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CF Industries Prices $1.5 Billlion Senior Notes

MS WFC CF GS

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CF Industries, Inc., a subsidiary of CF Industries Holdings, Inc. (CF - Analyst Report), has announced the pricing of senior notes worth $1.5 billion. The offering  comprised  $750 million aggregate principal amount of 3.45% senior notes due 2023 and $750 million aggregate principal amount of 4.95% senior notes due 2043. The notes will be guaranteed by CF Industries Holdings, Inc.

The net proceeds from the issuance of senior notes will be utilized to fund CF Industries’ capacity expansion projects, working capital and for other general corporate purposes, including stock repurchases. Depending on customary closing conditions, the offering is expected to close on May 23, 2013.

Morgan Stanley & Co. LLC and Goldman, Sachs & Co., a unit of Morgan Stanley (MS - Analyst Report) and The Goldman Sachs Group, Inc. (GS - Analyst Report), respectively, are acting as joint book-running managers for the senior notes offering. RBC Capital Markets, LLC and CIBC World Markets Corp. are acting as co-managers for the senior notes offering. BMO Capital Markets Corp., U.S. Bancorp Investments, Inc. and Wells Fargo Securities, LLC, a unit of Wells Fargo & Company (WFC - Analyst Report), are acting as senior co-managers.

CF Industries came out with its first-quarter 2013 results on May 8. The company reported adjusted earnings (excluding one-time items) of $6.03 per share, which were below the year-ago earnings of $6.06 but exceeded the Zacks Consensus Estimate of $6.00. After including one-time items, the company earned $6.47 a share in the quarter, up 16.8% from $5.54 in the year-ago quarter.

Sales were down 12.5% to $1.34 billion in the quarter from $1.53 billion in the prior-year quarter. It also missed the Zacks Consensus Estimate of $1.45 billion. The decrease reflected lower sales volumes in both the Nitrogen and Phosphate divisions and lower average prices for urea and phosphates. Sales also declined due to the impact of a change in the selling price calculation method used for products sold by Canadian Fertilizers Limited (CFL).

CF Industries remains positive regarding second-quarter 2013 based on higher prices for grains which will provide farmers with incentives to plant corn and apply both nitrogen and phosphate. Low domestic and global grain stocks are anticipated to boost plantings for the next several years.

The company expects capital expenditures for its announced capacity expansion projects at Donaldsonville, La., and Port Neal, Iowa, to be in the range of $600-$800 million in 2013. Capital expenditures for the company’s existing facilities are anticipated to be about $450 million.

CF Industries currently retains a short-term Zacks Rank #3 (Hold).
 

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