Ryerson has held non-deal roadshow meetings facilitated by BofA Merrill Lynch over the last several months, according to two sources familiar with the matter. The issuer is exploring a possible bond offering to tackle its upcoming maturities, which include a pricey 11% note, they said.

The metal processor and distributor’s USD 588m 11% senior secured notes due 2022 last traded in size on 6 June at 105.875 to yield 7.284%, in line with recent levels, according to MarketAxess. The notes were last quoted today at 106 to yield 4.24%, according to an analyst.

The notes are currently callable at 105.5, stepping down to 102.75 in May 2020 and par in May 2021.

Ryerson placed the 11% bond in 2016 to refinance debt that was set to mature starting the following year. At the time, the company had net leverage of roughly 8x given net debt of USD 889m and LTM EBITDA of USD 110m (excluding LIFO adjustments).

However, now Ryerson’s leverage is around 3.8x, considering USD 309m of LTM adjusted EBITDA (excluding LIFO) and USD 1.12bn of total debt.

Given the improved credit metrics, the company can likely obtain a lower cost of capital if it comes back to market, one of the sources said.

Furthermore, Ryerson aims to increase adjusted EBITDA to USD 350m–USD 400m within the next three years, and to reduce net leverage to 2x, according to a company presentation.

Besides the 11% notes, the remainder of the capital structure is a USD 1bn ABL facility due 2021, with USD 558m outstanding.

On an LTM basis, the company generated USD 188m of free cash flow (16% of total debt), with USD 309m of adjusted EBITDA, USD 37m of capex and USD 84m of interest expense. As of 31 March, Ryerson has USD 460m of liquidity through USD 22m of cash on hand and USD 438m in ABL availability.

The company guided 2Q19 adjusted EBITDA (excluding LIFO) at USD 64m-68m, a 36% decline year-over-year at midpoint and a 5% increase sequentially.

Ryerson processes and distributes metal products via facilities spread across North America and China to a range of manufacturing end markets.

The stock traded today at USD 7.75 for a market cap of USD 292.824m, down 4.56% from yesterday’s close.

BofA declined to comment. Ryerson did not respond to a request for comment.

2019 Debtwire