Howmet Aerospace Inc. Announces Pricing of Debt Offering

Rhea-AI Summary

Howmet Aerospace Inc. (NYSE:HWM) has announced the pricing of its public offering of $500 million aggregate principal amount of 4.850% Notes due 2031. The offering is expected to close on August 22, 2024, subject to customary conditions. The company plans to use the net proceeds, along with cash on hand, to redeem all outstanding principal (approximately $577 million) of its 6.875% Notes due 2025. J.P. Morgan Securities , Citigroup Global Markets Inc., Morgan Stanley & Co. , and SMBC Nikko Securities America, Inc. are acting as joint book-running managers for the offering.

Positive

• Successful pricing of $500 million in new notes
• Lower interest rate of 4.850% on new notes compared to 6.875% on notes being redeemed
• Refinancing of higher-interest debt, potentially reducing interest expenses

Negative

• Increase in total debt by approximately $500 million

Insights

Financial Analyst

Howmet Aerospace's $500 million debt offering at 4.850% interest rate, maturing in 2031, is a strategic move to refinance higher-cost debt. The company plans to use the proceeds to redeem $577 million of 6.875% Notes due 2025, potentially saving over $11 million annually in interest expenses.

This refinancing demonstrates prudent financial management, taking advantage of lower interest rates to reduce borrowing costs and extend debt maturity. The improved debt profile could enhance Howmet's financial flexibility and credit metrics, potentially leading to better terms for future financing and a stronger balance sheet.

Investors should note that while this move is financially sound, it doesn't significantly alter the company's overall debt load. The market's reaction will likely depend on how effectively Howmet utilizes this improved financial position to drive growth and profitability in its aerospace and industrial markets.

Market Research Analyst

The successful pricing of Howmet Aerospace's debt offering signals strong investor confidence in the company's financial health and future prospects. The oversubscription of the offering, as evidenced by the involvement of major financial institutions as joint book-running managers, suggests robust demand for Howmet's debt securities.

This transaction occurs against a backdrop of recovering aerospace markets, with increasing air travel and aircraft production rates. Howmet's strategic position in supplying critical components for commercial and defense aerospace applications positions it well to capitalize on this industry rebound.

The lower interest rate on the new notes compared to the ones being redeemed reflects both the current interest rate environment and potentially an improved credit outlook for Howmet. This could translate to enhanced investor perception and potentially positive momentum for the stock price in the near term.

PITTSBURGH--(BUSINESS WIRE)-- Howmet Aerospace Inc. (“Howmet Aerospace” or the “Company”) (NYSE:HWM) today announced that it has priced its underwritten public offering of $500 million aggregate principal amount of its 4.850% Notes due 2031 (the “Notes”). The offering is expected to close on August 22, 2024, subject to customary closing conditions.

The Company intends to use the net proceeds from the offering, together with cash on hand, for the redemption of all of the outstanding principal amount of approximately $577 million of its 6.875% Notes due 2025.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC and SMBC Nikko Securities America, Inc. are acting as joint book-running managers for the offering.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the Notes or any other security and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which, or to any persons to whom, such an offer, solicitation or sale would be unlawful. The Notes are being offered pursuant to an effective shelf registration statement previously filed with the Securities and Exchange Commission (the “SEC”), and a prospectus supplement and accompanying prospectus filed with the SEC as part of the shelf registration statement. The offering is being made only by means of a preliminary prospectus supplement and the accompanying prospectus. Copies of these documents can be obtained by calling J.P. Morgan Securities LLC collect at (212) 834-4533, Citigroup Global Markets Inc. toll-free at (800) 831-9146, Morgan Stanley & Co. LLC toll-free at (866) 718-1649 or SMBC Nikko Securities America, Inc. toll-free at (888) 868-6856 or by email at prospectus@smbcnikko-si.com.

