Ashland Global Holdings Inc. (ASH - Free Report) has priced the earlier announced offering of €500 million (nearly $560 million) total principal amount of 2% senior notes due 2028. The offering will be made by its indirect, fully-owned subsidiary, Ashland Services B.V. The notes will be treated as senior unsecured obligations of Ashland Services. Subject to customary closing conditions, the company expects the offering to close on January 23, 2020.
Initially, the notes will be guaranteed by each of Ashland and Ashland LLC, a fully-owned subsidiary of Ashland, on an unsecured basis.
The company plans to employ the net proceeds along with other funds of Ashland LLC or its subsidiaries for purchasing a portion of Ashland LLC’s outstanding 4.75% senior notes due 2022 with total purchase price of up to $575 million. The company will also purchase Hercules LLC’s outstanding 6.6% debentures due 2027 along with Hercules LLC’s outstanding 6.5% junior subordinated debentures due 2029 and Ashland LLC’s outstanding 6.875% senior notes due 2043. These collectively have a total purchase price of up to $250 million.
Moreover, the notes are offered to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933. It will also be offered to non-U.S. persons living outside the United States pursuant to Regulation S of the Securities Act.
Shares of Ashland have inched up 0.6% in the past year compared with the industry’s 11.8% growth.
In November 2019, Ashland stated that it expects demand dynamics in first-quarter fiscal 2020 to be similar to that in fiscal fourth quarter. The company expects limited improvement in Oral Care and Pharmachem businesses in the near term. Pricing and raw material price movements are expected to stay balanced. Moreover, the temporary shutdown of the Nanjing plant is expected to affect the company’s performance in fiscal first quarter.
Ashland has completed its cost-reduction program. The company reduced costs by $115 million on a run-rate basis as of Sep 30, 2019. It envisions the carryover impact from the program in fiscal 2020 to be nearly $25 million of selling, general and administrative cost savings.
Zacks Rank & Key Picks
Ashland currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the basic materials space are Daqo New Energy Corp (DQ - Free Report) , Pan American Silver Corp (PAAS - Free Report) and Commercial Metals Company (CMC - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Daqo New Energy has projected earnings growth rate of 294.7% for 2020. The company’s shares have skyrocketed 107.2% in the past year.
Pan American Silver has an estimated earnings growth rate of 38.1% for 2020. Its shares have returned 47% in the past year.
Commercial Metals has an expected earnings growth rate of 18.3% for fiscal 2020. The company’s shares have rallied 41.9% in the past year.
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