The net proceeds we will receive from the sale of 17,045,455 shares of our
common stock in this offering, after deducting underwriter discounts and
commissions and estimated offering expenses payable by us, will be
approximately $333.9 million. We intend to use all of the net proceeds from
this offering to repay indebtedness under our Global ABL Facility. We may later
from time to time use borrowings under our Global ABL Facility for general
corporate purposes. We will not receive any proceeds from the sale of shares
of our common stock by the selling stockholder in this offering (including any
shares sold by the selling stockholder pursuant to the underwriters’ option to
purchase additional shares).
Certain of the underwriters of this offering or their affiliates are lenders
under our Global ABL Facility. Accordingly, certain of the underwriters will
receive net proceeds from this offering in connection with the repayment of our
Global ABL Facility. In addition, funds affiliated with Goldman, Sachs & Co.,
one of the participating underwriters, are members of and own common units of
the selling stockholder and beneficially own in excess of 10% of our issued and
outstanding common stock.
Our Global ABL Facility allows us to borrow up to $1.25 billion, subject to
borrowing base limitations. The Global ABL Facility matures in March 2017.
Borrowings initially bear interest at an initial rate per annum equal to, in
the case of U.S. dollar borrowings, LIBOR plus 1.75%. The borrowings under the
Global ABL Facility which will be repaid originated in the March 2012
refinancing of our then existing ABL Credit Facility.
We are the largest North American PVF distributor to the energy industry based
on sales. The broad PVF distribution industry is fragmented and includes large,
nationally recognized distributors, major regional distributors and many
smaller local distributors. The principal methods of competition include
offering prompt local service, fulfillment capability, breadth of product and
service offerings, price and total costs to the customer. Our competitors
include nationally recognized PVF distributors, such as Wilson Industries,
Inc. (a subsidiary of Schlumberger), National Oilwell Varco, Inc. and Ferguson
Enterprises (a subsidiary of Wolseley, plc), several large regional or product-
specific competitors and many local, family-owned PVF distributors.
------
We are one of the largest global valve distributors to the energy industry
based on sales. The broad PVF distribution industry is fragmented and includes
large, internationally and nationally recognized distributors, major regional
distributors and many smaller local distributors. The principal methods of
competition include offering prompt local service, fulfillment capability,
breadth of product and service offerings, price and total costs to the
customer. Our competitors include several large regional or product-specific
competitors, such as Econosto (a subsidiary of Eriks), and many local, family-
owned PVF distributors.
stock keeping
units (“SKUs”), including an extensive array of PVF, oilfield supply,
automation, instrumentation and other general and specialty industry supply
products from over 12,000 suppliers. Through our North American and
International segments, we serve more than 12,000 customers through over 400
service locations throughout North America, Europe, Asia and Australasia.
Our PVF and oilfield supplies are used in mission critical process applications
that require us to provide a high degree of product knowledge, technical
expertise and value added services to our customers. We seek to provide
best-in-class service and a one-stop shop for our customers by satisfying the
most complex, multi-site needs of many of the largest companies in the energy
and industrial sectors as their primary PVF supplier. We provide services such
as product testing, manufacturer assessments, multiple daily deliveries, volume
purchasing, inventory and zone store management and warehousing, technical
support, just-in-time delivery, truck stocking, order consolidation, product
tagging and system interfaces customized to customer and supplier
specifications for tracking and replenishing inventory, which we believe result
in deeply integrated customer relationships. We believe the critical role we
play in our customers’ supply chain, together with our extensive product
offering, broad global presence, customer-linked scalable information systems
and efficient distribution capabilities, serve to solidify our long-standing
customer relationships and drive our growth. As a result, we have an average
relationship of over 20 years with our largest 25 customers.
We believe that growth in PVF and industrial supply spending within the energy
industry is likely to continue. Several factors have driven the long-term
growth in spending, including underinvestment in North American energy
infrastructure, production and capacity constraints, and market expectations
of future improvements in the oil, natural gas, refined products, petrochemical
and other industrial sectors. In addition, the products we distribute are
often used in extreme operating environments, leading to the need for a regular
replacement cycle. Approximately two-thirds of our sales are attributable to
multi-year maintenance, repair and operations (“MRO”) arrangements. Our average
annual retention rate for these contracts since 2000 is 95%. We consider MRO
arrangements to be normal, generally repetitive business that primarily
addresses the recurring maintenance, repair or operational work to existing
energy infrastructure. Project activities, including facility expansions,
exploration or new construction projects, are more commonly associated with a
customer’s capital expenditures budget. Such projects can be more sensitive to
global oil and natural gas prices and general economic conditions.
