Steel Dynamics Announces Completion of Note Offering

Rhea-AI Summary

Steel Dynamics (NASDAQ: STLD) announced the successful sale of $600 million in 5.375% Notes due 2034. The company plans to use the net proceeds for general corporate purposes, including the potential repayment of $400 million in 2.800% Senior Notes due December 2024. Theresa E. Wagler, Executive Vice President and CFO, highlighted the importance of this transaction in bolstering the company's long-term strategic goals, maintaining investment-grade credit ratings, and supporting future growth. The Notes offering was managed by J.P. Morgan Securities, Morgan Stanley, BofA Securities, Wells Fargo Securities, Goldman Sachs, and PNC Capital Markets.

Positive

• Successful sale of $600 million in 5.375% Notes due 2034.
• Potential repayment of $400 million in 2.800% Senior Notes due December 2024.
• Supports long-term strategic goals and future growth.
• Maintains investment-grade credit ratings.

Negative

• Increased debt obligation with $600 million in new Notes.

Financial Analyst

Steel Dynamics' recent $600 million note offering is a significant financial event for the company. The 5.375% interest rate on the Notes due in 2034 indicates a long-term commitment to securing capital at a relatively competitive rate considering the current market conditions. By focusing on 400 million repayment of senior notes due in December 2024, the company is managing its debt maturity profile effectively, a key indicator of sound financial management.

For retail investors, this move should be seen as a positive step towards financial stability and growth sustainability. Maintaining investment-grade credit ratings ensures lower borrowing costs, which is advantageous in economic downturns. However, the high-interest rate of 5.375% could be seen as a reflection of current market uncertainties and potential risks associated with long-term financing.

In the short term, this action alleviates the pressure of the upcoming debt maturity, providing breathing room for the company to allocate resources towards growth initiatives. In the long term, the ability to maintain an investment-grade rating and secure financing at reasonable rates will be critical for ongoing operational stability and growth. Investors should watch how Steel Dynamics utilizes the remaining proceeds for general corporate purposes, as this will signal the company's strategic priorities and potential return on investment.

Market Research Analyst

The successful completion of the note offering by Steel Dynamics also sends a strong signal to the market about the company's creditworthiness and strategic financial planning. The participation of high-profile joint book-running managers like J.P. Morgan, Morgan Stanley and Goldman Sachs illustrates confidence in Steel Dynamics' financial health and future prospects. This can positively influence market perception and investor sentiment.

For the industry at large, such a move demonstrates the ability of large industrial firms to access substantial funds even in potentially volatile market conditions. This could set a precedent for other companies considering similar financial strategies to manage debt and fund growth initiatives.

Retail investors should note the importance of investment-grade ratings in securing lower-cost capital, which can translate to favorable long-term operational costs and enhanced shareholder value. The diverse application of the proceeds, including potential growth investments, showcases a balanced approach to leveraging debt for strategic advantage.

FORT WAYNE, Ind., July 3, 2024 /PRNewswire/ -- Steel Dynamics, Inc. (NASDAQ/GS: STLD) announced today that it has consummated the sale of $600 million aggregate principal amount of 5.375% Notes due 2034 (the "Notes"). The net proceeds from the Notes will be used for general corporate purposes, which may include repayment of the company's $400 million 2.800% Senior Notes due December 2024.

"We are pleased with the execution and support for our investment grade note offering," stated Theresa E. Wagler, Executive Vice President and Chief Financial Officer. "This transaction is an important part of our long-term strategy to provide a strong capital foundation in support of our teams, customers, shareholders, and our continued growth. We remain committed to maintaining our investment grade credit ratings, which we believe provide lower-cost and longer-term capital, allowing for long-term strength, optionality, and value creation opportunities."

This announcement is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities, and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, BofA Securities, Inc., Wells Fargo Securities, LLC, Goldman Sachs & Co. LLC, and PNC Capital Markets LLC are acting as joint book-running managers for the offering of the Notes.

