MRC Global's Strategic Moves to Enhance Capital Structure

MRC Global Announces Strategic Financial Initiatives

In a significant step towards strengthening its capital structure, MRC Global Inc. has recently revealed its intentions to repurchase a large number of its preferred shares. As part of this strategy, the company struck an agreement with its main stakeholder, paving the way for a financial maneuver that could have lasting impacts on its market position.

Details of the Preferred Stock Repurchase

MRC Global is set to repurchase all 363,000 shares of its 6.50% Series A Convertible Perpetual Preferred Stock from Mario Investments, LLC. This action is contingent on successfully executing a term loan financing, indicating careful planning and a focus on financial efficiency.

Financial Aspects of the Repurchase

For this repurchase, MRC Global anticipates a total payment of around $361 million, which is reflective of 99.5% of the liquidation preference of the preferred stock. Along with the repurchased shares, MRC will also cover accrued dividends until the closing date of the agreement. Funding for this transaction is expected to come from a new senior secured term loan, referred to as Term Loan B, supplemented by either existing cash resources or borrowings from the asset-based lending facility.

Implementing Additional Financial Measures

As part of its broader strategy, MRC Global is initiating a Term Loan B financing of up to $350 million. This loan is projected to have a seven-year term, allowing the company to manage its financial obligations effectively while pursuing growth prospects.

Amendments to the Asset-Based Lending Facility

In addition to the loan financing, MRC Global is taking steps to amend its asset-based lending (ABL) facility, extending its maturity date until 2029. These actions are designed to optimize the company's debt leverage and provide a firmer financial footing as market conditions evolve.

Preliminary Financial Performance Insights

Alongside these financial maneuvers, MRC Global has provided preliminary insights into its third-quarter results. The company reported an anticipated revenue of approximately $797 million and an adjusted EBITDA of around $48 million, indicating a strong operational performance.

Operational Cash Flow and Future Outlook

Moreover, MRC Global projects cash flow from operations to reach about $95 million, showcasing effective cash management. The full third-quarter report is scheduled for release soon, along with a potential conference call to discuss the results in more depth.

Understanding Adjusted EBITDA

It’s essential to note that MRC Global uses Adjusted EBITDA as a key performance measure, which reflects the profitability of its operations by excluding certain non-recurring and non-cash expenses. This metric serves as a more precise indicator of how well the company is performing operationally.

Company Background

Headquartered in Houston, Texas, MRC Global stands as a leading global distributor of pipe, valves, fittings, and various infrastructure products and services. The company caters to a wide array of end markets, which include gas utilities, downstream industries, and energy transition sectors. With a century-long experience, MRC Global emphasizes innovative supply chain solutions and is backed by a robust digital platform, serving around 10,000 customers through its vast network of over 219 locations.

Frequently Asked Questions

What steps is MRC Global taking to manage its capital structure?

MRC Global is repurchasing its preferred stock, launching a Term Loan B financing, and amending its asset-based lending facility to strengthen its capital structure.

What are the expected financial outcomes from these actions?

These strategies aim to simplify capital structure, enhance cash generation, and improve earnings per share starting in 2025.

How much funds is MRC Global looking to raise with the Term Loan B?

MRC Global is targeting a $350 million Term Loan B financing to support its preferred stock repurchase.

What were MRC Global's preliminary financial results for Q3 2024?

For the third quarter of 2024, MRC Global estimates revenue at approximately $797 million and adjusted EBITDA around $48 million.

Who can I contact for more information regarding MRC Global?

For further inquiries, you can reach Monica Broughton, VP of Investor Relations & Treasury at MRC Global, at 832-308-2847.

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