Item 1.01
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Entry into a Material Definitive Agreement.
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On July 28, 2017, Worthington Industries, Inc. (the
Company) completed the public offering (the 2017 Notes Offering) of $200 million aggregate principal amount of its 4.300% Notes due 2032 (the Notes). The Notes were offered pursuant to the prospectus supplement
dated July 25, 2017, to the prospectus dated July 19, 2017 (together, the Prospectus), which forms part of the Companys effective Registration Statement on Form S-3 (Registration No. 333-219349) filed with the
Securities and Exchange Commission (the SEC) on July 19, 2017, pursuant to which the Notes were registered under the Securities Act of 1933, as amended.
The sale of the Notes was made pursuant to the terms of an Underwriting Agreement, dated July 25, 2017 (the Underwriting Agreement), between
the Company and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the several underwriters named in Schedule A to the Underwriting Agreement (individually, an Underwriter
and collectively, the Underwriters). The Underwriting Agreement includes the terms and conditions of the offer and sale of the Notes, indemnification and contribution obligations and other terms and conditions customary in agreements of
this type.
The terms of the Notes are governed by an Indenture, dated as of April 13, 2010 (the Base Indenture), between the Company and
U.S. Bank National Association, as trustee (the Trustee), as supplemented by a Third Supplemental Indenture, dated as of July 28, 2017 (the Third Supplemental Indenture and collectively with the Base Indenture, the
Indenture), between the Company and the Trustee.
The Notes are senior unsecured obligations of the Company and rank equal in right of payment
with the Companys other existing and future unsecured and unsubordinated indebtedness and senior in right of payment to all of the Companys future subordinated indebtedness. In addition, the Notes will be effectively subordinated in
right of payment to all of the obligations of the Companys subsidiaries and effectively subordinated in right of payment to all of Companys secured obligations, to the extent of the assets securing such obligations.
Interest on the Notes will accrue at a rate of 4.300% per annum and is payable semi-annually, in arrears, on February 1 and August 1 of each
year, commencing February 1, 2018. The Notes will mature on August 1, 2032, unless earlier redeemed. The Company may redeem the Notes prior to maturity, in whole or in part, at a redemption price equal to the greater of (i) 100% of
the principal amount of the Notes to be redeemed and (ii) the sum of the present values of the Remaining Scheduled Payments (as defined in the Third Supplemental Indenture) on the Notes to be redeemed discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in the Third Supplemental Indenture) plus 30 basis points; plus, in either case, accrued and unpaid interest on the principal amount being
redeemed to the date of redemption.
If a change of control triggering event with respect to the Notes (as described in the Third Supplemental Indenture)
occurs and the Company has not previously exercised the Companys right to redeem all of the outstanding Notes, each holder of Notes will have the right to require the Company to purchase all or a portion of such holders Notes at a price
equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the date of purchase.
The Indenture contains covenants
that, with certain exceptions, limit the Companys ability to incur certain liens, enter into sale/leaseback transactions and merge, consolidate or sell all or substantially all of its assets.
The following will constitute Events of Default with respect to the Notes, subject to any additional limitations and qualifications included in
the Indenture:
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default in the payment of any installment of interest on the Notes as and when the same become due and payable and continuance of such default for a period of 30 days;
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default in the payment of principal or premium with respect to any Notes as and when the same become due and payable, whether at maturity, upon redemption, by declaration, upon required repurchase or otherwise;
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default in the payment of any sinking fund payment with respect to any Notes as and when the same become due and payable;
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failure on the part of the Company to comply with the provisions of the Indenture relating to consolidations, mergers and sales of assets;
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failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Notes, in any resolution of the Board of Directors of the Company authorizing the
issuance of the Notes, in the Base Indenture or in the Third Supplemental Indenture or any other supplemental indenture with respect to the Notes (other than a covenant a default in the performance of which is otherwise specifically dealt with)
continuing for a period of 60 days after the date on which written notice specifying such failure and requiring the Company to remedy the same has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate principal amount of the Notes at the time outstanding;
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indebtedness of the Company or any Restricted Subsidiary of the Company (as defined in the Base Indenture) is not paid within any applicable grace period after final maturity or is accelerated by the holders
thereof because of a default, the total amount of such indebtedness unpaid or accelerated exceeds $50 million or the United States dollar equivalent thereof at the time and such default remains uncured or such acceleration is not rescinded for 10
days after the date on which written notice specifying such failure and requiring the Company to remedy the same has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the holders of at
least 25% in aggregate principal amount of the Notes at the time outstanding;
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the Company or any of its Restricted Subsidiaries (1) voluntarily commences any proceeding or files any petition seeking relief under the United States Bankruptcy Code or other federal or state bankruptcy,
insolvency or similar law, (2) consents to the institution of, or fails to controvert within the time and in the manner prescribed by law, any such proceeding or the filing of any such petition, (3) applies for or consents to the
