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CF Industries Prices $1.25B Senior Secured Notes Offering

CE KOP IPHS CF

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CF Industries Holdings, Inc. (CF - Free Report) said that its fully-owned subsidiary, CF Industries, Inc. has priced its earlier announced offering of $1.25 billion aggregate principal amount of senior secured notes. The notes comprise $500 million aggregate principal amount of 3.400% senior secured notes due 2021 and $750 million aggregate principal amount of 4.500% senior secured notes due 2026.

The company stated that the senior secured notes due 2021 will be issued at a price of 99.853% of their face value while the notes due 2026 will be issued at a price of 99.385% of their face value.

The closing of the sale of the notes is expected to take place on or around Nov 21, 2016, subject to customary closing conditions. The notes will be guaranteed on a senior secured basis, jointly and severally, by CF Industries and some of its domestic subsidiaries that are borrowers or guarantee obligations under CF Industries’ revolving credit facility.

CF Industries plans to utilize the net proceeds from the offering, along with cash on hand and/or borrowings under its revolving credit facility, to prepay the $1 billion principal amount of its senior notes due 2022, 2025 and 2027 and to pay the associated make-whole amount and related fees and expenses. The company plans to utilize the proceeds for general corporate purposes in case there is an amount which is in excess of amount needed for the senior notes prepayment, including the make-whole amount and related fees and expenses.

CF Industries’ shares closed around 2.5% higher at $27.13 last Thursday.    

CF Industries swung to a loss of $30 million or 13 cents per share in the third quarter of 2016 from a profit of $90 million or 39 cents per share a year ago. However, adjusted earnings were 13 cents per share for the quarter, beating the Zacks Consensus Estimate of 5 cents.

Revenues slipped roughly 27% year over year to $680 million in the quarter on reduced average selling prices across all segments. It missed the Zacks Consensus Estimate of $780 million.

While CF Industries remains on track with its capacity expansion projects and should gain from healthy demand for nitrogen, it continues to see pricing pressure in its nitrogen business. Global capacity expansion continues to exert pressure on urea and other nitrogen fertilizer prices.

CF Industries currently carries a Zacks Rank #5 (Strong Sell).

Other Stocks to Consider

Better-ranked companies in the basic materials space include Innophos Holdings Inc (IPHS - Free Report) , Koppers Holdings Inc. (KOP - Free Report) and Celanese Corporation (CE - Free Report) .

Innophos sports a Zacks Rank #1 (Strong Buy). The company has an expected earnings growth of 51.4% for the current year.

Koppers has an expected earnings growth of around 62.4% for the current year. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese carries a Zacks Rank #2 (Buy) and has an expected earnings growth of around 9.4% for the current year.

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