8-KMaterial AgreementsFinancial EventsExhibits & Filings

ATI INC 8-K Report, Material Agreement (Jun 3, 2009)

Filed June 3, 2009For Securities:ATI

Summary

Allegheny Technologies Incorporated (ATI) filed an 8-K on June 3, 2009, detailing significant financing activities. The company successfully completed the issuance of $350 million in 9.375% Senior Notes due 2019 and $402.5 million in 4.25% Convertible Senior Notes due 2014. These offerings, made under a shelf registration statement, aim to bolster the company's capital structure and provide financial flexibility. The Senior Notes are subject to a make-whole premium for early redemption and a change of control repurchase provision, while the Convertible Notes offer holders the option to convert into ATI common stock at an initial price of approximately $41.795 per share, maturing earlier in 2014. In addition to the debt issuances, ATI also amended its $400 million senior unsecured revolving credit facility on May 29, 2009. This amendment adjusted definitions for key financial covenants, including EBITDA and consolidated indebtedness, to exclude non-cash pension expense and net cash on hand above $50 million, respectively. These changes were implemented to provide the company with additional financial flexibility during potentially challenging economic conditions.

Key Highlights

  • 1Completed offering and sale of $350 million in 9.375% Senior Notes due 2019.
  • 2Completed offering and sale of $402.5 million in 4.25% Convertible Senior Notes due 2014.
  • 3Senior Notes carry a 9.375% annual interest rate, payable semi-annually, maturing in June 2019.
  • 4Convertible Notes carry a 4.25% annual interest rate, payable semi-annually, maturing in June 2014.
  • 5Holders of Convertible Notes have the option to convert into ATI common stock at an initial conversion price of approximately $41.795 per share.
  • 6Amended $400 million senior unsecured revolving credit facility on May 29, 2009, to enhance financial flexibility.
  • 7Credit agreement amendment adjusted definitions for financial covenants, including EBITDA and consolidated indebtedness.

Frequently Asked Questions

ATI completed the issuance of $350,000,000 in Senior Notes and $402,500,000 in Convertible Senior Notes, totaling $752,500,000 in new debt.

The Senior Notes have an aggregate principal amount of $350 million, bear interest at 9.375% per annum payable semi-annually, and mature on June 1, 2019. The company can redeem them early with a 'make-whole' premium, and holders can request repurchase at 101% of principal in the event of a change of control.

The Convertible Senior Notes have an aggregate principal amount of $402.5 million, bear interest at 4.25% per annum payable semi-annually, and mature on June 1, 2014. Holders can convert them into ATI common stock at an initial rate of 23.9263 shares per $1,000 principal amount (approx. $41.795 per share). Holders may also require repurchase upon a 'fundamental change'.

The amendment provides additional financial flexibility by restating the definitions of consolidated earnings for interest coverage and leverage ratios to exclude non-cash pension expense/income. It also adjusts the consolidated indebtedness definition for the leverage ratio to be net of cash on hand exceeding $50 million, potentially improving compliance with these ratios.