GrafTech Is Said to Seek to Raise More Than $800 Million in IPO

(Bloomberg) -- GrafTech International Ltd. is seeking to raise more than $800 million in an initial public offering that could value the company at more than 11 times what owner Brookfield Asset Management Inc. paid for it, according to people familiar with the matter.

Graftech, which is wholly owned by Brookfield's private equity group, is seeking a valuation of at least $8 billion for the entire company in the share sale, said the people, who asked not to be identified because the matter is private. The valuation could be as high as $10 billion, one of the people said. That value would be about 10 times the company's earnings before interest, taxes, depreciation and amortization.

A Brookfield representative declined to comment. A representative for GrafTech, based in Brooklyn Heights, Ohio, didn't immediately respond to a request for comment.

Toronto-based Brookfield acquired GrafTech in 2015 with an equity investment of about $855 million. The graphite electrodes the company produces are used in mini-steel mills to help melt scrap metal and other raw materials used in the production of steel.

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 tonne from 2006 to 2016, the company said in a regulatory filing. The weighted average contract price is now $9,700 per metric ton, Brookfield Business Partners, the private equity arm of the company, said in February.

GrafTech said in a regulatory filing that its adjusted ebitda from continuing operations reached $96 million in 2017 from a loss of $2.9 million the year before. Brookfield said it now expects GrafTech to generate $275 million in ebitda in the first quarter of 2018 because of higher prices and operational improvements.

Graftech, founded in 1886, has manufacturing facilities in France, Spain, Mexico and the U.S., according to a regulatory filing. It plans to list on the New York Stock Exchange under the ticker EAF.

The share sale is being led by JPMorgan Chase & Co. and Credit Suisse Group AG.

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, Michael Hytha

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