Reliance Steel buys back $420 million of PNA 10¾% notes, floaters

By Susanna Moon

Chicago, Aug. 4 - Reliance Steel & Aluminum Co. said it settled its cash tender offers to purchase any and all of the outstanding PNA Group, Inc. 10¾% senior notes due 2016 and any and all of the outstanding PNA Intermediate Holding Corp. senior floating-rate toggle notes due 2013.

The company said investors tendered all $250 million outstanding principal amount of 10¾% notes and all $170 million outstanding principal amount of floaters.

The offers expired on Friday. They began on July 1.

Reliance was also soliciting consents to amend the notes.

The offers were held in connection with Reliance's agreement to acquire the outstanding capital stock of PNA Group Holding Corp. Completion of the tenders was not a condition to the acquisition, which closed on Monday.

For the 10¾% notes, Reliance paid $1,205.75 per $1,000 principal amount. The total includes a consent payment of $20.00 per $1,000.

The amount was calculated using the sum of 35% of $1,107.50, the equity clawback price at which 35% of the notes may be redeemed with the net proceeds of certain qualified equity offerings, and 65% of $1,258.66, an estimate of the make-whole redemption price for the notes based on U.S. Treasury yields as of 11 a.m. ET on July 1 and a spread of 50 basis points.

For the floaters, the payment was $1,020.00 per $1,000 principal amount, also including a consent payment of $20.00 per $1,000.

To receive the consent payment, holders had to tender by the consent deadline of 5 p.m. ET on July 15.

Reliance also paid accrued interest up to but excluding the settlement date.

Holders who tendered were required to deliver consent to amendments that will eliminate substantially all of the restrictive covenants in the indentures and the notes other than the covenants related to change-of-control offers.

For each series of notes, consents were needed from holders of a majority of the notes.

The tenders were not conditioned on receipt of consents, and each tender offer was independent. They were subject to other conditions, including the closing of the acquisition of PNA by Reliance.

Citi was dealer manager (800 558-3745 or call collect 212 723-6106). Global Bondholder Services Corp. was the information agent and depositary (866 807-2200 or call collect 212 430-3774).

Reliance funded the purchase of PNA with proceeds from its new $500 million senior unsecured term loan and borrowing under Reliance's existing $1.1 billion credit facility.

In addition, Reliance entered into a new $500 million senior unsecured term loan on Thursday. Proceeds were used to fund the purchase of PNA, including the repayment of PNA's debt. Banc of America Securities LLC was the sole lead arranger of the term loan.

Reliance Steel is a Los Angeles-based metals service center company. PNA Group is an Atlanta-based steel service center group.

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