About Howmet Aerospace

Howmet Aerospace Inc., headquartered in Pittsburgh, Pennsylvania, is a leading global provider of advanced engineered solutions for the aerospace and transportation industries. The Company’s primary businesses focus on jet engine components, aerospace fastening systems, and airframe structural components necessary for mission-critical performance and efficiency in aerospace and defense applications, as well as forged aluminum wheels for commercial transportation.

Forward-Looking Statements

This release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as "anticipates", "believes", "could", "envisions", "estimates", "expects", "forecasts", "goal", "guidance", "intends", "may", "outlook", "plans", "projects", "seeks", "sees", "should", "targets", "will", "would", or other words of similar meaning. All statements that reflect Howmet Aerospace’s expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements, forecasts and outlook relating to the timing and terms of the offering and the use of proceeds therefrom; the condition of end markets; future financial results or operating performance; future strategic actions; Howmet Aerospace's strategies, outlook, and business and financial prospects; and any future dividends, debt issuances, debt reduction and repurchases of its common stock. These statements reflect beliefs and assumptions that are based on Howmet Aerospace’s perception of historical trends, current conditions and expected future developments, as well as other factors Howmet Aerospace believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, which could cause actual results to differ materially from those indicated by these statements. Such risks and uncertainties include, but are not limited to: (a) deterioration in global economic and financial market conditions generally; (b) adverse changes in the markets served by Howmet Aerospace; (c) the impact of potential cyber attacks and information technology or data security breaches; (d) the loss of significant customers or adverse changes in customers’ business or financial conditions; (e) manufacturing difficulties or other issues that impact product performance, quality or safety; (f) inability of suppliers to meet obligations due to supply chain disruptions or otherwise; (g) failure to attract and retain a qualified workforce and key personnel, labor disputes or other employee relations issues; (h) the inability to achieve anticipated or targeted revenue growth, cash generation, restructuring plans, cost reductions, improvement in profitability, or strengthening of competitiveness and operations; (i) inability to meet increased demand, production targets or commitments; (j) competition from new product offerings, disruptive technologies or other developments; (k) geopolitical, economic, and regulatory risks relating to Howmet Aerospace’s global operations, including geopolitical and diplomatic tensions, instabilities, conflicts and wars, as well as compliance with U.S. and foreign trade and tax laws, sanctions, embargoes and other regulations; (l) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation, which can expose Howmet Aerospace to substantial costs and liabilities; (m) failure to comply with government contracting regulations; (n) adverse changes in discount rates or investment returns on pension assets; and (o) the other risk factors summarized in Howmet Aerospace’s Form 10-K for the year ended December 31, 2023 and other reports filed with the SEC. Market projections are subject to the risks discussed above and other risks in the market. Credit ratings are not a recommendation to buy or hold any Howmet Aerospace securities, and they may be revised or revoked at any time at the sole discretion of the credit rating organizations. The statements in this release are made as of the date of this release, even if subsequently made available by Howmet Aerospace on its website or otherwise. Howmet Aerospace disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise, except as required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240808607735/en/

Investor Contact:

Paul T. Luther

(412) 553-1950

Paul.Luther@howmet.com

Media Contact:

Rob Morrison

(412) 553-2666

Rob.Morrison@howmet.com

Source: Howmet Aerospace Inc.

FAQ

What is the interest rate and maturity of Howmet Aerospace's (HWM) new notes offering?

Howmet Aerospace's new notes offering has an interest rate of 4.850% and is due in 2031.

How much is Howmet Aerospace (HWM) raising in its new debt offering?

Howmet Aerospace is raising $500 million in its new debt offering.

When is the expected closing date for Howmet Aerospace's (HWM) debt offering?

The debt offering is expected to close on August 22, 2024, subject to customary closing conditions.

What will Howmet Aerospace (HWM) use the proceeds from the new debt offering for?

Howmet Aerospace plans to use the net proceeds, along with cash on hand, to redeem all outstanding principal (approximately $577 million) of its 6.875% Notes due 2025.