GrafTech International Ltd. (NYSE:GTI) today announced it has
entered into an investment agreement with an affiliate of
Brookfield Asset Management Inc. (NYSE: BAM) (TSX: BAM.A)
(Euronext: BAMA) (“Brookfield”) under which Brookfield will acquire
$150 million of 7% convertible preferred shares of GrafTech in a
private offering. The investment agreement follows the letter of
intent announced by GrafTech on April 29, 2015.
The convertible preferred share issuance, which was unanimously
approved by GrafTech’s Board of Directors, is expected to close
once customary closing conditions, including applicable regulatory
approvals, are satisfied.
Under the terms of the investment agreement, upon issuance, the
convertible preferred shares will be issued in two series, Series A
shares and Series B shares. The series A shares will be immediately
convertible into GrafTech common shares equal to approximately
19.9% of the currently outstanding shares of GrafTech common stock,
at a conversion price of $5.00 per common share, subject to
customary anti-dilution adjustments. The series B shares will
become convertible into common shares equal to approximately 2% of
the currently outstanding shares only upon approval by GrafTech
stockholders in accordance with New York Stock Exchange
requirements. If approved, the two series will be combined into one
series.
Both series of convertible preferred shares are entitled to
dividends at a 7% annual rate. Dividends will be cumulative and
will accrue until paid. The proceeds from the sale of the
convertible preferred stock, together with other cash and credit
resources of the Company, will be used to repay the Company’s
senior subordinated notes due to mature in November 2015.
Pursuant to the investment agreement, Brookfield will designate
two directors to be appointed to the Company’s Board. With the
addition of these directors, the GrafTech Board will be expanded
from seven to nine.
Additional details regarding the private offering are available
in the Company’s filings with the Securities and Exchange
Commission.
As previously announced, the GrafTech Board unanimously approved
a separate letter of intent for a possible tender offer by
Brookfield to acquire outstanding shares of GrafTech common stock.
GrafTech and Brookfield continue to negotiate terms for a
definitive agreement regarding a potential tender offer. There can
be no assurance that any definitive agreement regarding a potential
tender offer will be signed or that a tender offer transaction will
be launched or consummated.
J.P. Morgan Securities LLC is serving as financial advisor to
GrafTech on both the convertible preferred issuance and the
potential tender offer, and Withers LLP and Willkie Farr &
Gallagher LLP are serving as legal counsel in connection with the
convertible preferred share issuance and negotiations regarding the
potential tender offer.
About GrafTech
GrafTech International is a global company that has been
redefining limits for more than 125 years. We offer innovative
graphite material solutions for our customers in a wide range of
industries and end markets, including steel manufacturing, advanced
energy applications and latest generation electronics. GrafTech
operates 18 principal manufacturing facilities on four continents
and sells products in over 70 countries. Headquartered in
Independence, Ohio, GrafTech employs approximately 2,400 people.
For more information, call 216-676-2000 or visit
www.GrafTech.com.
Notice to Investors
The potential tender offer described above has not yet
commenced. This communication is not an offer to buy nor a
solicitation of an offer to sell any shares of common stock of
GrafTech. The solicitation and the offer to buy shares
of common stock of GrafTech will only be made following
definitive documentation and pursuant to a tender offer statement
on Schedule TO, including an offer to purchase, a letter of
transmittal and other related materials that Brookfield intends to
file with the SEC. In addition, following definitive documentation,
GrafTech intends to file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the tender offer. If
filed, stockholders will be able to obtain the tender offer
statement on Schedule TO, the offer to purchase, the
Solicitation/Recommendation Statement of GrafTech on Schedule 14D-9
and related materials with respect to the tender offer and, if
applicable, the merger, free of charge at the website of the SEC at
www.sec.gov, and from any information agent named in the tender
offer materials. Stockholders may also obtain, at no charge, any
such documents filed with or furnished to the SEC by GrafTech under
the "Investors Relations" section of GrafTech's website at
www.graftech.com. STOCKHOLDERS ARE ADVISED TO READ THESE DOCUMENTS
IF AND WHEN THEY BECOME AVAILABLE, INCLUDING ANY
SOLICITATION/RECOMMENDATION STATEMENT OF GRAFTECH AND ANY
AMENDMENTS THERETO, AS WELL AS ANY OTHER DOCUMENTS RELATING TO THE
TENDER OFFER AND, IF APPLICABLE, THE MERGER THAT ARE FILED WITH THE
SEC, CAREFULLY AND IN THEIR ENTIRETY, PRIOR TO MAKING ANY DECISIONS
WITH RESPECT TO WHETHER TO TENDER THEIR SHARES INTO ANY POTENTIAL
TENDER OFFER BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION,
INCLUDING THE TERMS AND CONDITIONS OF ANY POTENTIAL TENDER
OFFER.
