Wesco Announces Pricing of Private Offering of Senior Notes Due 2033

Rhea-AI Summary

Wesco International (NYSE: WCC) has announced that its subsidiary, WESCO Distribution, has priced a private offering of $800 million in senior notes due 2033, increased from the previously announced $600 million. The notes carry a 6.375% interest rate and will be issued at 100% of principal amount, with settlement expected on March 6, 2025.

The net proceeds of approximately $789.5 million will be used to redeem all outstanding 10.625% Series A Preferred Stock and related depositary shares on June 22, 2025, and repay part of its asset-based revolving credit facility. Initially, funds will be used to repay portions of accounts receivable securitization and ABL facilities.

The notes will be unsecured, unsubordinated obligations guaranteed by Wesco and Anixter Inc., offered exclusively to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

Positive

• Increased offering size from $600M to $800M shows strong investor demand
• Lower interest rate (6.375%) compared to existing preferred stock (10.625%)
• Strong annual sales of $22B in 2024
• Debt refinancing will reduce interest expenses

Negative

• Additional debt burden of $800M
• Notes are unsecured obligations
• Subject to market and interest rate risks until 2033

Insights

Financial Analyst

Wesco International's upsized $800 million senior notes offering at 6.375% represents a significant financial engineering move that will generate substantial interest savings while restructuring its capital stack. By replacing the 10.625% Series A Preferred Stock with these lower-rate notes, Wesco stands to save approximately $34 million annually in pre-tax financing costs (the 4.25% rate differential on $800 million).

This transaction effectively transforms preferred equity into traditional debt, which carries important implications. While the move optimizes Wesco's weighted average cost of capital, it also increases the company's leverage ratio and fixed payment obligations. However, with approximately $22 billion in annual sales and strong operational cash flows, Wesco appears well-positioned to manage this additional debt load.

The timing is strategic - Wesco is locking in these rates before the June 22 redemption date of the preferred shares, while maintaining flexibility by temporarily redirecting proceeds to revolving facilities. This approach suggests management confidence in Wesco's operational outlook despite broader economic uncertainties in its industrial and construction end markets.

From a balance sheet perspective, this refinancing enhances financial flexibility by eliminating the perpetual preferred stock while extending debt maturities to 2033. For investors, this signals management's commitment to optimizing capital structure and potentially returning more value to common shareholders by reducing the overall cost of capital. The market will likely view this liability management exercise positively as it demonstrates proactive financial stewardship while maintaining Wesco's unsecured debt structure.

PITTSBURGH, Feb. 25, 2025 /PRNewswire/ -- WESCO International, Inc. (NYSE: WCC) ("Wesco"), a leading provider of business-to-business distribution, logistics services, and supply chain solutions, today announced that its wholly owned subsidiary, WESCO Distribution, Inc. ("Wesco Distribution"), priced its previously announced offering (the "Offering") to eligible purchasers of $800 million aggregate principal amount of 6.375% senior notes due 2033 (the "Notes"). The aggregate principal amount of the Notes to be issued in the Offering has been increased from the previously announced $600 million to $800 million. The Notes will be issued at a price of 100.000% of the aggregate principal amount thereof. The issuance and sale of the Notes is scheduled to settle on March 6, 2025, subject to customary closing conditions.

Wesco estimates that the net proceeds from the Offering will be approximately $789.5 million, after deducting the initial purchasers' discount and estimated offering expenses. Wesco intends to use the net proceeds from this Offering to redeem all of its outstanding 10.625% Series A Fixed-Rate Reset Cumulative Perpetual Preferred Stock (the "Series A Preferred Stock") and all of the related depositary shares representing fractional interests in the Series A Preferred Stock (the "Series A Depositary Shares") on June 22, 2025, and repay a portion of the amounts outstanding under its asset-based revolving credit facility (the "ABL Facility"). Prior to such redemption, Wesco intends to use the net proceeds from this Offering to repay a portion of the outstanding borrowings under its accounts receivable securitization facility and the ABL Facility.

