MELVILLE, N.Y. and DAVIDSON, N.C., July 6,
2016 /PRNewswire/ -- MSC INDUSTRIAL SUPPLY CO.
(NYSE: MSM), "MSC" or the "Company," a premier distributor of
Metalworking and Maintenance, Repair and Operations supplies to
industrial customers throughout North
America, today announced its plan to launch a "modified
Dutch auction" tender offer for up to $300 million of its Class A common stock at
a price per share not less than $66.00 and not greater than $72.50. The tender offer is expected to commence
on or about July 7, 2016 and will
remain open for at least 20 business days.
A "modified Dutch auction" tender offer allows shareholders to
indicate how many shares and at what price within the Company's
specified range they wish to tender. Based on the number of shares
tendered and the prices specified by the tendering shareholders,
the Company will determine the lowest price per share within the
range that will enable the Company to purchase shares having an
aggregate purchase price of up to $300
million. The Company also reserves the right, in the event
that more than $300 million of its
shares are tendered in the tender offer at or below the purchase
price, to purchase up to an additional 2% of its outstanding shares
of Class A common stock (excluding shares held by the Company's
Class B shareholders) without amending or extending the tender
offer. All shares purchased by the Company in the tender offer will
be purchased at the same price. Shareholders whose shares are
purchased in the tender offer will be paid the determined purchase
price in cash, less any applicable withholding taxes and without
interest, after the expiration of the tender offer.
The Company also announced that it has entered into a stock
purchase agreement with the holders of the Company's Class B common
stock to purchase from such shareholders a pro rata number of
shares at the same price per share as will be paid by the Company
in the tender offer, such that their percentage ownership and
voting power in the Company would remain substantially the same as
prior to the tender offer. The Class B shareholders also have
agreed not to participate in the tender offer. Based on their
ownership of Class A and Class B shares representing approximately
23.2% of the Company's outstanding shares, if the tender offer is
fully subscribed, the Company would repurchase a total of
approximately $390 million of its
common stock through the tender offer and the stock purchase
agreement (representing approximately 8.7% to 9.6% of the Company's
outstanding shares of common stock as of July 1, 2016).
The Company expects to finance the share purchases in the tender
offer and under the stock purchase agreement with proceeds from the
sale of $175 million in aggregate
principal amount of unsecured Senior Notes to be issued to New York
Life Insurance Company and one or more of its affiliates, and
borrowings under its existing revolving credit facility. The tender
offer will not be conditioned upon any minimum number of shares
being tendered, but will be subject to the successful closing of
the sale of the Notes and other customary conditions that will be
described in the tender offer documents. The tender offer
documents, which will be distributed to shareholders upon
commencement of the tender offer, also will contain tendering
instructions and a complete explanation of the tender offer's terms
and conditions. Shares of the Company's Class A common stock that
would be purchased pursuant to the tender offer and the stock
purchase agreement would not reduce the number of shares that the
Company may repurchase under its existing stock repurchase
plan.
Today's announcement is aligned with the Company's capital
allocation philosophy of periodically returning excess capital to
shareholders. The action will both return excess capital to
shareholders and optimize the Company's balance sheet, increasing
the tenor of its debt and lowering its overall cost of capital.
Once completed, the action will result in the Company having a
leverage ratio of approximately 1.4 times on a debt to EBITDA
basis, maintaining the flexibility to capitalize on future
opportunities, whether they be investments in organic growth,
acquisitions, further share repurchases or returning additional
capital to shareholders via dividends.
The Company expects that the dealer managers for the tender
offer will be J.P. Morgan Securities LLC and Credit Suisse
Securities (USA) LLC. Georgeson
LLC will serve as information agent for the tender offer and
Computershare will serve as the depositary for the tender
offer.
Neither MSC, its directors, the dealer managers, the information
agent, nor the depositary makes any recommendation as to whether to
tender shares or as to the price at which to tender them.
Additional Information Regarding the Planned Tender
Offer
This release is for informational purposes only and is not an
offer to buy or the solicitation of an offer to sell any shares of
the Company's Class A common stock. The planned tender offer
described in this release has not yet commenced and there can be no
assurance that the Company will commence the tender offer on the
terms described in this release or at all. The tender offer to buy
the Company's Class A common stock will only be made pursuant to an
Offer to Purchase, Letter of Transmittal and related materials that
the Company expects to send to its shareholders and file with the
Securities and Exchange Commission upon commencement of the tender
offer. SHAREHOLDERS ARE URGED TO CAREFULLY READ THE OFFER TO
PURCHASE, LETTER OF TRANSMITTAL AND RELATED MATERIALS WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION,
INCLUDING THE VARIOUS TERMS OF, AND CONDITIONS TO, THE TENDER
OFFER, THAT SHAREHOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION
REGARDING TENDERING THEIR SHARES. Once the tender offer is
commenced, shareholders will be able to obtain a free copy of the
tender offer statement on Schedule TO, the Offer to Purchase,
Letter of Transmittal and other documents that the Company expects
to file with the Securities and Exchange Commission at the
Commission's website at www.sec.gov. Shareholders may also obtain a
copy of these documents from the Company's information agent,
Georgeson LLC, by calling toll-free at 800-248-7690.
About MSC Industrial Supply Co. MSC Industrial
Supply Co. (NYSE:MSM) is a leading North American distributor of
metalworking and maintenance, repair, and operations (MRO) products
and services. We help our customers drive greater productivity,
profitability and growth with more than 1 million products,
inventory management and other supply chain solutions, and deep
expertise from 75 years of working with customers across
industries.
Our experienced team of over 6,500 associates is dedicated to
working side by side with our customers to help drive results for
their businesses - from keeping operations running efficiently
today to continuously rethinking, retooling, and optimizing for a
more productive tomorrow.
For more information on MSC, please visit www.mscdirect.com.
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SOURCE MSC Industrial Supply Co.