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Unisys Corporation (UIS - Analyst Report) recently completed the previously announced redemption of 12.5% senior notes worth $84.5 million due 2016.

Earlier on July 25, 2012, the company announced that it will redeem $84.5 million of its 12.5% senior notes due January 2016. However, Unisys expects to incur a charge of approximately $6.4 million in the third quarter of 2012 related to this redemption. The debt reduction will result in an approximate $10 million decline in annual interest expense.

Additionally, Unisys intends to redeem $26,097,000 of the 12.5% senior notes that remain outstanding. These remaining notes will be redeemed at a price of 106.250% of their principal amount. The redemption will be completed on September 24, 2012.

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. 

Unisys is consistently taking steps to reduce its debt, and targets a debt of $85 million by 2013 end. In 2011, Unisys reduced its debt by 56% or $464 million year over year to $360 million.

Unisys has also called for redemption of all $183,106,000 of its 12 3/4% senior secured notes due 2014. This redemption is expected to be completed on September 20, 2012.

These redemptions will result in an aggregate charge of approximately $23 million in the third quarter of 2012,

Last week, Unisys completed its previously announced offering of $210,000,000 of senior notes.

Management intends to use 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.

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.

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