WESCO Updates Financing Plan for Anixter Merger

PITTSBURGH — WESCO International, Inc. announced that, based on current market conditions, it has revised its expectations with respect to the financing of the cash portion of the consideration payable pursuant to the previously announced merger agreement with Anixter International Inc. The company also provided information about WESCO’s participation in the J.P. Morgan Industrials Conference on Wednesday, March 11, 2020.

Based on current market conditions, WESCO expects to fund the entirety of the cash portion of the merger consideration with debt and cash-on-hand at WESCO and Anixter. WESCO previously anticipated funding a portion of the cash consideration through the issuance of WESCO common stock or other equity or equity-linked securities, in addition to issuing debt.

“Given current market conditions, we are adjusting our financing plan for the cash portion of the Anixter merger consideration. Costs of issuing equity and debt have materially changed since we announced the transaction in January,” said WESCO Chairman, President, and Chief Executive Officer, John Engel. “Our equity is the most valuable component of our capital structure and we are unwilling to use it as a source of financing at the current market value. Issuing debt instead of equity adds approximately one-half turn to our expected leverage at closing. We expect the outstanding cash flow generation of the combined company to service the higher level of debt while retaining our flexibility to invest in the business and de-lever to within our target leverage range within three years.”

The merger agreement, which is unchanged, provides for each share of Anixter common stock to be converted into the right to receive $70.00 in cash (which amount may be increased by up to $2.82 per Anixter common share at closing, based on the volume-weighted average trading price of WESCO common stock on the NYSE during a specified period prior to closing, as described in greater detail in WESCO’s Registration Statement on Form S-4 in connection with the merger), 0.2397 shares of WESCO common stock and preferred stock consideration valued at $15.89, based on the value of its liquidation preference. Investors should review the Registration Statement on Form S-4, as amended, for a more complete description of the merger consideration.

Leverage and Debt Mix at Closing

WESCO has committed debt financing that fully backstops amounts needed to pay the cash consideration to consummate the merger and for the other transactions contemplated by the merger agreement.

Based on current market conditions and WESCO’s expectations for the financing of the cash portion of the merger consideration:

• WESCO expects, in total, to issue $2.2 to $2.4 billion in new long-term debt securities in connection with the merger and to draw on its credit facilities as described below.
• WESCO estimates that its pro forma leverage at closing on a net debt-to-EBITDA basis to be approximately 5.0x, including assumed first year cost synergies of approximately $68 million.
• WESCO estimates that its post-closing debt would be approximately 70% fixed-rate.

There can be no assurance that WESCO will finance the entirety of the cash portion of the merger consideration solely with debt and cash-on-hand and WESCO may, depending on market conditions, finance a portion of such cash consideration through the issuance of WESCO common stock or other equity or equity-linked securities. As of the date of this press release, WESCO has not made any final determination with respect to the financing of the cash portion of the merger consideration. Such determination will be made considering market conditions and other relevant factors.

Treatment of Existing Indebtedness of WESCO and Anixter in Connection with the Merger

WESCO intends to solicit the consent of the holders of Anixter’s senior notes due 2023 and 2025 to waive the change of control put right with respect to this transaction so that those notes will remain outstanding following the transaction. The company expects to refinance Anixter’s senior notes due 2021, but does not plan to refinance the WESCO 2021 notes at this time.

Liquidity

WESCO expects to retain liquidity of at least $800 million through its credit facilities and cash balances. It expects bank credit facility commitments to be $2.2 billion at closing, split approximately evenly between its three-year securitization and a new five-year asset-based revolver that is part of the financing commitment. The bank credit facilities are expected to include terms that are generally consistent with WESCO’s existing credit facilities.

Pro Forma Shares Outstanding in Connection with the Merger (in thousands)

The following table is based on information contained in the Unaudited Pro Forma Condensed Combined Financial Information contained in the Registration Statement on Form S-4, as amended on March 9, 2020. Investors should review the Registration Statement on Form S-4, as amended, for a more complete description of these matters.

Filing of 10-K/A

Additionally, WESCO filed with the Securities and Exchange Commission (“SEC”) an amendment to its Annual Report on Form 10-K for the fiscal year ended December 31, 2019. This amendment contains information related to WESCO’s directors and officers, compensation plans and certain other matters, and was filed with the SEC for purposes of incorporating the information included therein by reference into other WESCO filings with the SEC. This amendment does not change any previously reported financial results, including those contained in the Annual Report on Form 10-K filed by WESCO with the SEC on February 24, 2020.

J.P. Morgan Industrials Conference Presentation

WESCO will be participating in the J.P. Morgan Industrials Conference on Wednesday, March 11, 2020 at 8:45 a.m. ET. The live audio webcast will be accessible via WESCO’s Investor Relations website, www.wesco.investorroom.com.