Wesco Announces Commencement of Private Offering of Senior Notes Due 2033

Rhea-AI Summary

Wesco International (NYSE: WCC) announced that its subsidiary, WESCO Distribution, plans to offer $600 million in senior notes due 2033 to qualified institutional buyers and non-U.S. persons. The company intends to use the proceeds to:

1. Redeem all outstanding 10.625% Series A Fixed-Rate Reset Cumulative Perpetual Preferred Stock and related depositary shares on June 22, 2025

2. Repay a portion of its asset-based revolving credit facility

3. Initially repay outstanding borrowings under its accounts receivable securitization facility

The notes will be unsecured, unsubordinated debt obligations guaranteed by Wesco and its subsidiary Anixter Inc. Wesco is a FORTUNE 500® company with approximately $22 billion in annual sales in 2024, employing around 20,000 people across more than 700 sites in approximately 50 countries. The company provides business-to-business distribution, logistics services, and supply chain solutions across electrical, communications, utility, and broadband sectors.

Positive

• Refinancing higher-cost preferred stock (10.625% Series A) with potentially lower-cost debt
• Strong market position with $22 billion in annual sales (2024)
• Global presence across 700+ sites in approximately 50 countries
• Diversified business across multiple sectors (electrical, communications, utility, broadband)

Negative

• Increasing debt load with $600 million new senior notes
• Notes are unsecured obligations
• Subject to market and other conditions that could affect final terms

Insights

Financial Analyst

Wesco's announcement of a $600 million senior notes offering represents a strategic debt refinancing maneuver with significant financial implications for investors. The company plans to use these proceeds to redeem its 10.625% Series A Preferred Stock and reduce borrowings under its credit facilities, effectively restructuring its capital stack.

This refinancing initiative is particularly noteworthy given today's interest rate environment. By replacing high-cost preferred equity (10.625%) with likely lower-rate senior debt, Wesco stands to realize substantial interest expense savings. For context, investment-grade industrial companies have recently issued 8-year notes at yields between 5-6%, suggesting Wesco could potentially reduce its financing costs by 400-500 basis points on this capital.

The strategic shift from preferred equity to debt offers several advantages beyond potential cost savings. Unlike preferred dividends, interest payments on the new notes will be tax-deductible, enhancing after-tax cash flows. Additionally, this move eliminates the perpetual nature of the preferred stock, replacing it with defined-maturity debt, which provides greater financial flexibility for future capital allocation decisions.

From a balance sheet perspective, this transaction will increase Wesco's debt-to-EBITDA ratio modestly while reducing its overall cost of capital. For a distribution business with Wesco's scale ($22 billion in annual sales) and stable cash flow profile, this leverage is manageable, particularly as it optimizes the company's capital structure.

The interim use of proceeds to pay down revolving credit facilities before the June 22 preferred stock redemption date demonstrates prudent cash management, temporarily reducing short-term borrowing costs while awaiting the redemption window.

For investors, this refinancing signals management's confidence in Wesco's operational stability and cash flow generation capabilities. By proactively addressing its high-cost preferred equity during a period of elevated but stabilizing interest rates, Wesco is positioning itself for improved financial flexibility and potentially enhanced earnings per share, as reduced financing costs flow through to the bottom line.

PITTSBURGH, Feb. 25, 2025 /PRNewswire/ -- WESCO International, Inc. (NYSE: WCC) ("Wesco"), a leading provider of business-to-business distribution, logistics services, and supply chain solutions, today announced that its wholly owned subsidiary, WESCO Distribution, Inc. ("Wesco Distribution"), intends to offer (the "Offering") to eligible purchasers, subject to market and other conditions, $600 million aggregate principal amount of senior notes due 2033 (the "Notes").

Wesco intends to use the net proceeds from this Offering to redeem all of its outstanding 10.625% Series A Fixed-Rate Reset Cumulative Perpetual Preferred Stock (the "Series A Preferred Stock") and all of the related depositary shares representing fractional interests in the Series A Preferred Stock (the "Series A Depositary Shares") on June 22, 2025, and repay a portion of the amounts outstanding under its asset-based revolving credit facility (the "ABL Facility"). Prior to such redemption, Wesco intends to use the net proceeds from this Offering to repay a portion of the outstanding borrowings under its accounts receivable securitization facility and the ABL Facility.

The Notes will be unsecured, unsubordinated debt obligations of Wesco Distribution, and will rank equally with Wesco Distribution's other existing and future unsecured, unsubordinated obligations. The Notes will be guaranteed on an unsecured, unsubordinated basis by Wesco and its wholly owned subsidiary, Anixter Inc. (the "Guarantees").