We distribute products globally, including in PVF intensive, rapidly expanding
oil and natural gas exploration and production (“E&P”) areas such as the
Bakken, Barnett, Eagle Ford, Fayetteville, Haynesville, Marcellus, Niobrara
and Utica shales in North America. Furthermore, our Canadian subsidiary
Midfield Supply ULC (“MRC Midfield”), one of the two largest Canadian PVF
distributors based on sales, provides PVF products to oil and natural gas
companies operating primarily in Western Canada, including the Western Canadian
Sedimentary Basin, Alberta Oil Sands and heavy oil regions. These regions are
still in the early stages of infrastructure investment with numerous companies
seeking to facilitate the long-term harvesting of difficult to extract and
process crude oil. Beyond North America, our acquisitions of Transmark Fcx
Group BV (together with its subsidiaries, “MRC Transmark”) and Stainless Pipe
and Fittings Australia Pty Ltd. (“MRC SPF”) have provided us with a well-
established and integrated platform for international growth and further
positioned us to be the leading global PVF distributor to the energy industry.
MRC Locations – 18 Countries
Australia Kazakhstan
Belgium Netherlands
Canada New Zealand
China Singapore
Finland South Korea
France Thailand
Germany United Arab Emirates
Indonesia United Kingdom
Italy United States
Our business is characterized by diversity in the industry sectors and regions
we serve and in the products we supply.
Due to the demanding operating conditions in the energy industry, high costs
and safety risks associated with equipment failure, customers prefer highly
reliable products and vendors with established qualifications, reputation and
experience. As our PVF products typically are mission critical yet represent a
fraction of the total cost of the project, our customers often place a premium
on service and high reliability given the high cost to them of maintenance or
project delays. Our products are typically used in high-volume, high-stress and
abrasive applications or in high-pressure, extreme temperature and high-
corrosion applications.
With over 400 global service locations servicing the energy and industrial
sectors, we are an important link between our more than 12,000 customers and
our more than 12,000 suppliers. We add value to our customers and suppliers in
a number of ways:
o Broad Product Offering and High Customer Service Levels: The breadth and
depth of our product offering enables us to provide a high level of service
to our energy and industrial customers. Given our global inventory coverage
and branch network, we are able to fulfill orders more quickly, including
orders for less common and specialty items, and provide our customers with a
greater array of value added services than if we operated on a smaller scale
or only at a local or regional level. These value added services include
multiple daily deliveries, volume purchasing, product testing, manufacturer
assessments, inventory management and warehousing, technical support, just-
in-time delivery, order consolidation, product tagging and tracking and
system interfaces customized to customer and supplier specifications.
o Approved Manufacturer List (“AML”) Services: Our customers rely on us to
provide a high level of quality control for their PVF products. We do this
by regularly auditing many of our suppliers for quality assurance through
our Supplier Registration Process (“SRP”). We use our resulting Approved
Supplier List (the “MRC ASL”) to supply products across many of the
industries we support, particularly for downstream and midstream customers.
Increasingly, many of our customers rely on the MRC ASL and our AML services
to help devise and maintain their own approved manufacturer listings.
o Customized and Integrated Service Offering: We offer our customers
integrated supply services, including product procurement, quality
assurance, physical warehousing and inventory management and analysis, using
our proprietary information technology (“IT”) platform. This is part of an
overall strategy to provide a “one stop” solution for PVF purchases across
the upstream-midstream-downstream spectrum through integrated supply
agreements and MRO contracts. This enables our customers to focus on their
core operations, generate cost savings and increase the overall efficiency
of their businesses.
------
MRC Global Inc. was incorporated in Delaware on November 20, 2006. Our
principal executive office is located at 2 Houston Center, 909 Fannin, Suite
3100, Houston, Texas 77010. Our telephone number is (877) 294-7574. Our website
address is www.mrcpvf.com.