Ferroglobe Announces the Full Redemption of its Remaining 9.375% Senior Secured Notes Due 2025
- Successful reduction of adjusted gross debt by approximately $370 million since the end of 2022
- Expected savings of approximately $32 million in annual interest expense compared to 2022
- Enhanced financial flexibility for the company
- None.
Insights
The decision by Ferroglobe to fully redeem its 9.375% Senior Secured Notes due 2025 represents a strategic move to optimize its capital structure. By using cash on hand to address this high-interest debt, the company is effectively reducing its cost of capital. The call premium of 102.34375% indicates a slightly above par value redemption, which is a common practice to compensate bondholders for the early termination of their investment. The reduction in annual interest expense by approximately $32 million not only enhances the company's net income but also demonstrates strong free cash flow generation, a key metric for investors evaluating a company's financial health.
Furthermore, the reduction of adjusted gross debt by $370 million since the end of 2022 to less than $100 million is a substantial deleveraging effort. This action is likely to be received positively by credit rating agencies and investors, as it reduces financial risk and may lead to lower borrowing costs in the future. The enhanced financial flexibility mentioned by the CFO could pave the way for shareholder-friendly activities such as dividends or share buybacks, which would be attractive to investors. However, one must consider the opportunity cost of using cash for debt redemption versus potential investments in growth or operational improvements.
The redemption of the Senior Secured Notes by Ferroglobe is an indicator of the company's robust position in the silicon metal and ferroalloys market. This industry is known for its cyclical nature and sensitivity to global economic conditions. By reducing its debt burden, Ferroglobe is better positioned to weather market volatility and invest in strategic initiatives. The company's focus on strengthening its balance sheet is reflective of a broader industry trend where firms are prioritizing financial stability in response to uncertain market conditions.
Investors should note that the ability to generate strong free cash flow, as indicated by Ferroglobe's CFO, is a testament to the company's operational efficiency and cost management. This may also signal the company's competitive advantage in the market, potentially leading to an increased market share. The reference to future capital return policies could suggest that management is confident in the company's sustained cash flow generation and its ability to continue rewarding shareholders.
From an economic perspective, Ferroglobe's move to redeem its high-yield debt ahead of schedule can be seen as a response to the macroeconomic environment. The redemption comes at a time when interest rates have been fluctuating and companies with high levels of debt are looking to lock in lower rates or reduce interest expenses. By addressing its high-yield debt now, Ferroglobe is likely aiming to mitigate the impact of potential future interest rate hikes.
Moreover, the company's deleveraging strategy may be influenced by forecasts of economic downturns, during which maintaining a strong balance sheet is crucial for corporate survival and growth. The CFO's statement about future attractive avenues for debt financing suggests an anticipation of more favorable borrowing conditions, which could be a strategic maneuver to ensure access to capital for future growth opportunities or to maintain operational stability during economic uncertainty.
LONDON, Feb. 05, 2024 (GLOBE NEWSWIRE) -- Ferroglobe PLC (NASDAQ: GSM) (“Ferroglobe”, the “Company,” or the “Parent”), a leading global producer of silicon metal, silicon-based and manganese-based ferroalloys, announces today that its subsidiary issuers of the
The Notes are being redeemed with cash on the balance sheet.
“The elimination of the Senior Secured Notes is a significant milestone for Ferroglobe,” said Beatriz Garcia-Cos, Ferroglobe’s Chief Financial Officer. “Since the end of 2022, we have reduced our adjusted gross debt by roughly
About Ferroglobe
Ferroglobe is a leading global producer of silicon metal, silicon-based and manganese-based ferroalloys serving a customer base across the globe in dynamic and fast-growing end markets, such as solar, automotive, consumer products, construction and energy. The Company is based in London. For more information, visit https://investor.ferroglobe.com.
Forward-Looking Statements
This release contains “forward-looking statements” within the meaning of U.S. securities laws. Forward-looking statements are not historical facts but are based on certain assumptions of management and describe the Company’s future plans, strategies and expectations. Forward-looking statements often use forward-looking terminology, including words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “guidance”, “intends”, “likely”, “may”, “plan”, “potential”, “predicts”, “seek”, “target”, “will” and words of similar meaning or the negative thereof.
Forward-looking statements contained in this press release are based on information currently available to the Company and assumptions that management believe to be reasonable, but are inherently uncertain. As a result, Ferroglobe’s actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements, which are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company’s control.
Forward-looking financial information and other metrics presented herein represent the Company’s goals and are not intended as guidance or projections for the periods referenced herein or any future periods.
All information in this press release is as of the date of its release. Ferroglobe does not undertake any obligation to update publicly any of the forward-looking statements contained herein to reflect new information, events or circumstances arising after the date of this press release. You should not place undue reliance on any forward-looking statements, which are made only as of the date of this press release.
INVESTOR CONTACT:
Alex Rotonen, CFA
Vice President, Investor Relations
Email: investor.relations@ferroglobe.com
MEDIA CONTACT:
Cristina Feliu Roig
Executive Director, Communications & Public Affairs
Email: corporate.comms@ferroglobe.com
FAQ
What is the ticker symbol for Ferroglobe PLC?
What is the full redemption announcement for Ferroglobe PLC?
When is the expected redemption date for the Notes?
How much is the expected annual interest expense savings from the redemption?
