GrafTech International Ltd. (NYSE: EAF) (“GrafTech” or the
“Company”) announced today that GrafTech Finance Inc. (“GrafTech
Finance”) and GrafTech Global Enterprises Inc. (“GrafTech Global”
and, together with GrafTech Finance, the “Issuers”), each a
subsidiary of the Company, have commenced separate offers to
exchange (each an “Exchange Offer” and, together, the “Exchange
Offers”) any and all of (i) GrafTech Finance’s 4.625% senior
secured notes due 2028 (the “Existing 4.625% Notes”) and (ii)
GrafTech Global’s 9.875% senior secured notes due 2028 (the
“Existing 9.875% Notes” and, together with the Existing 4.625%
Notes, the “Existing Notes”), for up to an aggregate principal
amount of $500,000,000 new 4.625% second lien notes due 2029 and up
to an aggregate principal amount of $450,000,000 new 9.875% second
lien notes due 2029, respectively (collectively, the “Exchange
Notes”), pursuant to the terms and conditions described in a
confidential exchange offer memorandum and consent solicitation
statement (as it may be supplemented and amended from time to time,
the “Offering Memorandum”).
Simultaneously with the Exchange Offers, the Company announced
that the Issuers are soliciting consents (with respect to each
series of Existing Notes, a “Consent Solicitation” and,
collectively, the “Consent Solicitations”), on the terms and
subject to the conditions set forth in the Offering Memorandum,
(with respect to each series of Existing Notes, a “Consent” and,
collectively, the “Consents”) from Eligible Holders (as defined
below) of such series of Existing Notes to adopt certain proposed
amendments (the “Proposed Amendments”) to the indentures governing
the Existing Notes (collectively, the “Existing Notes Indentures”).
The Proposed Amendments for each series of Existing Notes would
eliminate substantially all of the restrictive covenants as well as
certain events of default and related provisions and definitions in
the Existing Notes Indentures. Holders of at least a majority of
the outstanding principal amount of a series of the Existing Notes
must consent (the “Indenture Consents”) to the Proposed Amendments
in order for the Proposed Amendments to become effective with
respect to such series of Existing Notes. The Proposed Amendments
with respect to each series of Existing Notes would also release
all of the collateral securing such series of Existing Notes (the
“Collateral Release”) if consents from the holders of at least 66
2/3% of the outstanding principal amount of such series of Existing
Notes are received (the “Collateral Release Consents” and, together
with the Indenture Consents, the “Requisite Consents”). If the
Collateral Release Consents are obtained with respect to a series
of Existing Notes and the Collateral Release becomes operative, all
of the collateral securing such Existing Notes will be released.
Eligible Holders of Existing Notes may not tender Existing Notes
without delivering the related Consents, and Eligible Holders of
Existing Notes may not deliver Consents without tendering the
related Existing Notes.
Certain holders (the “Supporting Noteholders”) representing
approximately 89% of the principal amount of the Existing 4.625%
Notes and 72% of the principal amount of the Existing 9.875% Notes,
have agreed to tender their Existing Notes in the Exchange Offers
and thereby provide their consent to support the Proposed
Amendments in the Consent Solicitations. As a result, we expect the
Supporting Noteholders to tender their Existing Notes pursuant to
the Exchange Offers and provide the Requisite Consents, including,
for the avoidance of doubt, the Collateral Release Consents, with
respect to each series of the Existing Notes to effect the Proposed
Amendments with respect to each series of the Existing Notes.
The following table describes certain terms of the Exchange
Offers and summarizes the consideration for each $1,000 principal
amount of Existing Notes tendered in the Exchange Offers:
Title of Existing
Notes
Issuer
CUSIP No./ISIN(1)
Aggregate Outstanding
Principal Amount
Consideration (which includes
consideration for accompanying Consents delivered pursuant to the
Consent Solicitations)
4.625% Senior Secured Notes due 2028
GrafTech Finance
384311AA4 / US384311AA42 (144A) U3826GAA5
/ USU3826GAA59 (Reg S)
$500,000,000
$1,000 of New 4.625% Notes
9.875% Senior Secured Notes due 2028
GrafTech Global
38431AAA4 / US38431AAA43 (144A) U3830AAA2
/ USU3830AAA26 (Reg S)
$450,000,000
$1,000 of New 9.875% Notes
(1)
No representation is made as to the
correctness or accuracy of the CUSIP numbers listed in this press
release or printed on the Existing Notes. CUSIPs are provided
solely for convenience.