The Notes and related Guarantees will be offered only to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"), and to non-U.S. persons in transactions outside the United States under Regulation S of the Securities Act. The Notes have not been, and will not be, registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.

This press release does not and will not constitute an offer to sell, or the solicitation of an offer to buy, the Notes or any other securities, nor will there be any sale of the Notes or other securities, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. Any offer will be made only by means of a private offering memorandum. This press release does not constitute a notice of redemption with respect to the Series A Preferred Stock and the related Series A Depositary Shares.

About Wesco
Wesco International (NYSE: WCC) builds, connects, powers and protects the world. Headquartered in Pittsburgh, Pennsylvania, Wesco is a FORTUNE 500® company with approximately $22 billion in annual sales in 2024 and a leading provider of business-to-business distribution, logistics services and supply chain solutions. Wesco offers a best-in-class product and services portfolio of Electrical and Electronic Solutions, Communications and Security Solutions, and Utility and Broadband Solutions. The Company employs approximately 20,000 people, partners with the industry's premier suppliers, and serves thousands of customers around the world. With millions of products, end-to-end supply chain services, and leading digital capabilities, Wesco provides innovative solutions to meet customer needs across commercial and industrial businesses, contractors, educational institutions, government agencies, technology companies, telecommunications providers, and utilities. Wesco operates more than 700 sites, including distribution centers, fulfillment centers, and sales offices in approximately 50 countries, providing a local presence for customers and a global network to serve multi-location businesses and global corporations.

Forward-Looking Statements
All statements made herein that are not historical facts should be considered as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. These forward-looking statements include, but are not limited to, statements regarding the proposed terms of the Offering, the timing of the Offering and the anticipated use of proceeds therefrom, including the redemption of the Series A Preferred Stock and the related Series A Depositary Shares. Such statements can generally be identified by the use of words such as "anticipate," "plan," "believe," "estimate," "intend," "expect," "project" and similar words, phrases or expressions or future or conditional verbs such as "could," "may," "should," "will" and "would," although not all forward-looking statements contain such words. These forward-looking statements are based on current expectations and beliefs of Wesco's management, as well as assumptions made by, and information currently available to, Wesco's management, current market trends and market conditions and involve various risks and uncertainties, some of which are beyond Wesco's and Wesco's management's control, and which may cause actual results to differ materially from those contained in forward-looking statements. Wesco's actual results could differ materially from those expressed in any forward-looking statement made by Wesco or on Wesco's behalf. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will in fact prove to be accurate. Accordingly, you should not place undue reliance on such statements. Wesco has undertaken no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Those risks, uncertainties and assumptions include whether Wesco will be able to consummate the Offering, including the satisfaction of customary closing conditions with respect to the Offering of the Notes. Additional factors that could cause results to differ materially from those described above can be found in Wesco's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and Wesco's other reports filed with the U.S. Securities and Exchange Commission.

Contact Information:
Investor Relations           
Will Ruthrauff
Director, Investor Relations
484-885-5648    

Corporate Communications
Jennifer Sniderman
Vice President, Corporate Communications
717-579-6603

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SOURCE Wesco International

FAQ

What is the size of Wesco's (WCC) senior notes offering announced in February 2025?

Wesco announced a $600 million aggregate principal amount of senior notes due 2033 through its subsidiary WESCO Distribution, Inc.

How does Wesco (WCC) plan to use the proceeds from its 2033 senior notes offering?

Wesco plans to use the proceeds to redeem all outstanding Series A Preferred Stock and related depositary shares on June 22, 2025, and repay portions of its asset-based revolving credit facility and accounts receivable securitization facility.

Who will guarantee Wesco's (WCC) 2033 senior notes?

The notes will be guaranteed on an unsecured, unsubordinated basis by Wesco International, Inc. and its wholly owned subsidiary, Anixter Inc.

What were Wesco's (WCC) annual sales in 2024?

According to the press release, Wesco reported approximately $22 billion in annual sales in 2024.

When will Wesco (WCC) redeem its Series A Preferred Stock using the senior notes proceeds?

Wesco plans to redeem all of its outstanding 10.625% Series A Preferred Stock and related depositary shares on June 22, 2025.

Who is eligible to purchase Wesco's (WCC) 2033 senior notes?

The notes are being offered only to qualified institutional buyers under Rule 144A of the Securities Act and to non-U.S. persons in transactions outside the United States under Regulation S.