GrafTech reacts to low market demand with $150 million equity investment from Brookfield affiliate

By Lisa Kerner

Charlotte, N.C., April 30 – GrafTech International Ltd. chief executive officer Joel Hawthorne said graphite electrode demand continued to soften as global electric arc furnace (EAF) steel production weakened. This, along with lower end-market demand in some steel-consuming sectors and high Chinese steel exports, led to lower EAF customer utilization rates, particularly in North America.

As a result, Hawthorne expects a challenging operating environment for the company, and the industry, for the remainder of the year.

GrafTech is taking action to improve its cost structure and align production rates with market demand, according to its first-quarter earnings news release.

Actions include reducing graphite electrode operating rates, streamlining overhead costs, and managing working capital requirements and reducing inventory by roughly $50 million in 2015.

On Wednesday, the company announced a letter of intent with an affiliate of Brookfield Asset Management for a $150 million convertible preferred equity investment in GrafTech.

GrafTech and Brookfield also announced a letter of intent under which Brookfield would begin a tender offer to acquire GrafTech common stock for $5.05 per share.

As of March 31, GrafTech had long-term debt of about $336 million and cash and cash equivalents of about $11 million.

GrafTech is a Parma, Ohio-based manufacturer of graphite electrodes and needle coke.

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