In addition to the consideration described in the table above,
the Issuers will pay in cash accrued and unpaid interest on the
Existing Notes accepted in the Exchange Offer from the applicable
latest interest payment date to, but not including, the settlement
date for the Exchange Offers. Interest on the New Notes will accrue
from the date of first issuance of the New Notes.
The New 4.625% Notes will bear interest at a rate of 4.625% per
year, to be paid semi-annually on June 23 and December 23,
commencing on June 23, 2025. The 9.875% Notes will bear interest at
a rate of 9.875% per year, to be paid semi-annually on June 23 and
December 23, commencing on June 23, 2025.
The payment of principal and interest on the New Notes will be
guaranteed by the guarantors under the Existing Notes (including
the Company), as well as certain additional guarantors that are not
organized under the laws of the United States (“Non-U.S.
Guarantors”). The New Notes and each guarantee will be senior
obligations that rank pari passu in right of payment with all of
our and the guarantors’ existing and future senior indebtedness,
subject to certain exceptions set forth in the Offering Memorandum.
The New Notes will be secured by a perfected second-priority
security interest in all of the assets and property of the Issuers
and the guarantors (the “Collateral”) (subject to certain
exclusions and limitations on perfection steps); provided, that the
trustee of the New Notes will first enforce against Collateral of
guarantors that are organized under the laws of the United States
prior to any Collateral of Non-U.S. Guarantor, subject to certain
limitations as set forth in the Offering Memorandum.
Each Exchange Offer and Consent Solicitation will expire at 5:00
pm, New York City time, on December 20, 2024, or any other date and
time to which the Issuers extend such date and time in its sole
discretion (such date and time for such Exchange Offer and Consent
Solicitation, as each may be extended, the “Expiration Time”),
unless earlier terminated. To be eligible to receive the exchange
consideration set forth in the table above in the applicable
Exchange Offer and Consent Solicitation, Eligible Holders must
validly tender (and not validly withdraw) their Existing Notes at
or prior to the Expiration Time. Rights to withdraw tendered
Existing Notes and revoke consents will terminate at 5:00 pm, New
York City time on December 20, 2024, unless extended (such time and
date as it may be extended, the “Withdrawal Deadline”), except for
certain limited circumstances where additional withdrawal rights
are required by law.
Each Exchange Offer and Consent Solicitation is a separate offer
and solicitation and each may be individually amended, extended,
terminated or withdrawn, subject to certain conditions and
applicable law, at any time in the Issuers’ sole discretion, and
without amending, extending, terminating or withdrawing any other
Exchange Offer or Consent Solicitation. The Expiration Time with
respect to the Exchange Offers and Consent Solicitations can be
extended independently of the Withdrawal Deadline for the Exchange
Offers and Consent Solicitations.
The consummation of each of the Exchange Offers and the Consent
Solicitations is subject to, and conditioned upon, the satisfaction
or waiver by the Issuers of certain conditions, including, the
Commitment Conditions (as defined in the Offering Memorandum) and
the tender of at least 80% of the outstanding principal amount of
Existing Notes (in the aggregate) in the Exchange Offers. Subject
to applicable law, the Issuers may amend, extend, terminate or
withdraw one of the Exchange Offers and related Consent
Solicitation without amending, extending, terminating or
withdrawing the other, at any time and for any reason, including if
any of the conditions set forth under “Conditions to the Exchange
Offers and the Consent Solicitations” in the Offering Memorandum
with respect to the applicable Exchange Offer is not satisfied as
determined by the Issuers in their sole discretion.
The Exchange Offers and Consent Solicitations are being made,
and the New Notes are being offered, only to holders of the
Existing Notes who are either (a) reasonably believed to be
“qualified institutional buyers” as defined in Rule 144A under the
Securities Act of 1934, as amended (the “Securities Act”) or (b)
not “U.S. persons,” as defined in Regulation S who agree to
purchase the New Notes outside of the United States and who are
otherwise in compliance with the requirements of Regulation S under
the Securities Act. A person in, or subject to the securities laws
of any province or territory of Canada, must be a resident of one
of the Provinces of Ontario, Quebec or Alberta and both an
“accredited investor” and a “permitted client”, as such terms are
defined under Canadian securities laws in order to be eligible to
participate in the Exchange Offers. The holders of Existing Notes
who have certified to the Issuers that they are eligible to
participate in the Exchange Offers and Consent Solicitations
pursuant to at least one of the foregoing conditions are referred
to as “Eligible Holders.” Eligible Holders may go to
https://epiqworkflow.com/cases/GrafTechEL to confirm their
eligibility.
