Olin Announces Partial Redemption Of 9.75% Senior Notes Due 2023

Rhea-AI Summary

Olin Corporation (NYSE: OLN) plans to redeem $600 million of its 9.75% senior notes due October 15, 2023, on the same date, at a redemption price of 102.438%, totaling a $14.6 million premium. The redemption will be funded by a $500 million senior delayed-draw term loan and $114.6 million from operations. This move is expected to decrease annual interest expenses by approximately $40 million, reflecting improved liquidity from reduced working capital and capital spending.

Positive

• Redemption of $600 million in high-cost senior notes improves liquidity.
• Expected annual interest expense reduction of $40 million.

Negative

• None.

CLAYTON, Mo., Sept. 15, 2020 /PRNewswire/ -- Olin Corporation (NYSE: OLN) announced today that it has notified bondholders that it intends to redeem $600 million of outstanding 9.75% senior notes due October 15, 2023 (the "Notes").  The Notes are expected to be redeemed on October 15, 2020 at a redemption price in cash of 102.438% of the principal amount of the Notes (representing an aggregate redemption premium of approximately $14.6 million).  The Notes were issued in connection with the 2015 Dow Chlorine Products acquisition.  Olin expects to fund the redemption using its $500 million senior delayed-draw term loan and approximately $114.6 million of cash generated from operations.   

"The use of cash to redeem $100 million of the high-cost bonds reflects improved liquidity driven by actions to reduce working capital and capital spending in 2020 and our second half 2020 operating results," said Scott Sutton, President and Chief Executive Officer. "We expect that the redemption will reduce annual interest expense by approximately $40 million."

COMPANY DESCRIPTION

Olin Corporation is a leading vertically-integrated global manufacturer and distributor of chemical products and a leading U.S. manufacturer of ammunition.  The chemical products produced include chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach and hydrochloric acid.  Winchester's principal manufacturing facilities produce and distribute sporting ammunition, law enforcement ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.

Visit www.olin.com for more information on Olin.

FORWARD-LOOKING STATEMENTS

This communication includes forward-looking statements.  These statements relate to analyses and other information that are based on management's beliefs, certain assumptions made by management, forecasts of future results, and current expectations, estimates and projections about the markets and economy in which we and our various segments operate.  The statements contained in this communication that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.

We have used the words "anticipate," "intend," "may," "expect," "believe," "should," "plan," "project," "estimate," "forecast," "optimistic," and variations of such words and similar expressions in this communication to identify such forward-looking statements.  These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control.  Therefore, actual outcomes and results may differ materially from those matters expressed or implied in such forward-looking statements.  We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.  The payment of cash dividends is subject to the discretion of our board of directors and will be determined in light of then-current conditions, including our earnings, our operations, our financial conditions, our capital requirements and other factors deemed relevant by our board of directors.  In the future, our board of directors may change our dividend policy, including the frequency or amount of any dividend, in light of then-existing conditions.

The risks, uncertainties and assumptions involved in our forward-looking statements, many of which are discussed in more detail in our filings with the SEC, including without limitation the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, include, but are not limited to, the following:

• sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as vinyls, urethanes, and pulp and paper;
• the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products;
• our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation;
• higher-than-expected raw material, energy, transportation, and/or logistics costs;
• failure to control costs or to achieve targeted cost reductions;
• new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;
• the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;
• weak industry conditions affecting our ability to comply with the financial maintenance covenants in our senior secured credit facility;
• the negative impact from the COVID-19 pandemic and the global response to the pandemic;
• the failure or an interruption of our information technology systems;
• complications resulting from our multiple enterprise resource planning systems and the conversion to a new system;
• the loss of a substantial customer for either chlorine or caustic soda could cause an imbalance in customer demand for these products;
• our substantial amount of indebtedness and significant debt service obligations;
• unexpected litigation outcomes;
• changes in, or failure to comply with, legislation or government regulations or policies;
• costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;
• failure to attract, retain and motivate key employees;
• the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the liabilities in our pension plan;
• adverse changes in international markets, including economic, political or regulatory changes;
• our long range plan assumptions not being realized causing a non-cash impairment charge of long-lived assets;
• adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital; and
• various risks associated with our transition and subsequent operation of the Lake City U.S. Army Ammunition Plant.

All of our forward-looking statements should be considered in light of these factors.  In addition, other risks and uncertainties not presently known to us or that we consider immaterial could affect the accuracy of our forward-looking statements.

2020-14

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SOURCE Olin Corporation

FAQ

What is Olin Corporation's plan regarding its senior notes on October 15, 2020?

Olin Corporation plans to redeem $600 million of its 9.75% senior notes due October 15, 2023, on that date.

What is the redemption price for Olin's senior notes?

The redemption price for the senior notes is 102.438% of the principal amount.

How will Olin Corporation fund the redemption of its senior notes?

Olin will fund the redemption using a $500 million senior delayed-draw term loan and approximately $114.6 million from generated cash.

What impact will the redemption of senior notes have on Olin's financials?

The redemption is expected to reduce Olin's annual interest expense by about $40 million.