Century Aluminum Company (NASDAQ: CENX) announced that it closed its private offering of 2.75% convertible senior notes due May 1, 2028 for gross proceeds of $86.25 million, including the full exercise of the option to purchase $11.25 million additional principal amount of Notes granted by Century to the initial purchasers.
The net proceeds from the offering were approximately $82.9 million, after deducting the initial purchasers’ discount and commissions and estimated offering expenses payable by Century. A portion the net proceeds from the offering of the Notes, together with the net proceeds anticipated to be received from Century’s concurrent private offering of $250 million aggregate principal amount of 7.50% senior secured notes due April 2028, will be used to repay all of Century’s $250 million outstanding principal amount of 12.0% Senior Secured Notes due 2025 pursuant to Century’s previously announced cash tender offer for the Existing Notes and the redemption of any Existing Notes not acquired in the Tender Offer. Century intends to use the remaining net proceeds from the offering of the Notes, together with cash on hand, to repay borrowings under Century’s credit facilities, to pay for the cost of capped call transactions described below, and to pay fees and expenses relating to these transactions.
The Notes, which are senior, unsecured obligations of the Century, were issued at a price of 100.00% of their aggregate principal amount. The Notes will pay interest semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2021, at a rate of 2.75% per annum in cash. The Notes will mature on May 1, 2028, unless earlier converted, repurchased or redeemed.
Century may not redeem the Notes prior to May 6, 2025. On or after May 6, 2025, Century may redeem for cash all or part of the Notes at its option if the last reported sale price of Century’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period (including the last trading day of such period) ending on and including the trading day immediately preceding the date on which Century provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
In addition, holders of Notes may require Century to repurchase for cash all or any portion of their Notes in the event a “fundamental change” (as defined in the indenture governing the Notes) at a purchase price of 100% of their principal amount plus any accrued and unpaid interest. In connection with certain corporate events or if the Company calls any Notes for redemption, the Company will, under certain circumstances, increase the conversion rate for noteholders who elect to convert their Notes in connection with any such corporate event or convert their Notes called for redemption.
The initial conversion rate will be 53.3547 shares of Century’s common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $18.74 per share of Century’s common stock). The Notes will be convertible into cash, shares of Century’s common stock or a combination of cash and shares of Century’s common stock, at Century’s election.
Holders may convert all or any portion of their Notes at their option at any time prior to the close of business on the business day immediately preceding February 1, 2028 only upon satisfaction of specified conditions and during certain periods. On or after February 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of these conditions.
In connection with the pricing of the Notes and the full exercise by the initial purchasers of their option to purchase additional notes, Century entered into capped call transactions with the initial purchasers or their respective affiliates. The capped call transactions are expected generally to reduce the potential dilution to Century’s common stock upon any conversion of Notes and/or offset any cash payments Century may be required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap based on a cap price initially equal to $22.95, subject to certain adjustments under the terms of the capped call transactions.
In connection with establishing their initial hedges of the capped call transactions, the Option Counterparties or their respective affiliates expect to purchase shares of Century’s common stock and/or enter into various derivative transactions with respect to Century’s common stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of Century’s common stock or the Notes at that time.
In addition, the Option Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Century’s common stock and/or purchasing or selling Century’s common stock or other securities of Century in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so on each exercise date for the capped call transactions, which are expected to occur on each trading day during the 20 trading day period beginning on the 21st scheduled trading day prior to the maturity date of the Notes, or following any termination of any portion of the capped call transactions in connection with any repurchase, redemption or early conversion of the Notes). This activity could also cause or avoid an increase or a decrease in the market price of Century’s common stock or the Notes, which could affect the ability of noteholders to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, it could affect the amount and value of the consideration that a noteholder will receive upon conversion of its Notes.
The Notes have been offered and sold only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The Notes have not been, and Century common stock, if any, issuable upon conversion of the Notes will not be, registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the Notes or the shares of common stock issuable upon conversion of the Notes nor shall there be any sale of Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.
This press release contains information about pending or anticipated transactions, and there can be no assurance that these transactions will be completed.
About Century Aluminum Company
Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century’s corporate offices are located in Chicago, IL.
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