Post by Sapphire Capital on Jul 12, 2008 22:46:51 GMT 4
Century Aluminum Co. said July 8, 2008 it will pay $1.7 billion in cash and securities to its largest shareholder to cancel fixed-price sales contracts that keep it from taking advantage of the metal's record high pricing.
Part of the payment entails a large increase in the number of Century Aluminum's shares outstanding. The company's stock tumbled $8.79, or 14.4 percent, to $52.36 at midday.
In November 2004 and again in June 2005, Century agreed to pay Switzerland's Glencore International AG the difference between a monthly set price for aluminum and the higher market price; likewise Glencore agreed to pay Century if the market price was below the monthly set price. Glencore holds a 28.5 percent stake in Century Aluminum, according to Capital IQ.
Since agreeing to the so-called forward sales contracts with Glencore, the price of aluminum has soared, closing Monday at a record $3,327 a ton.
Glencore's consideration for canceling the contracts includes securities and cash. It will accept $730.2 million in cash, comprised of $225 million of Century's cash on hand and a $505.2 million deferred settlement agreement that carries an adjustable interest rate.
Glencore also will accept $978.4 million in 160,000 shares of nonvoting convertible preferred stock that pays no dividend unless Century were to pay a dividend on its common stock. The new shares are convertible into Century common stock at a 1-to-100 ratio, representing 16 million underlying shares of common stock.
On March 31, the company had about 41 million shares outstanding.
In addition, to help finance the buyout of Glencore's sales contracts Century will issue 6.5 million new common shares, plus 975,000 shares to underwriters for overallotments. Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Inc. are joint bookrunners for the offering.
Part of the payment entails a large increase in the number of Century Aluminum's shares outstanding. The company's stock tumbled $8.79, or 14.4 percent, to $52.36 at midday.
In November 2004 and again in June 2005, Century agreed to pay Switzerland's Glencore International AG the difference between a monthly set price for aluminum and the higher market price; likewise Glencore agreed to pay Century if the market price was below the monthly set price. Glencore holds a 28.5 percent stake in Century Aluminum, according to Capital IQ.
Since agreeing to the so-called forward sales contracts with Glencore, the price of aluminum has soared, closing Monday at a record $3,327 a ton.
Glencore's consideration for canceling the contracts includes securities and cash. It will accept $730.2 million in cash, comprised of $225 million of Century's cash on hand and a $505.2 million deferred settlement agreement that carries an adjustable interest rate.
Glencore also will accept $978.4 million in 160,000 shares of nonvoting convertible preferred stock that pays no dividend unless Century were to pay a dividend on its common stock. The new shares are convertible into Century common stock at a 1-to-100 ratio, representing 16 million underlying shares of common stock.
On March 31, the company had about 41 million shares outstanding.
In addition, to help finance the buyout of Glencore's sales contracts Century will issue 6.5 million new common shares, plus 975,000 shares to underwriters for overallotments. Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Inc. are joint bookrunners for the offering.