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8-K - FORM 8-K - KAISER ALUMINUM CORP | a55562e8vk.htm |
EX-10.1 - EX-10.1 - KAISER ALUMINUM CORP | a55562exv10w1.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Kaiser Aluminum Corporation Announces Pricing of $150 Million Private Offering
of Cash Convertible Senior Notes, Repurchase of Common Stock and Execution of
Revolving Credit Agreement
of Cash Convertible Senior Notes, Repurchase of Common Stock and Execution of
Revolving Credit Agreement
FOOTHILL RANCH, Calif., March 24, 2010 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
Aluminums common stock and a conversion rate initially equal to 20.6949 shares of Kaiser
Aluminums 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
Aluminums 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 Aluminums 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 Aluminums common stock. To the extent that the market value of Kaiser Aluminums
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 Aluminums 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 Aluminums 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 Aluminums 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 Aluminums 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 Aluminums 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 Aluminums 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 Companys 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
Companys stock is included in the Russell 2000® index. For more information, please visit
www.kaiseraluminum.com.
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 Aluminums 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 Aluminums reports filed with the
Securities and Exchange Commission, including Kaiser Aluminums 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.
Investor Relations Contact:
Melinda C. Ellsworth
Kaiser Aluminum
(949) 614-1757
Melinda C. Ellsworth
Kaiser Aluminum
(949) 614-1757
Public Relations Contact:
Dave Quast
FD
(646) 421-5341
Dave Quast
FD
(646) 421-5341