We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Celanese (CE) Refinances Debt to Extend Maturity & Reduce Costs
Read MoreHide Full Article
Celanese Corporation (CE - Free Report) recently unveiled a series of transactions aimed at extending its debt maturity profile and reducing its overall effective net borrowing rate.
Celanese had intentionally pursued a shorter-term debt maturity strategy when it received financing for the M&M acquisition. This approach aimed to avoid locking in unfavorable spreads on longer-term debt and positioned the company to capitalize on potential refinancing prospects.
Celanese's subsidiary, Celanese US Holdings LLC, on Aug 10, 2023, priced a registered offering of $3 billion aggregate principal amount of notes. These notes are set to mature between 2028 and 2033, with interest rates ranging from 6.35% to 6.7%. The senior unsecured notes are guaranteed by the company and select Celanese domestic subsidiaries and the offering is expected to be closed around Aug 24, 2023.
The proceeds generated from the note offering will be utilized for two key objectives. It will be used to finance the tender offer for up to $1.75 billion total purchase price of CE’s outstanding 5.900% Senior Notes due 2024, 6.050% Senior Notes due 2025 and 3.500% Senior Notes due 2024. Also, the remaining funds will be utilized to retire other outstanding debts, including the full repayment of the three-year term loan credit agreement due in 2025, while also facilitating various essential general corporate initiatives.
Through these refinancing maneuvers, Celanese is set to extend the average maturity of its debt from 3.3 years to 4.6 years. The total value of combined debt maturities in the years 2023, 2024 and 2025 is projected to reduce from $6.4 billion to $3.4 billion.
In a strategic response to currency risk, Celanese has also ventured into cross-currency swaps, effectively converting a portion of its U.S. dollar-denominated notes into euro-denominated and Japanese yen-denominated borrowings at current euro and yen interest rates.
Upon the successful execution of these refinancing endeavors and currency swaps, Celanese is poised to achieve an effective total net borrowing rate of approximately 4.67%, marking a reduction of about 14 basis points.
The earnings estimate for CRS’s current year is pegged at $3.36, indicating year-over-year growth of 194%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 10%. The company’s shares have rallied 57.5% in the past year.
The Zacks Consensus Estimate for PPG’s current-year earnings has been revised 3.5% upward in the past 60 days. PPG beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.3% on average. The company’s shares have risen roughly 2.4% in the past year.
The consensus estimate for FSTR's current year is pegged at 53 cents, indicating year-over-year growth of 112.5%. FSTR beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 134.5%. The company’s shares have rallied 16.2% in the past year.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Celanese (CE) Refinances Debt to Extend Maturity & Reduce Costs
Celanese Corporation (CE - Free Report) recently unveiled a series of transactions aimed at extending its debt maturity profile and reducing its overall effective net borrowing rate.
Celanese had intentionally pursued a shorter-term debt maturity strategy when it received financing for the M&M acquisition. This approach aimed to avoid locking in unfavorable spreads on longer-term debt and positioned the company to capitalize on potential refinancing prospects.
Celanese's subsidiary, Celanese US Holdings LLC, on Aug 10, 2023, priced a registered offering of $3 billion aggregate principal amount of notes. These notes are set to mature between 2028 and 2033, with interest rates ranging from 6.35% to 6.7%. The senior unsecured notes are guaranteed by the company and select Celanese domestic subsidiaries and the offering is expected to be closed around Aug 24, 2023.
The proceeds generated from the note offering will be utilized for two key objectives. It will be used to finance the tender offer for up to $1.75 billion total purchase price of CE’s outstanding 5.900% Senior Notes due 2024, 6.050% Senior Notes due 2025 and 3.500% Senior Notes due 2024. Also, the remaining funds will be utilized to retire other outstanding debts, including the full repayment of the three-year term loan credit agreement due in 2025, while also facilitating various essential general corporate initiatives.
Through these refinancing maneuvers, Celanese is set to extend the average maturity of its debt from 3.3 years to 4.6 years. The total value of combined debt maturities in the years 2023, 2024 and 2025 is projected to reduce from $6.4 billion to $3.4 billion.
In a strategic response to currency risk, Celanese has also ventured into cross-currency swaps, effectively converting a portion of its U.S. dollar-denominated notes into euro-denominated and Japanese yen-denominated borrowings at current euro and yen interest rates.
Upon the successful execution of these refinancing endeavors and currency swaps, Celanese is poised to achieve an effective total net borrowing rate of approximately 4.67%, marking a reduction of about 14 basis points.
Celanese Corporation Price and Consensus
Celanese Corporation price-consensus-chart | Celanese Corporation Quote
Zacks Rank & Key Picks
Celanese currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation (CRS - Free Report) and PPG Industries, Inc. (PPG - Free Report) , both sporting a Zacks Rank #1 (Strong Buy), and L.B. Foster Company (FSTR - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The earnings estimate for CRS’s current year is pegged at $3.36, indicating year-over-year growth of 194%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 10%. The company’s shares have rallied 57.5% in the past year.
The Zacks Consensus Estimate for PPG’s current-year earnings has been revised 3.5% upward in the past 60 days. PPG beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.3% on average. The company’s shares have risen roughly 2.4% in the past year.
The consensus estimate for FSTR's current year is pegged at 53 cents, indicating year-over-year growth of 112.5%. FSTR beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 134.5%. The company’s shares have rallied 16.2% in the past year.