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Koppers Successfully Reprices and Upsizes Term Loan B

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Koppers Holdings Inc. successfully reprices and upsizes its Term Loan B, reducing interest rate margins by 50 basis points and increasing the TLB by $100 million. The company aims to use the proceeds for general corporate purposes, including reducing borrowings under its revolving credit facility.
Positive
  • Successful completion of the repricing and upsizing of the Term Loan B by Koppers Holdings Inc.
  • Reduction of interest rate margins by 50 basis points, from 3.50% to 3.00% with a floor of 50 bps.
  • Removal of the 10 bps credit spread adjustment from the pricing structure of the TLB.
  • Upsizing of the TLB by $100 million, increasing the principal balance to $497 million.
  • Proceeds from the TLB to be used for general corporate purposes, including reducing borrowings under the revolving credit facility.
  • Enhanced liquidity and financial flexibility resulting from the transaction.
  • Recognition and support from the markets for Koppers' expand and optimize strategy.
Negative
  • None.

With Koppers Holdings Inc.'s recent repricing and upsizing of its Term Loan B, several financial metrics become a focal point for analysis. The reduction in interest rate margins by 50 basis points translates into a tangible decrease in debt servicing costs. Considering the current principal balance increase to $497 million, this could potentially save the company millions in interest payments over the life of the loan. This is predicated, however, on broader market conditions and the prevailing Term SOFR Rate, which replaces LIBOR as a benchmark for floating rates in financial instruments.

Upsizing the TLB by $100 million at par is also noteworthy, as it provides additional liquidity without immediate dilution to shareholders. The intended use of these proceeds to mitigate revolving credit facility borrowings, particularly those associated with recent strategic acquisitions, suggests a proactive approach to capital structure optimization. While this can be seen as bolstering financial flexibility, it simultaneously raises the company's leverage – a double-edged sword that could affect future borrowing costs and credit ratings.

From a market perspective, the strong demand for Koppers' TLB indicates a vote of confidence from lenders in the company's creditworthiness and strategic direction. The company's 'expand and optimize' strategy, coupled with an improving balance sheet, may signal growth and efficiency improvements. For investors, such financial engineering could be a harbinger of enhanced shareholder value if the company deploys the capital effectively.

Furthermore, the relationship with a consortium of reputable financial institutions like Wells Fargo Bank, PNC Capital Markets LLC and others as joint lead arrangers and bookrunners, provides a sturdy platform for Koppers to navigate future financial endeavors. Nevertheless, as the debt market conditions continue to evolve in response to macroeconomic factors, the sustainability of these favorable terms could be challenged, warranting close observation of the company's credit metrics and industry trends.

Reduces Interest Rate Margins by 50 Basis Points

Increases TLB by $100 Million

PITTSBURGH, April 15, 2024 /PRNewswire/ -- Koppers Holdings Inc. (NYSE: KOP), an integrated global provider of treated wood products, wood treatment chemicals, and carbon compounds, today announced that the company successfully completed the repricing and upsizing of its seven-year $397 million senior secured Term Loan B (TLB) due April 10, 2030.

This transaction reduces the interest rate margins applicable to the TLB by 50 basis points, from 3.50% with a floor of 50 bps to 3.00% with a floor of 50 bps at adjusted Term SOFR Rate or adjusted Daily Simple SOFR and removes the 10 bps credit spread adjustment from the pricing structure of the TLB. In addition, the TLB was upsized, at par, by $100 million, increasing the principal balance to $497 million.

Proceeds from the TLB will be used for general corporate purposes. The company intends to reduce borrowings under its revolving credit facility, including recent borrowings to fund the acquisition of Brown Wood Preserving.

"We are pleased with the strong market demand for our Term Loan B, and with the enhanced liquidity and financial flexibility this transaction provides," said Chief Financial Officer Jimmi Sue Smith. "Koppers continues to deliver on our expand and optimize strategy, while strengthening our balance sheet and improving our credit metrics, and we appreciate the resulting recognition and support of the markets."

Wells Fargo Bank, National Association is acting as administrative agent for the TLB. Wells Fargo Securities, LLC, PNC Capital Markets LLC, BofA Securities, Inc., Fifth Third Bank, National Association, Citizens Bank, N.A. and Truist Securities, Inc. are acting as joint lead arrangers and bookrunners for the TLB.

