This page is temporarily not available. Please check later as it should be available shortly. If you have any questions, please email customer support at firstname.lastname@example.org or call 800-767-3771 ext. 9339.
Recently, Lender Processing Services, Inc. (LPS - Analyst Report) declared the price of its senior notes offering with a principal amount of $600 million. Due in 2023, the senior notes carry an interest rate of 5.75% and will be paid semi-annually.
The company expects the offering to be completed by October 12, 2012, upon the fulfillment of certain customary conditions. Currently, the book-running managers for this notes offering are Wells Fargo Securities, LLC, - a unit of Wells Fargo & Company (WFC - Analyst Report), J.P. Morgan Securities LLC - a part of JPMorgan Chase & Co. (JPM - Analyst Report), Merrill Lynch, Pierce, Fenner & Smith Incorporated – a wing of Bank of America Corporation (BAC - Analyst Report), SunTrust Robinson Humphrey, Inc. – an arm of SunTrust Banks, Inc.(STI - Analyst Report), U.S. Bancorp Investments, Inc. – a part of U.S. Bancorp (USB - Analyst Report) and Goldman, Sachs & Co – an investment division of The Goldman Sachs Group, Inc. (GS - Analyst Report).
The company plans to use the sale proceeds from this offering to purchase senior notes, scheduled to expire on 2016, having a coupon rate of 8.125%. Additionally, it intends to use the proceeds for the repayment of Term B Loans in full, outstanding under its senior credit facilities as well as for all the costs connected to these transactions.
Lender Processing also recently entered into a cash tender offer for the $362 million principal amount outstanding on its 8.125% senior note, which is due to mature in 2016.
The company has a strong balance sheet and cash flow position. Its free cash flow increased 41% year over year to $115.0 million at the end of the second quarter of 2012. Further, the company strengthened its balance sheet by reducing around $54.0 million debt including prepaying the compulsory payments under Term Loan A through the end of 2013. Lender Processing’s cash balance also increased by $35.0 million sequentially to $138.5 million at the end of second quarter 2012.
In the stringent regulatory landscape, the aforementioned offering is expected to further strengthen the company’s balance sheet as well as bring down its cost of capital.
We believe that Lender Processing’s technology-driven end-to-end solutions for the mortgage and real estate industries as well as contract renewals will aid generating modest business growth, going forward. The company also lowered its risk profile by exiting its unprofitable non-core business lines at the beginning of 2012. Last but not the least; management is optimistic on the origination market which is still not fully tapped. Improvement in free cash flow, reduction in debt as well as continued margin expansion enhances the bullish sentiments on the stock.
Lender Processing currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the company’s fundamentals, we also maintain a long-term ‘Outperform’ recommendation on the stock.