Unisys Corporation (UIS - Analyst Report) recently announced that it has priced an offering of $210,000,000 of senior notes scheduled to mature in 2017. The notes carry a coupon of 6.25% and Unisys will pay semi-annual interest on the notes in arrears on February 15 and August 15 every year. The first interest will be paid on February 15, 2013.
Unisys expects to close the offering on August 21, 2012. Management intends to use the net proceeds from this offering to redeem all of the company's outstanding 12.75% senior secured notes due 2014, including payment of accrued interest and premium.
In the first half of 2012, Unisys repaid a long-term debt worth $68.5 million. This comprises all of the remaining $25.5 million of its 14.25% senior secured notes due 2015, $40.0 million of its 12.5% senior notes due 2016 and $3.0 million of its 12.75% senior secured notes due 2014.
On July 25, 2012, the company called for redemption of $84.5 million of its 12.5% senior notes due January 2016. Unisys expects to incur a charge of approximately $6.4 million in the third quarter of 2012 related to the redemption. The debt reduction will result in an approximate $10 million declinein annual interest expense.
At the end of June 30, 2012, Unisys had cash and equivalents of $659.7 million, down from $714.9 million at the end of December 31, 2011. Long term debt stood at $291.8 million, down from $358.8 million at the end of December 2011.
Earlier, Unisys reported second-quarter 2012 results, which were ahead of the Zacks Consensus Estimate. Unisys generated revenues of $921 million in the second quarter of 2012, down 2% from the year-ago quarter and 0.8% sequentially.
Unisys posted a net income (including pension expenses) of $46.6 million or 99 cents per diluted share in the second quarter of 2012 compared with a net loss (including debt reduction charge, post-tax charge and pension charge) of $11.6 million or 27 cents per diluted share in the year-ago quarter, and a net income (including a charge related to debt reduction and pension expense) of $13.4 million or 30 cents per diluted share in the first quarter of 2012.
Excluding these charges and expenses, net income for the quarter came in at $1.41 per diluted share versus $1.07 per diluted share in the year-earlier quarter and 97 cents per diluted share in the previous quarter.
The macroeconomic conditions continue to be challenging for Unisys. We have a Neutral recommendation on the stock. The stock currently carries a Zacks #1 Rank, which translates into a short-term rating of Strong Buy.