Full details of the terms and conditions of the Exchange Offers
and Consent Solicitations are described in the Offering Memorandum.
The Exchange Offers and Consent Solicitations are only being made
pursuant to, and the information in this press release is qualified
in its entirety by reference to, the Offering Memorandum, which is
being made available to Eligible Holders of the Existing Notes.
Eligible Holders of the Existing Notes are encouraged to read the
Offering Memorandum, as it contains important information regarding
the Exchange Offers and Consent Solicitations.
Requests for the eligibility letter related to the Offering
Memorandum may be directed to Epiq Corporate Restructuring, LLC,
the exchange agent and information agent for the Exchange Offers by
email at registration@epiqglobal.com.
None of the Company, any of its subsidiaries (including the
Issuers) or affiliates, or any of their respective officers, boards
of directors, members or managers, the exchange agent and
information agent or the trustee of the Existing Notes or the New
Notes is making any recommendation as to whether Eligible Holders
should tender any Existing Notes in response to the Exchange Offers
or Consent to the Proposed Amendments, and no one has been
authorized by any of them to make such a recommendation.
The Exchange Offers are not being made to Eligible Holders of
the Existing Notes in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction. In any jurisdiction in
which the Exchange Offers are required to be made by a licensed
broker or dealer, the Exchange Offers will be deemed to be made on
behalf of the Company and the Issuers by one or more registered
brokers or dealers that are licensed under the laws of such
jurisdiction. The New Notes have not been and will not be
registered under the Securities Act, or any state securities laws
and may not be offered or sold in the United States, except
pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and applicable
state securities laws.
No Offer or Solicitation
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the Existing Notes or the New Notes
in the United States and shall not constitute an offer,
solicitation or sale of the New Notes in any jurisdiction where
such offering or sale would be unlawful. There shall not be any
sale of the New Notes in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction.
About GrafTech
GrafTech International Ltd. is a leading manufacturer of
high-quality graphite electrode products essential to the
production of electric arc furnace steel and other ferrous and
non-ferrous metals. The Company has a competitive portfolio of
low-cost, ultra-high power graphite electrode manufacturing
facilities, with some of the highest capacity facilities in the
world. GrafTech is the only large-scale graphite electrode producer
that is substantially vertically integrated into petroleum needle
coke, GrafTech’s key raw material for graphite electrode
manufacturing. This unique position provides GrafTech with
competitive advantages in product quality and cost.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements reflect our current views with respect to, among other
things, the Exchange Offers and the Consent Solicitations. You can
identify these forward-looking statements by the use of
forward-looking words such as “will,” “may,” “plan,” “estimate,”
“project,” “believe,” “anticipate,” “expect,” “foresee,” “intend,”
“should,” “would,” “could,” “target,” “goal,” “forecast,” “continue
to,” “positioned to,” “are confident,” or the negative versions of
those words or other comparable words. Any forward-looking
statements contained in this press release are based upon our
historical performance and on our current plans, estimates and
expectations considering information currently available to us. The
inclusion of this forward-looking information should not be
regarded as a representation by us that the future plans,
estimates, or expectations contemplated by us will be achieved. Our
expectations and targets are not predictions of actual performance
and historically our performance has deviated, often significantly,
from our expectations and targets. Forward-looking statements are
subject to various risks and uncertainties and assumptions relating
to our operations, financial results, financial condition,
business, prospects, growth strategy and liquidity. Accordingly,
there are or will be important factors that could cause our actual
results to differ materially from those indicated in these
statements. We believe that these factors include, but are not
limited to: our ability to complete the Exchange Offers, Consent
Solicitations and other related transactions on the terms
contemplated or at all; our ability to satisfy the required
conditions for the consummation of the Exchange Offers, Consent
Solicitations and other related transactions; our dependence on the
global steel industry generally and the electric arc furnace steel
industry in particular; the cyclical nature of our business and the
selling prices of our products, which may continue to decline in
the future, and may lead to prolonged periods of reduced
profitability and net losses or adversely impact liquidity; the
sensitivity of our business and operating results to economic
conditions, including any recession, and the possibility others may