About Koppers

Koppers, with corporate headquarters in Pittsburgh, Pennsylvania, is an integrated global provider of treated wood products, wood treatment chemicals, and carbon compounds.  Our products and services are used in a variety of niche applications in a diverse range of end markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and construction industries.  We serve our customers through a comprehensive global manufacturing and distribution network, with facilities located in North America, South America, Australasia, and Europe.  The stock of Koppers Holdings Inc. is publicly traded on the New York Stock Exchange under the symbol "KOP."

For more information, visit: www.koppers.com. Inquiries from the media should be directed to Ms. Jessica Franklin Black at BlackJF@koppers.com or 412-227-2025.  Inquiries from the investment community should be directed to Ms. Quynh McGuire at McGuireQT@koppers.com or 412-227-2049.

Safe Harbor Statement

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and may include, but are not limited to, statements about sales levels, acquisitions, restructuring, declines in the value of Koppers assets and the effect of any resulting impairment charges, profitability and anticipated expenses and cash outflows. All forward-looking statements involve risks and uncertainties.

All statements contained herein that are not clearly historical in nature are forward-looking, and words such as "outlook," "guidance," "forecast," "believe," "anticipate," "expect," "estimate," "may," "will," "should," "continue," "plan," "potential," "intend," "likely," or other similar words or phrases are generally intended to identify forward-looking statements. Any forward-looking statement contained herein, in other press releases, written statements or other documents filed with the Securities and Exchange Commission, or in Koppers communications and discussions with investors and analysts in the normal course of business through meetings, phone calls and conference calls, regarding future dividends, expectations with respect to sales, earnings, cash flows, operating efficiencies, restructurings, the benefits of acquisitions, divestitures, joint ventures or other matters as well as financings and debt reduction, are subject to known and unknown risks, uncertainties and contingencies.

Many of these risks, uncertainties and contingencies are beyond our control, and may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. Factors that might affect such forward-looking statements include, among other things, the impact of changes in commodity prices, such as oil and copper, on product margins; general economic and business conditions; potential difficulties in protecting our intellectual property; the ratings on our debt and our ability to repay or refinance our outstanding indebtedness as it matures; our ability to operate within the limitations of our debt covenants; unexpected business disruptions; potential impairment of our goodwill and/or long-lived assets; demand for Koppers goods and services; competitive conditions; capital market conditions, including interest rates, borrowing costs and foreign currency rate fluctuations; availability and fluctuations in the prices of key raw materials; disruptions and inefficiencies in the supply chain; economic, political and environmental conditions in international markets; changes in laws; the impact of environmental laws and regulations; unfavorable resolution of claims against us, as well as those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Koppers, particularly our latest annual report on Form 10-K and any subsequent filings by Koppers with the Securities and Exchange Commission. Any forward-looking statements in this release speak only as of the date of this release, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

For Information:

Quynh McGuire, Vice President, Investor Relations
412 227 2049
McGuireQT@koppers.com

 

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SOURCE KOPPERS HOLDINGS INC.

FAQ

What did Koppers Holdings Inc. successfully complete?

Koppers Holdings Inc. successfully completed the repricing and upsizing of its Term Loan B.

By how many basis points were the interest rate margins reduced?

The interest rate margins were reduced by 50 basis points, from 3.50% to 3.00% with a floor of 50 bps.

What was the increase in the principal balance of the TLB?

The TLB was upsized by $100 million, increasing the principal balance to $497 million.

What will the proceeds from the TLB be used for?

The proceeds from the TLB will be used for general corporate purposes, including reducing borrowings under the revolving credit facility.

Who is acting as the administrative agent for the TLB?

Wells Fargo Bank, National Association is acting as the administrative agent for the TLB.

Koppers Holdings Inc.

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About KOP

koppers, headquartered in pittsburgh, pennsylvania, is a global wood preservation technology company that creates safe and environmentally responsible solutions to solve our customer’s most important challenges. our products and services are used in a variety of niche applications in a diverse range of end-markets including railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber and construction industries. with more than 2,100 employees, we maintain a global manufacturing and distribution network, with facilities in north america, south america, australasia, china and europe. koppers is committed to living a culture of zero harm that places the care of our people, our environment and our communities first at all times. the company is also a member of the american chemistry council and dedicated to adopting its responsible care® initiative at all of our locations worldwide.