Kaiser Aluminum Corporation Announces Pricing of $150 Million Private Offering of Cash Convertible Senior Notes, Repurchase of C
March 24 2010 - 9:16AM
Kaiser Aluminum Corporation (Nasdaq:KALU) today announced the
pricing of $150 million aggregate principal amount of Cash
Convertible Senior Notes due 2015 (the "notes") through a private
offering to qualified institutional buyers pursuant to Rule 144A
under the Securities Act of 1933, as amended. The $150 million
aggregate principal amount of the notes was increased from the
initial offering of $130 million.
The notes will pay interest semiannually at a rate of 4.5% per
annum. In certain circumstances, the notes may be converted
into an amount of cash based on the market value at that time of
Kaiser Aluminum's common stock and a conversion rate initially
equal to 20.6949 shares of Kaiser Aluminum's common stock per
$1,000 principal amount of the notes (which is equal to a
conversion price of approximately $48.32 per share, representing a
26% conversion premium over the closing price of $38.35 per share
on March 23, 2010). The notes will not be convertible into
Kaiser Aluminum's common stock or into any other securities.
In connection with the offering of the notes, Kaiser Aluminum is
repurchasing approximately $45 million of its outstanding common
stock in privately negotiated, off-market transactions with
purchasers of the notes, which will be effected through one of the
initial purchasers of the notes, and has entered into convertible
note hedge transactions with the initial purchasers and/or their
affiliates (the "option counterparties"). The convertible note
hedge transactions are expected to generally reduce Kaiser
Aluminum's exposure to potential cash payments in excess of the
principal amount of the notes that it may be required to make upon
the conversion of the notes. Kaiser Aluminum has also entered
into warrant transactions with the option counterparties pursuant
to which Kaiser Aluminum will sell to the option counterparties
net-share-settled warrants to purchase shares of Kaiser Aluminum's
common stock. To the extent that the market value of Kaiser
Aluminum's common stock on the applicable valuation dates exceeds
the strike price of the warrants, which represents a 60% premium
over the closing price per share of Kaiser Aluminum's common stock
on March 23, 2010, the warrants will have a dilutive
effect. If the initial purchasers exercise their option to
purchase additional notes, Kaiser Aluminum expects to enter into
additional convertible note hedge transactions and warrant
transactions with the option counterparties.
In connection with hedging the convertible note hedge
transactions and the warrant transactions, the option
counterparties and/or their affiliates expect to enter into various
derivative transactions with respect to Kaiser Aluminum's common
stock concurrently with or shortly after the pricing of the notes.
These activities and the repurchase of common stock by Kaiser
Aluminum could increase (or reduce the size of any decrease in) the
price of Kaiser Aluminum's common stock concurrently with or
shortly after the pricing of the notes. In addition, the
option counterparties and/or their affiliates expect to modify
their hedge positions from time to time by entering into, or
unwinding, various derivative transactions and/or by purchasing, or
selling, shares of Kaiser Aluminum's common stock in secondary
market transactions, and are particularly likely to do so following
the conversion of a note or shortly before the maturity date of the
notes. Although the effect of these activities on the price of
Kaiser Aluminum's common stock will depend in part on various
market conditions and cannot be ascertained at this time, the
effect could be to depress (or to avoid an increase) in the price
of Kaiser Aluminum's common stock.
Kaiser Aluminum estimates that the net proceeds from the
offering of notes will be approximately $142 million, after
deducting the initial purchasers' discounts and estimated fees and
expenses. Kaiser Aluminum granted the initial purchasers a
30-day option to purchase up to $25 million principal amount of
additional notes to cover over-allotments.
In connection with the offering of the notes, Kaiser Aluminum
has entered into a new $200 million, four year senior secured
revolving credit facility providing for borrowings based upon
advances against eligible accounts receivable and eligible
inventory. The new credit facility is effective as of March 23,
2010 and amends and restates the previously existing $265 million
senior secured revolving credit facility.
Kaiser Aluminum plans to use approximately $15 million of the
net proceeds from the offering of the notes to pay the costs of the
convertible note hedge transactions (after such costs are partially
offset by the proceeds that Kaiser Aluminum receives from the
warrant transactions) and approximately $45 million of the net
proceeds to repurchase its common stock. The remainder of the
net proceeds will be used for general corporate purposes.
The sale of the notes and the repurchase of the shares of common
stock are expected to close on March 29, 2010.
This announcement does not constitute an offer to sell or a
solicitation of an offer to buy securities. Any offers of the
securities will be made only by means of a private offering
memorandum. The offer and the sale of the notes, the convertible
note hedge, the warrants and the shares of common stock underlying
such securities have not been registered under the Securities Act
of 1933, as amended, or the securities laws of any other
jurisdiction and the notes, convertible note hedge, warrants and
underlying shares of common stock may not be offered or sold absent
registration or an applicable exemption from registration
requirements. This announcement contains information about
anticipated transactions, and there can be no assurance that such
transactions will be completed.
Kaiser Aluminum Corporation, headquartered in Foothill Ranch,
Calif., is a leading producer of semi-fabricated specialty aluminum
products, serving customers worldwide with highly-engineered
solutions for aerospace and high-strength, general engineering, and
custom automotive and industrial applications. The Company's North
American facilities produce value-added sheet, plate, extrusions,
forgings, rod, bar and tube products, adhering to traditions of
quality, innovation and service that have been key components of
our culture since the Company was founded in 1946. The Company's
stock is included in the Russell 2000® index. For more information,
please visit www.kaiseraluminum.com.
The Kaiser Aluminum Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6081
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by the use of forward-looking
terminology such as "expects," "may," "will," "plans" or
"anticipates" or the negative of the foregoing or other variations
or comparable terminology, or by discussions of strategy or
intentions. These statements are based on the beliefs and
assumptions of Kaiser Aluminum's management based on information
available to management at the time such statements are
made. Readers are cautioned that any such forward-looking
statements are not guarantees of future performance or events and
involve significant risks and uncertainties, and that actual
results or events may vary materially from those in the
forward-looking statements as a result of various
factors. These factors include (a) conditions in the capital
markets; (b) general economic and business conditions,
including conditions in the aerospace and other end markets Kaiser
Aluminum serves; (c) changing prices and market conditions; and (d)
other factors summarized in Kaiser Aluminum's reports filed with
the Securities and Exchange Commission, including Kaiser Aluminum's
Annual Report on Form 10-K for the fiscal year ended December 31,
2009. All information in this release is as of the date of the
release. Kaiser Aluminum undertakes no duty to update any
forward-looking statement to conform the statement to actual
results or events or changes in its expectations.
CONTACT: Kaiser Aluminum
Investor Relations Contact:
Melinda C. Ellsworth
(949) 614-1757
FD
Public Relations Contact:
Dave Quast
(646) 421-5341
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