About Steel Dynamics, Inc.
Steel Dynamics is one of the largest domestic steel producers and metals recyclers in North America, based on estimated annual steelmaking and metals recycling capability, with facilities located throughout the United States, and in Mexico. Steel Dynamics produces steel products, including hot roll, cold roll, and coated sheet steel, structural steel beams and shapes, rail, engineered special-bar-quality steel, cold finished steel, merchant bar products, specialty steel sections, and steel joists and deck. In addition, the company produces liquid pig iron and processes and sells ferrous and nonferrous scrap.

Forward-Looking Statements
This press release contains some predictive statements about future events, including statements related to conditions in domestic or global economies, conditions in steel, aluminum, and recycled metals market places, our revenues, costs of purchased materials, future profitability and earnings, and the operation of new, existing or planned facilities and decarbonization goals and sustainability efforts. These statements, which we generally precede or accompany by such typical conditional words as "anticipate", "intend", "believe", "estimate", "plan", "seek", "project", or "expect", or by the words "may", "will", or "should", are intended to be made as "forward-looking", subject to many risks and uncertainties, within the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These statements speak only as of this date and are based upon information and assumptions, which we consider reasonable as of this date, concerning our businesses and the environments in which they operate. Such predictive statements are not guarantees of future performance, and we undertake no duty to update or revise any such statements. Some factors that could cause such forward-looking statements to turn out differently than anticipated include: (1) domestic and global economic factors; (2) global steelmaking overcapacity and imports of steel, together with increased scrap prices; (3) pandemics, epidemics, widespread illness or other health issues; (4) the cyclical nature of the steel industry and the industries we serve; (5) volatility and major fluctuations in prices and availability of scrap metal, scrap substitutes and supplies, and our potential inability to pass higher costs on to our customers; (6) cost and availability of electricity, natural gas, oil, and other energy resources are subject to volatile market conditions; (7) increased environmental, greenhouse gas emissions and sustainability considerations from our customers or related regulations; (8) compliance with and changes in environmental and remediation requirements; (9) significant price and other forms of competition from other steel and aluminum producers, scrap processors and alternative materials; (10) availability of an adequate source of supply of scrap for our metals recycling operations; (11) cybersecurity threats and risks to the security of our sensitive data and information technology; (12) the implementation of our growth strategy; (13) litigation and legal compliance; (14) unexpected equipment downtime or shutdowns; (15) governmental agencies may refuse to grant or renew some of our licenses and permits required to operate our business; (16) our senior unsecured credit facility contains, and any future financing agreements may contain, restrictive covenants that may limit our flexibility; and (17) the impacts of impairment charges.

More specifically, we refer you to our more detailed explanation of these and other factors and risks that may cause such predictive statements to turn out differently, as set forth in our most recent Annual Report on Form 10-K under the headings Special Note Regarding Forward-Looking Statements and Risk Factors, in our Quarterly Reports on Form 10-Q, or in other reports which we file with the Securities and Exchange Commission. These reports are available publicly on the Securities and Exchange Commission website, www.sec.gov, and on our website, www.steeldynamics.com under "Investors – SEC Filings."

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SOURCE Steel Dynamics, Inc.

FAQ

What did Steel Dynamics announce on July 3, 2024?

Steel Dynamics announced the completion of a $600 million sale of 5.375% Notes due 2034.

What will Steel Dynamics use the proceeds from the Notes for?

The proceeds will be used for general corporate purposes, including potentially repaying $400 million in 2.800% Senior Notes due December 2024.

What is the interest rate on the new Notes issued by Steel Dynamics?

The interest rate on the new Notes is 5.375%.

Which financial institutions managed the Notes offering for Steel Dynamics?

The offering was managed by J.P. Morgan Securities, Morgan Stanley, BofA Securities, Wells Fargo Securities, Goldman Sachs, and PNC Capital Markets.

How does the new Notes offering support Steel Dynamics' strategic goals?

The offering supports long-term strategic goals by maintaining investment-grade credit ratings, providing lower-cost and longer-term capital, and supporting future growth.