CMC to Opportunistically Raise $150M Tax-Exempt Bond Financing to Partially fund Steel WV Mill Project

Rhea-AI Summary

Commercial Metals Company (NYSE: CMC) has announced plans to launch a $150 million tax-exempt bond financing through the West Virginia Economic Development Authority (WVEDA) to partially fund a new steel mill project in Berkeley County, West Virginia.

The total investment in the facility is expected to range between $550-600 million, with additional financial support including $75 million in government assistance from WVEDA and approximately $80 million in tax credits under the Inflation Reduction Act. The bonds will be issued as special obligations of WVEDA, with CMC's obligations being senior unsecured obligations.

The project involves the construction of solid waste disposal facilities, with the bonds being exempt from registration under the Securities Act of 1933. CMC, primarily operating in the United States and Central Europe, provides reinforcement solutions for the global construction sector.

Positive

• Secured $75 million in government assistance from WVEDA
• Qualifies for $80 million in tax credits under Inflation Reduction Act
• Tax-exempt status of the bond financing reduces borrowing costs
• Strategic expansion of manufacturing capacity in West Virginia

Negative

• Large capital expenditure requirement of $550-600 million
• Increased debt obligation through $150 million bond issuance
• Project execution and startup risks in new facility construction

Insights

Financial Analyst

CMC raising $150M in tax-exempt bonds for WV mill project, representing 25-27% of total $550-600M investment, with $155M in government incentives.

Commercial Metals Company is pursuing $150 million in tax-exempt bond financing through the West Virginia Economic Development Authority to partially fund their new steel mill project in Berkeley County. This financing represents approximately 25-27% of the total anticipated investment of $550-600 million (net of government assistance). The structure involves Solid Waste Disposal Facility Revenue Bonds where the WVEDA will issue the bonds and loan the proceeds to CMC.

The company has secured significant government incentives that effectively reduce the project's net cost. These include $75 million in government assistance from the WVEDA and an anticipated tax credit of approximately $80 million under the Inflation Reduction Act. Combined, these incentives total about $155 million, representing nearly 28% of the midpoint gross project cost.

From a capital structure perspective, CMC's obligations under the loan agreement will be senior unsecured obligations, maintaining their debt hierarchy. The bonds will be special obligations of the WVEDA, with substantially all rights assigned to the trustee as security. This financing approach allows CMC to diversify its funding sources for this capital-intensive project while maintaining financial flexibility.

Industrial Development Expert

CMC's strategic $550-600M West Virginia mill investment receives substantial government support through tax-exempt bonds and incentives.

CMC's planned investment in a new solid waste disposal facility in Berkeley County represents a significant capital commitment to expanding the company's manufacturing capabilities. The project's qualification for tax-exempt bond financing indicates it meets public interest criteria related to waste management infrastructure. The $150 million bond issuance will fund approximately one-quarter of the total project cost.

The facility qualifies for substantial government support, demonstrating alignment with both state economic development and federal climate policy objectives. The $75 million in direct assistance from West Virginia authorities reduces the company's net investment requirement. Additionally, the project's qualification for an approximately $80 million tax credit under the Inflation Reduction Act suggests the implementation of clean manufacturing technologies or processes that reduce emissions.

While specific production details aren't provided, the designation as "solid waste disposal facilities" indicates capabilities related to materials processing or recycling, consistent with CMC's described focus on providing reinforcement solutions for the construction sector. The substantial government incentives effectively improve the project economics by reducing the net capital requirements by nearly 28%, enhancing the potential returns on this strategic capacity investment.

IRVING, Texas, April 25, 2025 /PRNewswire/ -- Commercial Metals Company (NYSE: CMC) ("CMC") plans to launch a proposed tax-exempt bond financing today in the amount of $150.0 million. In connection with the proposed financing, the West Virginia Economic Development Authority (the "WVEDA") authorized the issuance and sale of Solid Waste Disposal Facility Revenue Bonds (Commercial Metals Company Project), Series 2025 (the "Bonds"). If the financing is completed, WVEDA will issue the Bonds and loan the proceeds of the sale of the Bonds to CMC pursuant to a loan agreement between CMC, as borrower, and WVEDA, as lender. The loan proceeds will be used to finance a portion of the costs of the acquisition, construction, reconstruction and equipping of solid waste disposal facilities located in Berkeley County, West Virginia (the "Facility"). CMC expects its investment in the Facility to be between $550.0 million and $600.0 million, net of $75.0 million of government assistance expected to be received from the WVEDA. The construction of the Facility is also expected to qualify for a net tax credit under the Inflation Reduction Act of approximately $80.0 million. The Bonds, if issued, will be special limited obligations of WVEDA, and WVEDA will assign substantially all of its rights under the loan agreement to the trustee for the bondholders as security for the Bonds. CMC's obligations under the loan agreement will be senior unsecured obligations.

The Bonds will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), or under any state or other securities laws, and the Bonds will be issued pursuant to an exemption therefrom, and may not be offered or sold within the United States, or to or for the account or benefit of any U.S. Person, absent registration or an applicable exemption from registration requirements.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful. This press release is being issued pursuant to, and in accordance with, Rule 135c under the Securities Act.