not be able to fulfill their obligations to us in a timely fashion
or at all; the possibility that we may be unable to implement our
business strategies in an effective manner; the possibility that
global graphite electrode overcapacity may adversely affect
graphite electrode prices; the competitiveness of the graphite
electrode industry; our dependence on the supply of raw materials,
including decant oil and petroleum needle coke, and disruptions in
supply chains for these materials; our primary reliance on one
facility in Monterrey, Mexico for the manufacturing of connecting
pins; the cost of electric power and natural gas, particularly in
Europe; our manufacturing operations are subject to hazards; the
legal, compliance, economic, social and political risks associated
with our substantial operations in multiple countries; the
possibility that fluctuation of foreign currency exchange rates
could materially harm our financial results; the possibility that
our results of operations could further deteriorate if our
manufacturing operations were substantially disrupted for an
extended period, including as a result of equipment failure,
climate change, regulatory issues, natural disasters, public health
crises, such as a global pandemic, political crises or other
catastrophic events; the risks and uncertainties associated with
litigation, arbitration, and like disputes, including disputes
related to contractual commitments; our dependence on third parties
for certain construction, maintenance, engineering, transportation,
warehousing and logistics services; the possibility that we are
subject to information technology systems failures, cybersecurity
attacks, network disruptions and breaches of data security; the
possibility that we are unable to recruit or retain key management
and plant operating personnel or successfully negotiate with the
representatives of our employees, including labor unions; the
sensitivity of long-lived assets on our balance sheet to changes in
the market; our dependence on protecting our intellectual property
and the possibility that third parties may claim that our products
or processes infringe their intellectual property rights; the
impact of inflation and our ability to mitigate the effect on our
costs; the impact of macroeconomic and geopolitical events on our
business, results of operations, financial condition and cash
flows, and the disruptions and inefficiencies in our supply chain
that may occur as a result of such events; the possibility that our
indebtedness could limit our financial and operating activities or
that our cash flows may not be sufficient to service our
indebtedness; past increases in benchmark interest rates and the
fact that any future borrowings may subject us to interest rate
risk; risks and uncertainties associated with our ability to access
the capital and credit markets could adversely affect our results
of operations, cash flows and financial condition; the possibility
that disruptions in the capital and credit markets could adversely
affect our customers and suppliers; the possibility that
restrictive covenants in our financing agreements could restrict or
limit our operations; changes in, or more stringent enforcement of,
health, safety and environmental regulations applicable to our
manufacturing operations and facilities; the possibility that the
cash dividends on our common stock, which are currently suspended,
will remain suspended and we may not pay cash dividends on our
common stock in the future; our ability to continue to meet NYSE
continued listing standards; and the ability to satisfy the
conditions precedent with respect to the new financings.
These factors should not be construed as exhaustive and should
be read in conjunction with the Risk Factors and other cautionary
statements that are included in our most recent Annual Report on
Form 10-K and other filings with the U.S. Securities and Exchange
Commission. Additionally, there can be no assurances that the
Exchange Offers and Consent Solicitations will be successfully
consummated as they remain subject to the satisfaction of certain
conditions precedent. The forward-looking statements made in this
press release relate only to events as of the date on which the
statements are made. Except as required by law, we do not undertake
any obligation to publicly update or review any forward-looking
statement, whether as a result of new information, future
developments or otherwise. If one or more of these or other risks
or uncertainties materialize, or if our underlying assumptions
prove to be incorrect, our actual results may vary materially from
what we may have expressed or implied by these forward-looking
statements. We caution that you should not place undue reliance on
any of our forward-looking statements. You should specifically
consider the factors identified in this press release that could
cause actual results to differ before making an investment decision
to purchase our common stock. Furthermore, new risks and
uncertainties arise from time to time, and it is impossible for us
to predict those events or how they may affect us.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241121121195/en/
Michael Dillon 216-676-2000 investor.relations@graftech.com
GrafTech (NYSE:EAF)
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