The Notes will be unsecured, unsubordinated debt obligations of Wesco Distribution, and will rank equally with Wesco Distribution's other existing and future unsecured, unsubordinated obligations. The Notes will be guaranteed on an unsecured, unsubordinated basis by Wesco and its wholly owned subsidiary, Anixter Inc. (the "Guarantees").

The Notes and related Guarantees are being offered only to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"), and to non-U.S. persons in transactions outside the United States under Regulation S of the Securities Act. The Notes have not been, and will not be, registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release does not and will not constitute an offer to sell, or the solicitation of an offer to buy, the Notes or any other securities, nor will there be any sale of the Notes or other securities, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. Any offer will be made only by means of a private offering memorandum. This press release does not constitute a notice of redemption with respect to the Series A Preferred Stock and the related Series A Depositary Shares.

About Wesco
Wesco International (NYSE: WCC) builds, connects, powers and protects the world. Headquartered in Pittsburgh, Pennsylvania, Wesco is a FORTUNE 500® company with approximately $22 billion in annual sales in 2024 and a leading provider of business-to-business distribution, logistics services and supply chain solutions. Wesco offers a best-in-class product and services portfolio of Electrical and Electronic Solutions, Communications and Security Solutions, and Utility and Broadband Solutions. The Company employs approximately 20,000 people, partners with the industry's premier suppliers, and serves thousands of customers around the world. With millions of products, end-to-end supply chain services, and leading digital capabilities, Wesco provides innovative solutions to meet customer needs across commercial and industrial businesses, contractors, educational institutions, government agencies, technology companies, telecommunications providers, and utilities. Wesco operates more than 700 sites, including distribution centers, fulfillment centers, and sales offices in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.

Forward-Looking Statements
All statements made herein that are not historical facts should be considered as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. These forward-looking statements include, but are not limited to, statements regarding the proposed terms of the Offering, the timing of the Offering and the anticipated use of proceeds therefrom, including the redemption of the Series A Preferred Stock and the related Series A Depositary Shares. Such statements can generally be identified by the use of words such as "anticipate," "plan," "believe," "estimate," "intend," "expect," "project" and similar words, phrases or expressions or future or conditional verbs such as "could," "may," "should," "will" and "would," although not all forward-looking statements contain such words. These forward-looking statements are based on current expectations and beliefs of Wesco's management, as well as assumptions made by, and information currently available to, Wesco's management, current market trends and market conditions and involve various risks and uncertainties, some of which are beyond Wesco's and Wesco's management's control, and which may cause actual results to differ materially from those contained in forward-looking statements. Wesco's actual results could differ materially from those expressed in any forward-looking statement made by Wesco or on Wesco's behalf. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will in fact prove to be accurate. Accordingly, you should not place undue reliance on such statements. Wesco has undertaken no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Those risks, uncertainties and assumptions include whether Wesco will be able to consummate the Offering, including the satisfaction of customary closing conditions with respect to the Offering of the Notes. Additional factors that could cause results to differ materially from those described above can be found in Wesco's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and Wesco's other reports filed with the U.S. Securities and Exchange Commission.

Contact Information:
Investor Relations 
Will Ruthrauff
Director, Investor Relations
484-885-5648    

Corporate Communications
Jennifer Sniderman
Vice President, Corporate Communications
717-579-6603

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SOURCE Wesco International

FAQ

What is the size and interest rate of Wesco's (WCC) new senior notes offering?

Wesco is offering $800 million in senior notes due 2033 with a 6.375% interest rate, increased from the initially announced $600 million.

When will Wesco (WCC) settle the new senior notes offering?

The senior notes offering is scheduled to settle on March 6, 2025, subject to customary closing conditions.

How will Wesco (WCC) use the proceeds from the senior notes offering?

The proceeds will redeem Series A Preferred Stock on June 22, 2025, and repay portions of asset-based revolving credit facility and accounts receivable securitization facility.

What is the guarantee structure of Wesco's (WCC) new senior notes?

The notes are unsecured, unsubordinated obligations guaranteed by Wesco International and Anixter Inc.

Who can purchase Wesco's (WCC) new senior notes?

The notes are only available to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.