6.50%.

How will Forterra utilize the proceeds from the $500 million note offering?

The proceeds will be used to repay part of the outstanding Term Loan Facility and cover associated fees.

When is the interest payment schedule for the new notes issued by Forterra?

Interest on the notes will be paid semi-annually on January 15 and July 15 each year.

What is the significance of the liens associated with Forterra's new notes?

The new notes are secured by first and second-priority liens on assets, providing security for investors.

What is Forterra's primary business focus?

Forterra primarily manufactures water and drainage products for infrastructure applications in the U.S. and Eastern Canada.