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Middleby (MIDD) Starts Actions to Reframe Capital Structure
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The Middleby Corporation (MIDD - Free Report) announced yesterday that it undertook multiple financial transactions to reshape its capital structure. Also, enhanced financial flexibility from the transactions will ensure continuity in growth investments.
It is worth mentioning here that the company’s shares gained 0.28% yesterday, ending the trading session at $103.16.
Inside the Headline
As noted, Middleby opted to amend its senior credit facility and hence, entered an agreement with other related parties. A brief of the amendments is provided below:
With this, the company’s senior credit facility (secured) will be worth $3.1 billion — comprising of a term loan of $350 million and revolving credit facility (multiple currencies) of $2.75 billion. The secured credit facility’s date of maturity will be Jan 31, 2025.
The threshold leverage ratio will likely be 5.50:1.00. Borrowing costs will likely be the same at pre-amendment level. The agreement also provides for secured net debt leverage ratio of 3.50:1.00. This ratio can reach up to 4.50:1.00 by the end of first-quarter 2021 and to 4.25:1.00 at the end of second-quarter 2021.
Notably, the agreement is conditioned upon the prepayment of $400 million worth of term loan by Middleby.
In addition to the above, the company yesterday announced its intention to offer convertible senior notes worth $550 million. The private offering of notes will be for qualified institutional buyers — defined under the Securities Act of 1933. Also, the initial buyers will likely have the facility to purchase extra $82.5 million notes in 13 days.
The company noted that the senior notes will mature on Sep 1, 2025, and interest payments on them will be done twice annually. Conversion conditions are separate, if the conversion option is exercised before Jun 1, 2025, and on or after Jun 1, 2025. Proceeds from the offering will be used for the prepayment of term loan and satisfy general corporate needs. Also, the company might fund expenses related to capped call transactions with the note offering proceeds.
Notably, the capped call transactions, when implemented, will help Middleby nullify the dilutive impact of notes conversion into shares.
Zacks Rank, Price Performance & Estimate Trend
With a market capitalization of $5.7 billion, Middleby currently carries a Zacks Rank #3 (Hold). Solid product offerings, cost-saving actions, healthy liquidity and supply-chain initiatives might be beneficial for the company in the quarters ahead. However, demand weakness caused by the pandemic, increase in costs and expenses, and huge debts are concerning.
In the past three months, the company’s share price has increased 60.2% compared with the industry’s growth of 24.8%.
In the past 30 days, the Zacks Consensus Estimate for Middleby’s earnings has been raised by 9.2% to $4.14 for 2020 and 1.9% to $5.24 for 2021. Also, the consensus estimate for the third quarter rose 12.7% to 89 cents per share during the same timeframe.
Some better-ranked stocks in the industry are Chart Industries, Inc. (GTLS - Free Report) , Altra Industrial Motion Corp. and Graco Inc. (GGG - Free Report) . While Chart Industries currently sports a Zacks Rank #1 (Strong Buy), both Altra Industrial and Graco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for these companies have improved for the current year. Further, earnings surprise for the last reported quarter was 46.51% for Chart Industries, 76.47% for Altra Industrial and 37.04% for Graco.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Middleby (MIDD) Starts Actions to Reframe Capital Structure
The Middleby Corporation (MIDD - Free Report) announced yesterday that it undertook multiple financial transactions to reshape its capital structure. Also, enhanced financial flexibility from the transactions will ensure continuity in growth investments.
It is worth mentioning here that the company’s shares gained 0.28% yesterday, ending the trading session at $103.16.
Inside the Headline
As noted, Middleby opted to amend its senior credit facility and hence, entered an agreement with other related parties. A brief of the amendments is provided below:
With this, the company’s senior credit facility (secured) will be worth $3.1 billion — comprising of a term loan of $350 million and revolving credit facility (multiple currencies) of $2.75 billion. The secured credit facility’s date of maturity will be Jan 31, 2025.
The threshold leverage ratio will likely be 5.50:1.00. Borrowing costs will likely be the same at pre-amendment level. The agreement also provides for secured net debt leverage ratio of 3.50:1.00. This ratio can reach up to 4.50:1.00 by the end of first-quarter 2021 and to 4.25:1.00 at the end of second-quarter 2021.
Notably, the agreement is conditioned upon the prepayment of $400 million worth of term loan by Middleby.
In addition to the above, the company yesterday announced its intention to offer convertible senior notes worth $550 million. The private offering of notes will be for qualified institutional buyers — defined under the Securities Act of 1933. Also, the initial buyers will likely have the facility to purchase extra $82.5 million notes in 13 days.
The company noted that the senior notes will mature on Sep 1, 2025, and interest payments on them will be done twice annually. Conversion conditions are separate, if the conversion option is exercised before Jun 1, 2025, and on or after Jun 1, 2025. Proceeds from the offering will be used for the prepayment of term loan and satisfy general corporate needs. Also, the company might fund expenses related to capped call transactions with the note offering proceeds.
Notably, the capped call transactions, when implemented, will help Middleby nullify the dilutive impact of notes conversion into shares.
Zacks Rank, Price Performance & Estimate Trend
With a market capitalization of $5.7 billion, Middleby currently carries a Zacks Rank #3 (Hold). Solid product offerings, cost-saving actions, healthy liquidity and supply-chain initiatives might be beneficial for the company in the quarters ahead. However, demand weakness caused by the pandemic, increase in costs and expenses, and huge debts are concerning.
In the past three months, the company’s share price has increased 60.2% compared with the industry’s growth of 24.8%.
In the past 30 days, the Zacks Consensus Estimate for Middleby’s earnings has been raised by 9.2% to $4.14 for 2020 and 1.9% to $5.24 for 2021. Also, the consensus estimate for the third quarter rose 12.7% to 89 cents per share during the same timeframe.
The Middleby Corporation Price and Consensus
The Middleby Corporation price-consensus-chart | The Middleby Corporation Quote
Key Picks
Some better-ranked stocks in the industry are Chart Industries, Inc. (GTLS - Free Report) , Altra Industrial Motion Corp. and Graco Inc. (GGG - Free Report) . While Chart Industries currently sports a Zacks Rank #1 (Strong Buy), both Altra Industrial and Graco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for these companies have improved for the current year. Further, earnings surprise for the last reported quarter was 46.51% for Chart Industries, 76.47% for Altra Industrial and 37.04% for Graco.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>