Olin Announces Refinancing Transaction And Partial Redemption Of 10% Senior Notes Due 2025

Rhea-AI Summary

Olin Corporation (NYSE: OLN) has executed a Third Amendment to its Credit Agreement, increasing its term loan facility by $315 million and lowering borrowing costs. The company plans to redeem $315 million of senior notes due October 15, 2025 at a premium of $15.8 million using the incremental loan and cash reserves. The CEO noted these actions could reduce annual interest expenses by approximately $30 million. Olin anticipates improving its net debt to EBITDA ratio to around 3 times within the next year.

Positive

• Increased term loan facility by $315 million with lower borrowing costs.
• Expected annual interest expense reduction of approximately $30 million.
• Plans to improve net debt to adjusted EBITDA ratio to 3 times within the next 12 months.

Negative

• None.

CLAYTON, Mo., March 1, 2021 /PRNewswire/ -- Olin Corporation (NYSE: OLN) announced today the execution of an Amendment ("the Third Amendment") to its existing Credit Agreement, which increased the term loan facility by $315 million, with a delayed-draw feature, and lowered the pricing tiers for borrowings under the Credit Agreement. 

Olin also announced that it has notified bondholders that it intends to redeem $315 million of outstanding 10% senior notes due October 15, 2025 (the "Notes").  The Notes are expected to be redeemed on March 31, 2021 at a redemption price in cash of 105% of the principal amount of the Notes (representing an aggregate redemption premium of approximately $15.8 million).  The Notes were issued in connection with the 2015 Dow Chlorine Products acquisition.  Olin expects to fund the redemption using the $315 million of incremental delayed-draw term loan and cash on hand.

"We are pleased with the results of the Third Amendment, as it lowers our interest rate on bank borrowings and accelerates the refinancing of a meaningful portion of the remaining $500 million of high-cost acquisition bonds.  These actions are expected to reduce annual interest expense by approximately $30 million," said Scott Sutton, President and Chief Executive Officer, "During the remainder of 2021, we expect to use excess cash flow generated to redeem the remaining $185 million 10% senior notes, as we expect our net debt to adjusted EBITDA ratio to improve to the 3 times range within the next 12 months."

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," "outlook," "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, 2020, include, but are not limited to, the following:

Business, Industry and Operational Risks

• 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;
• 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;
• unsuccessful implementation of our operating model, which prioritizes Electrochemical Unit (ECU) margins over sales volumes;
• our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation;
• failure to control costs or to achieve targeted cost reductions;
• higher-than-expected raw material, energy, transportation, and/or logistics costs;
• the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;
• the failure or an interruption of our information technology systems;
• our substantial amount of indebtedness and significant debt service obligations;
• the negative impact from the COVID-19 pandemic and the global response to the pandemic;
• weak industry conditions affecting our ability to comply with the financial maintenance covenants in our senior secured credit facility;
• the loss of a substantial customer for either chlorine or caustic soda could cause an imbalance in customer demand for these products;
• failure to attract, retain and motivate key employees;
• risks associated with our international sales and operations, including economic, political or regulatory changes;
• the effects of any declines in global equity markets on asset values and any declines in interest rates or other significant assumptions used to value the liabilities in our pension plan;
• adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital;
• our long-range plan assumptions not being realized causing a non-cash impairment charge of long-lived assets;

Legal, Environmental and Regulatory Risks

• new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;
• changes in, or failure to comply with, legislation or government regulations or policies, including changes within the international markets in which we operate;
• unexpected litigation outcomes;
• costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings; and
• various risks associated with our Lake City U.S. Army Ammunition Plant contract, including performance and compliance with governmental contract provisions.

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.

2021-06

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SOURCE Olin Corporation

FAQ

What recent financial changes did Olin Corporation announce on March 1, 2021?

Olin Corporation announced a Third Amendment to its Credit Agreement, increasing its term loan by $315 million and lowering borrowing costs.

How much debt is Olin Corporation planning to redeem, and when is it due?

Olin Corporation plans to redeem $315 million of senior notes due on October 15, 2025.

What is the expected impact of Olin's refinancing on annual interest expenses?

Olin expects to reduce annual interest expenses by approximately $30 million following the refinancing.

What is Olin Corporation's target for its net debt to EBITDA ratio within the next year?

Olin aims to improve its net debt to adjusted EBITDA ratio to around 3 times within the next 12 months.