Forward-Looking Statements
This news release and related discussions may contain
forward-looking statements about such matters as: the proposed
issuance of convertible preferred stock, the conditions to
consummation of such potential issuance, the terms of any such
potential issuance and stock, the use of proceeds and related
matters; a possible tender offer and merger, the conditions to
consummation thereof, the terms thereof and related matters; the
effects of such possible issuance, tender offer and merger under
equity award and benefit plans and agreements or our credit
agreement, senior notes or senior subordinated notes; our outlook
for 2015; future or targeted operational and financial performance;
growth prospects and rates; the markets we serve; future or
targeted profitability, cash flow, liquidity, sales, costs and
expenses, tax rates, working capital, inventory levels, debt
levels, capital expenditures, EBITDA, cost savings and business
opportunities and positioning; strategic plans; stock repurchase
plans; cost, inventory and supply-chain management; rationalization
and related activities; the impact of rationalization, product line
changes, cost competitiveness and liquidity initiatives; expected
or targeted changes in production capacity or levels, operating
rates or efficiency in our operations or our competitors' or
customers' operations; future prices and demand for our products;
product quality; diversification, new products and product
improvements and their impact on our business; the integration or
impact of acquired businesses; investments and acquisitions that we
may make in the future; possible financing or refinancing
(including factoring and supply-chain financing) activities; our
customers' operations, order patterns and demand for their
products; the impact of customer bankruptcies; our position in
markets we serve; regional and global economic and industry market
conditions, including our expectations concerning their impact on
us and our customers and suppliers; conditions and changes in the
global financial and credit markets; legal proceedings and
antitrust investigations; our liquidity and capital resources,
including our obligations under our senior subordinated notes that
mature in November 2015; tax rates and the effects of
jurisdictional mix; the impact of accounting changes; and currency
exchange and interest rates and changes therein.
We have no duty to update these statements. Our expectations and
targets are not predictions of actual performance and historically
our performance has deviated, often significantly, from our
expectations and targets. Actual future events, circumstances,
performance and trends could differ materially, positively or
negatively, due to various factors, including: failure to satisfy
the conditions contained in the definitive investment agreement to
consummation thereof, including due to material adverse changes
affecting the Company or its prospects or failure to obtain
regulatory approvals; failure to enter into definitive agreements
relating to the tender offer and merger; failure to satisfy
conditions to be contained in any such agreements to consummation
thereof, including due to material adverse changes affecting the
Company or its prospects or failure to obtain regulatory approvals;
litigation in relation to such transactions; failure to achieve
cost savings, EBITDA or other estimates; actual outcome of
uncertainties associated with assumptions and estimates used when
applying critical accounting policies and preparing financial
statements; failure to successfully develop and commercialize new
or improved products; adverse changes in cost, inventory or
supply-chain management; limitations or delays on capital
expenditures; business interruptions including those caused by
weather, natural disaster or other causes; delays or changes in, or
non-consummation of, proposed investments or acquisitions; failure
to successfully integrate or achieve expected synergies,
performance or returns expected from any completed investments or
acquisitions; inability to protect our intellectual property rights
or infringement of intellectual property rights of others; changes
in market prices of our securities; changes in our ability to
obtain new or refinance existing financing on acceptable terms;
adverse changes in labor relations; adverse developments in legal
proceedings or investigations; non-realization of anticipated
benefits from, or variances in the cost or timing of,
organizational changes, rationalizations and restructurings; loss
of market share or sales due to rationalization, product-line
changes or pricing activities; negative developments relating to
health, safety or environmental compliance, remediation or
liabilities; downturns, production reductions or suspensions or
other changes in steel, electronics and other markets we or our
customers serve; customer or supplier bankruptcy or insolvency
events; political unrest which adversely impacts us or our
customers' businesses; declines in demand; intensified competition
and price or margin decreases; graphite-electrode and needle-coke
manufacturing capacity increases; fluctuating market prices for our
products, including adverse differences between actual
graphite-electrode prices and spot or announced prices;
consolidation of steel producers; mismatches between manufacturing
capacity and demand; significant changes in our provision for
income taxes and effective income-tax rate; changes in the
availability or cost of key inputs, including petroleum-based coke
or energy; changes in interest or currency-exchange rates;
inflation or deflation; failure to satisfy conditions to government
grants; continuing uncertainty over fiscal or monetary policies or
conditions in the U.S., Europe, China or elsewhere; changes in
fiscal and monetary policy; a protracted regional or global
financial or economic crisis; and other risks and uncertainties,
including those detailed in our SEC filings, as well as future
decisions by us. This news release does not constitute an offer or
solicitation as to any securities. References to street or analyst
earnings estimates mean those published by First Call.
GTI-G
GrafTech International Ltd.Kelly Taylor, 216-676-2000Director,
Investor Relations
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