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GrafTech (EAF) Offers Senior Notes, To Use Funds for Loan Payments

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GrafTech International Ltd. (EAF - Free Report) announced the pricing of $500 million worth of private offerings of senior notes. Notably, the offerings will be accomplished by GrafTech Finance Inc. — a wholly-owned subsidiary of the company.

It is worth mentioning here that the company’s shares have gained 1.3% in the past two days, ending the trading session at $9.80 yesterday.

Inside the Headlines

As mentioned, the notes will be considered as GrafTech’s as well as its U.S. subsidiaries’ senior secured obligations. These notes carry a coupon rate of 4.625% and are due to expire in 2028. The offer price is kept the same as the principal amount.

Subject to the fulfillment of customary conditions, the public offering of notes is expected to close on Dec 22, 2020.

GrafTech Finance will use the funds raised from the notes offering for repaying term loans (secured) raised under the available credit agreement. Also, it plans to use part of the funds raised for funding certain fees and expenses.

We believe that the offerings of senior notes will increase the company’s debts and, in turn, might inflate its financial obligations and hurt profitability. However, the repayment of term loans will be a relief.

Exiting the third quarter of 2020, GrafTech’s long-term debts were at $1,564.4 million. Also, its total debt to total capital was 141.6% and times interest earned was 6.7X compared with the industry’s respective figures of 72.9% and 6.X.

Zacks Rank, Estimate Trend and Price Performance

With a market capitalization of $2.7 billion, GrafTech currently carries a Zacks Rank #4 (Sell). Solid product offerings, healthy production capabilities and a focus on strengthening balance sheet are its priorities. However, challenges related to the pandemic are concerning.

In the past three months, the company’s share price has increased 59.6% against the industry’s growth of 38%.


The Zacks Consensus Estimate for its earnings is pegged at $1.54 for 2020 and $1.71 for 2021, reflecting growth of 5.5% and a decline of 6% from the 60-day-ago figures. Also, earnings estimates of 38 cents for the fourth quarter have been raised by 5.6% in the past two months.

GrafTech International Ltd. Price and Consensus


GrafTech International Ltd. Price and Consensus

GrafTech International Ltd. price-consensus-chart | GrafTech International Ltd. Quote

Stocks to Consider

Three better-ranked stocks in the industry are Ampco-Pittsburgh Corporation (AP - Free Report) , The Timken Company (TKR - Free Report) and TriMas Corporation (TRS - Free Report) . All these companies presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 60 days, bottom-line estimates for these companies have improved for the current year. Further, e arnings surprise for the last reported quarter was 16.67% for Ampco-Pittsburgh, 24.18% for Timken and 10.26% for TriMas.

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