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Steel Dynamics (STLD) Declares Notes Offering Worth $400M


Steel Dynamics, Inc. STLD has announced its plans of selling debt securities with an aggregate principal amount of roughly $400 million. The transaction is expected to be exempt from the registration requirements of the amended Securities Act, 1933, subject to market and other conditions.

The company aims to use the net proceeds from the sale, along with its cash in hand, for the purchase of its outstanding 6.125% Senior Notes, due 2019 validly tendered in a tender offer, which commenced on Nov 29, 2016, as well as to redeem, repurchase or satisfy and discharge any Senior Notes due 2019, not purchased in the Tender Offer, and to pay associated fees and expenses.

Steel Dynamics will be purchasing the Senior Notes for $1,033.88 per $1,000 principal amount of Notes as well as any accrued or unpaid interest until, but excluding, the settlement date for the transaction. The date is expected to be Dec 6, 2016 and holders of the Notes are to validly tender their Notes by Dec 5, 2016. However, the time may be extended and the company may not complete the offer.

Shares of Steel Dynamics closed 0.7% lower at $35.23 on Nov 29.

Steel Dynamics reported adjusted earnings of 65 cents per share in the third quarter of 2016, within management’s expected range of 63−67 cents and above the prior-year quarter figure of 25 cents. The improvement in the bottom line was backed by positive momentum experienced in the flat roll metal spread expansion which boosted operating earnings. Earnings also met the Zacks Consensus Estimate. Sales for the reported quarter increased 7.7% year over year to $2.1 billion.

Steel Dynamics expects fourth-quarter 2016 to see lower volumes due to seasonality, along with weaker pricing. However, the automotive sector is expected to grow in 2017, which should boost sales. The construction sector is also expected to grow, particularly large infrastructure projects. Further, the company expects the energy sector to witness some improvement.

Steel Dynamics’ strong balance sheet and liquidity have enabled the option of a share repurchase program in addition to the capital allocation strategy. The company remains committed to increasing shareholder value via organic and strategic growth.

Steel Dynamics currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the steel space include POSCO PKX, Ternium S.A. TX and AK Steel Holding Corporation AKS.

POSCO has an expected long-term growth of 5% and sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Ternium, with a Zacks Rank #2 (Buy), has an expected long-term growth of 19.322%.

AK Steel has an expected long-term growth of 5%. The company carries a Zacks Rank #2.

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