Vallourec progresses its balance sheet with successful pricing of its 2032 Senior Notes offering

Source: 4/18/2024, Location: Europe

Vallourec S.A., (the “Company” and, together with its subsidiaries, the “Group”), a world leader in premium tubular solutions, announces that it has successfully priced an offering of Senior Notes due 2032 (the “Notes”) in an aggregate principal amount of $820 million, which will be issued at par and will bear interest at a rate of 7.500% per annum. The offering of the Notes is expected to close on April 23, 2024, subject to customary closing conditions.

Upon completion, the proceeds from the offering of the Notes will be used, together with cash on hand, to (i) fund the redemption of the Company’s €1,023.4 million in aggregate principal amount of 8.5% senior notes due 2026 (the “Existing Notes”) and pay accrued and unpaid interest thereon, (ii) repay approximately €68 million outstanding under the Company’s existing state-guaranteed loans (PGE, prêts garantis par l’Etat) and pay accrued and unpaid interest thereon and (iii) pay fees and expenses in connection with the foregoing transactions, including fees and expenses incurred in connection with the offering.

Following the completion of its refinancing, Vallourec will have holistically reconfigured its balance sheet via:
Entry into a new 5-year €550 million multi-currency revolving credit facility (RCF) with a substantially diversified, global banking group
Entry into an upsized and extended 5-year $350 million ABL facility in the United States
Issuance of the aforementioned 8-year $820 million 7.500% Senior Notes and redemption of its 8.5% Senior Notes due 2026
Repayment of approximately €68 million of its €262 million PGE during the transaction and repayment of the remaining amount by December 31, 2024

Furthermore, Vallourec now maintains credit ratings with all three of the major ratings agencies. Next to its existing issuer rating with S&P, which has been upgraded once again and now stands at BB+, Outlook stable, Vallourec is pleased to welcome the addition of Moody’s and Fitch, which rate Vallourec Ba2, Outlook positive and BB+, Outlook positive, respectively.

The pro forma effects of the transaction lead to a reduction of net debt compared to the reported net debt of €570 million as of December 2023.

Philippe Guillemot, Chairman of the Board of Directors, and Chief Executive Officer, declared: “I am extremely pleased with the results of this transaction and our overall balance sheet refinancing. This step further strengthens Vallourec's financial position and sustainably improves its cash flow generation. The completion of this transaction will give us both greater visibility and financial flexibility over the coming years.

The New Vallourec plan, initiated in May 2022, resulted in an improvement of our operating results, and ultimately enabled us to reduce net debt, extend our debt maturities, maintain a very healthy liquidity profile and, importantly, improve Vallourec’ ongoing cash generation”.

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