appointment of a receiver, trustee, custodian, sequestrator or similar official for the Company or any such Restricted Subsidiary or for a substantial part of its property, (4) files an answer admitting the material allegations of a petition
filed against it in any such proceeding, (5) makes a general assignment for the benefit of creditors, (6) admits in writing its inability to pay, or fails generally to pay, its debts as they become due, (7) takes corporate action for
the purpose of effecting any of the foregoing or (8) takes any comparable action under any foreign laws relating to insolvency;
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the entry of an order or decree by a court having competent jurisdiction for (1) relief with respect to the Company or any of its Restricted Subsidiaries or a substantial part of any of their property under the
United States Bankruptcy Code or any other federal or state bankruptcy, insolvency or similar law, (2) the appointment of a receiver, trustee, custodian, sequestrator or similar official for the Company or any such Restricted Subsidiary or for
a substantial part of any of their property (except any decree or order appointing such official of such Restricted Subsidiary pursuant to a plan under which the assets and operations of such Restricted Subsidiary are transferred to or combined with
another Restricted Subsidiary or Subsidiaries of the Company or to the Company) or (3) the winding-up or liquidation of the Company or any such Restricted Subsidiary (except any decree or order approving or ordering the winding-up or
liquidation of the affairs of a Restricted Subsidiary pursuant to a plan under which the assets and operations of such Restricted Subsidiary are transferred to or combined with one or more other Restricted Subsidiaries or the Company), and such
order or decree continues unstayed and in effect for 60 consecutive days, or any similar relief is granted under any foreign laws and the order or decree stays in effect for 60 consecutive days;
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any judgment or decree for the payment of money in excess of $50 million or the United States dollar equivalent
thereof at the time is entered against the Company or any Restricted Subsidiary of the Company by a court or courts of competent jurisdiction, which judgment is not covered by insurance, and is not discharged and either (1) an enforcement
proceeding has been commenced by any creditor upon such judgment or decree or (2) there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged or waived or the execution
thereof stayed and, in
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either case, such default continues for 10 days after the date on which written notice specifying such failure and requiring the Company to remedy the same has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Notes at the time outstanding; and
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any other Event of Default provided with respect to the Notes.
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These Events of Default are substantially
similar to the Events of Default defined in the Base Indenture, provided that the monetary thresholds set forth in the Events of Default described in the sixth and ninth bullet points above were increased from $20 million in the Base
Indenture to $50 million in the Third Supplemental Indenture to reflect the current terms of the Companys revolving credit facility.
If an Event of
Default described in the first, second, third, fourth, fifth, sixth, ninth or tenth bullet points above occurs and is continuing with respect to the Notes, unless the principal and interest with respect to all the Notes has already become due and
payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare the principal of and interest on all the Notes due and payable immediately. If an Event of Default described in
the seventh or eighth bullet points above occurs, unless the principal and interest with respect to all the Notes has become due and payable, the principal of and interest on all the Notes will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Notes.
The terms of the Notes are further described in the Prospectus.
Certain of the Underwriters and their affiliates have provided from time to time, and may provide in the future, investment and commercial banking and
financial advisory services to the Company and the Companys affiliates in the ordinary course of business, for which they have received and may continue to receive customary fees and commissions. J.P. Morgan Securities LLC and PNC Capital
Markets LLC serve as joint bookrunners and joint lead arrangers under the Companys revolving credit facility. Affiliates of J.P. Morgan Securities LLC
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Merrill Lynch, Pierce, Fenner & Smith Incorporated, PNC Capital Markets
LLC, U.S. Bancorp Investments, Inc. (such affiliate is also the Trustee under the Indenture), Wells Fargo Securities, LLC, Fifth Third Securities, Inc. and The Huntington Investment Company are lenders under the Companys revolving credit
facility. In addition, an affiliate of PNC Capital Markets LLC serves as administrative agent under the Companys revolving credit facility, an affiliate of J.P. Morgan Securities LLC acts as syndication agent under the Companys revolving
credit facility and affiliates of Merrill Lynch, Pierce, Fenner & Smith Incorporated, U.S. Bancorp Investments, Inc. (such affiliate is also the Trustee under the Indenture) and Wells Fargo Securities, LLC act as co-documentation agents
under the Companys revolving credit facility. In addition, certain of the Underwriters are purchasers under the Companys trade accounts receivable securitization facility.
The Company intends to use the net proceeds from the 2017 Notes Offering to repay the Companys borrowings under the Companys revolving credit
facility and to repay amounts outstanding under the Companys revolving trade accounts receivable securitization facility and, therefore, affiliates of the Underwriters that are lenders under the Companys revolving credit facility will
receive a portion of the net proceeds from the 2017 Notes Offering. The Company intends to add the remaining portion of the net proceeds from the sale of the Notes to the Companys working capital to be used for general corporate purposes,
which may include the repayment of other indebtedness.
The foregoing description is qualified in its entirety by reference to the full text of the
Underwriting Agreement, the Base Indenture and the Third Supplemental Indenture (which includes the form of the Notes), copies of which are filed or incorporated by reference as Exhibit 1.1, Exhibit 4.1 and Exhibit 4.2, respectively, to this
Current Report on Form 8-K and are incorporated herein by reference.
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