Steel Dynamics, Inc. (STLD - Free Report) declared that it completed the sale of $400-million total principal amount of 2.8% notes due 2024 and $600-million total principal amount of 3.45% notes due 2030.
The company plans to use the net proceeds from the notes to redeem and discharge the entire $700 million of its 5.125% senior notes due 2021, per the indenture terms governing the 2021 notes. The net proceeds will also be used for general corporate purposes.
Per management, the transaction is expected to bolster its capital base and liquidity profile.
The issuance of the notes and retirement of the 2021 notes will allow the company to reduce the effective interest rate and broaden the debt maturity profile when completely consummated.
Steel Dynamics also announced the redemption call for the entire $700 million of the 2021 notes. Notably, the redemption date for the 2021 notes is expected to be Jan 10, 2020, and the redemption price for the same is expected to be 100% plus accrued and unpaid interest to but not including the date of redemption.
Shares of Steel Dynamics have gained 8.3% in the past year against the industry’s 8.5% decline.
The company had cash and cash equivalents of around $1,146 million at the end of the third quarter, up 29.6% year over year. Long-term debt was $2,355.2 million, up 0.1% year over year.
Considering domestic steel demand fundamentals, Steel Dynamics is optimistic about North America steel market dynamics in 2020. The company believes that North America steel consumption will experience modest growth. This is likely to be supported by the end of steel inventory destocking and further steel import reductions.
In October, the company had expected current trade actions to have a favorable impact on further lowering unfairly traded steel imports into the United States.
Steel Dynamics is positive about its Sinton, TX-based flat roll steel mill project as well as the related long-term value it will create through its value-added products and geographic diversification.
Steel Dynamics, Inc. Price and Consensus
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are General Moly, Inc (GMO - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
General Moly has an expected earnings growth rate of 12.5% for the current fiscal year. The company’s shares have gained 46.5% in the past year.
Franco-Nevada has a projected earnings growth rate of 45.3% for 2019. The company’s shares have rallied 33.4% in a year.
Agnico Eagle has an estimated earnings growth rate of 167.9% for the current year. Its shares have moved up 51.7% in the past year.
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