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LSB Industries (LXU) to Offer Senior Notes, Completes Exchange

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LSB Industries, Inc. (LXU - Free Report) yesterday announced its intention to offer a $500 million principal amount of senior secured notes maturing in 2028. Concurrently, the company communicated that it completed the previously announced a preferred stock to common stock exchange transaction.

Shares of the company have gained 4.76% yesterday, ending the session at $11.01.

Inside the Headlines

The proposed notes offering will be accomplished in private placements and only suitable purchasers shall participate. LSB Industries’ current subsidiaries along with some of its future domestic subsidiaries (wholly owned) will provide a guarantee to these secured instruments.

Proceeds from the notes offerings will likely be used by LSB Industries to pay from the redemption of $435 million worth of senior secured notes, maturing in 2023. The notes carry a coupon rate of 9.625%. The company might use part of the proceeds from the 2028-notes offering to finance any transaction-related fees and expenses as well as satisfy general corporate purposes.

As regard to the exchange transaction, LSB Industries signed the agreement with Eldridge’s affiliate LSB Funding LLC in July 2021. The agreement required LSB Industries to exchange its redeemable preferred stock (Series E-1 and Series F-1) held by Eldridge with its common stock.

Yesterday, LSB Industries completed the transaction, having exchanged its common stock for $310 million worth of redeemable preferred stock (Series E-1 and Series F-1) held by Eldridge. The exchange price applied was $6.16.

As previously announced, LSB Industries will pay a special dividend at the rate of 0.30 of its common shares to shareholders of record as of Sep 24, 2021. The payment of the special stock dividend will be made on Oct 8, 2021. Post the payment date, LSB Industries’ shares outstanding will be 88.9 million, with 61% owned by Eldridge.

LSB Industries anticipates the exchange transaction to help reduce its cost of capital, enhance financial flexibility and boost growth opportunities.

Zacks Rank, Price Performance and Estimate Trend

LSB Industries currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from healthy demand for products, effective pricing in industrial, mining and agricultural sectors, and efforts to lower the cost of capital. However, high costs of sales are concerning.

In the past three months, the company’s shares have surged 86.6% compared with the industry’s growth of 3.8%.


Zacks Investment ResearchImage Source: Zacks Investment Research


In the past 60 days, the Zacks Consensus Estimate for the company’s bottom line has improved from a loss of $1.12 to a loss of 79 cents for 2021. The same for the third quarter of 2021 improved from a loss of 52 cents to a loss of 28 cents. Earnings estimates for 2022 increased 70.8% to 41 cents in the past couple of months.

Lsb Industries Inc. Price and Consensus


Lsb Industries Inc. Price and Consensus

Lsb Industries Inc. price-consensus-chart | Lsb Industries Inc. Quote

Stocks to Consider

Three better-ranked stocks in the industry are Raven Industries, Inc. , Danaher Corporation (DHR - Free Report) and Carlisle Companies Incorporated (CSL - Free Report) . While Raven currently sports a Zacks Rank #1 (Strong Buy), both Danaher and Carlisle carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these stocks have improved for the current year. Earnings surprise for the last reported quarter was 100.00% for Raven, 20.59% for Danaher and 3.35% for Carlisle.

See More Zacks Research for These Tickers

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