About CMC

CMC is an innovative solutions provider helping build a stronger, safer, and more sustainable world. Through an extensive manufacturing network principally located in the United States and Central Europe, we offer products and technologies to meet the critical reinforcement needs of the global construction sector. CMC's solutions support early-stage construction across a wide variety of applications, including infrastructure, non-residential, residential, industrial, and energy generation and transmission.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws with respect to CMC's expectations concerning the bond financing described above, the estimated cost of construction of CMC's previously announced micro mill in Berkeley County, West Virginia and incentives related to such project. The statements in this release that are not historical statements, are forward-looking statements. These forward-looking statements can generally be identified by phrases such as CMC or its management "expects," "anticipates," "believes," "estimates," "future," "intends," "may," "plans to," "ought," "could," "will," "should," "likely," "appears," "projects," "forecasts," "outlook" or other similar words or phrases, as well as by discussions of strategy, plans or intentions.

CMC's forward-looking statements are based on management's expectations and beliefs as of the time this news release was prepared. Although CMC believes that its expectations are reasonable, CMC can give no assurance that these expectations will prove to have been correct, and actual results may vary materially. Except as required by law, CMC undertakes no obligation to update, amend or clarify any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, new information or circumstances or any other changes. Important factors that could cause actual results to differ materially from CMC's expectations include those described in its filings with the Securities and Exchange Commission, including, but not limited to, in Part I, Item 1A, "Risk Factors" of CMC's annual report on Form 10-K for the fiscal year ended August 31, 2024 and Part II, Item 1A, "Risk Factors" of CMC's quarterly report on Form 10-Q for the quarter ended February 28, 2025, as well as the following: changes in economic conditions which affect demand for CMC's products or construction activity generally, and the impact of such changes on the highly cyclical steel industry; rapid and significant changes in the price of metals, potentially impairing CMC's inventory values due to declines in commodity prices or reducing the profitability of downstream contracts within CMC's vertically integrated steel operations due to rising commodity pricing; excess capacity in CMC's industry, particularly in China, and product availability from competing steel mills and other steel suppliers including import quantities and pricing; the impact of geopolitical conditions, including political turmoil and volatility, regional conflicts, terrorism and war on the global economy, inflation, energy supplies and raw materials; increased attention to environmental, social and governance ("ESG") matters, including any targets or other ESG, environmental justice or regulatory initiatives; operating and startup risks, as well as market risks associated with the commissioning of new projects could prevent us from realizing anticipated benefits and could result in a loss of all or a substantial part of CMC's investments; impacts from global public health crises on the economy, demand for CMC's products, global supply chain and on CMC's operations; compliance with and changes in existing and future laws, regulations and other legal requirements and judicial decisions that govern CMC's business, including increased environmental regulations associated with climate change and greenhouse gas emissions; involvement in various environmental matters that may result in fines, penalties or judgments; evolving remediation technology, changing regulations, possible third-party contributions, the inherent uncertainties of the estimation process and other factors that may impact amounts accrued for environmental liabilities; potential limitations in CMC's or its customers' abilities to access credit and non-compliance with their contractual obligations, including payment obligations; activity in repurchasing shares of  common stock under CMC's share repurchase program; financial and non-financial covenants and restrictions on the operation of CMC's business contained in agreements governing CMC's debt; CMC's ability to successfully identify, consummate and integrate acquisitions and realize any or all of the anticipated synergies or other benefits of acquisitions; the effects that acquisitions may have on CMC's financial leverage; risks associated with acquisitions generally, such as the inability to obtain, or delays in obtaining, required approvals under applicable antitrust legislation and other regulatory and third-party consents and approvals; lower than expected future levels of revenues and higher than expected future costs; failure or inability to implement growth strategies in a timely manner; the impact of goodwill or other indefinite-lived intangible asset impairment charges; the impact of long-lived asset impairment charges; currency fluctuations; global factors, such as trade measures, military conflicts and political uncertainties, including changes to current trade regulations, such as Section 232 trade tariffs and quotas, tax legislation and other regulations which might adversely impact CMC's business; availability and pricing of electricity, electrodes and natural gas for mill operations; CMC's ability to hire and retain key executives and other employees; competition from other materials or from competitors that have a lower cost structure or access to greater financial resources; information technology interruptions and breaches in security; CMC's ability to make necessary capital expenditures; availability and pricing of raw materials and other items over which CMC exerts little influence, including scrap metal, energy and insurance; unexpected equipment failures; losses or limited potential gains due to hedging transactions; litigation claims and settlements, court decisions, regulatory rulings and legal compliance risks, including those related to the PSG litigation and other legal proceedings; risk of injury or death to employees, customers or other visitors to CMC's operations; and civil unrest, protests and riots.

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SOURCE Commercial Metals Company

FAQ

How much is CMC investing in the new West Virginia steel mill project?

CMC is investing between $550-600 million in the new steel mill project, net of $75 million in government assistance from WVEDA.

What financial incentives is CMC receiving for the West Virginia facility?

CMC is receiving $75 million in government assistance from WVEDA and approximately $80 million in tax credits under the Inflation Reduction Act.

What is the purpose of CMC's $150 million tax-exempt bond financing?

The bond financing will partially fund the acquisition, construction, and equipping of solid waste disposal facilities in Berkeley County, West Virginia.

What type of obligations are the CMC bonds being issued as?

The bonds will be special obligations of WVEDA, with CMC's obligations being senior unsecured obligations.

Where are CMC's primary manufacturing operations located?

CMC's manufacturing network is principally located in the United States and Central Europe.