Brookfield's GrafTech Aims to Raise Up to $907 Million in IPO

(Bloomberg) -- GrafTech International Ltd. said it plans to price its initial public offering at between $21 and $24 a share and raise as much as $907 million at the top end of the range.

GrafTech, which is a wholly owned subsidiary of the private equity group at Brookfield Asset Management Inc., will seek a valuation of up to $7.3 billion, according to a regulatory filing Wednesday. GrafTech had been targeting a valuation of at least $8 billion, people familiar with the matter said earlier this week.

The bankers on the deal have the option to exercise an over-allotment that could bring the total proceeds from the offering to more than $1 billion, the filing shows. The share sale is being led by JPMorgan Chase & Co. and Credit Suisse Group AG.

The company plans to list on the New York Stock Exchange under the symbol EAF.

Toronto-based Brookfield acquired GrafTech in 2015 with an equity investment of about $855 million. If the IPO were to price at the top end of the range, that would ascribe a valuation to the company that is 8.5 times what Brookfield paid for it three years ago.

The company produces graphite electrodes used in mini-steel mills to help melt scrap metal and other raw materials used in the production of steel. It will not receive any of the proceeds from the share sale, according to the filing.

Brookfield has said it used a downturn in the steel industry after it acquired the company to restructure GrafTech's operations, exiting non-core businesses, shutting down excess capacity and removing about $100 million in costs.

As the steel market recovered, GrafTech has since been able to renegotiate its contracts with purchasers on a long-term basis amid a shortage of graphite electrodes. The price of its products averaged about $4,500 per metric ton from 2006 to 2016, the company said in a regulatory filing. The weighted average contract price is now $9,700 per ton, Brookfield Business Partners, the private equity arm of the company, said in February.

Graftech, founded in 1886, has manufacturing facilities in France, Spain, Mexico and the U.S., according to a regulatory filing. The Brooklyn Heights, Ohio-based company plans to list on the New York Stock Exchange under the ticker EAF.

To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Jacqueline Thorpe, Steven Frank

©2018 Bloomberg L.P.