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Scotts Miracle-Gro Begins Exchange of Senior Notes Due 2029

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The Scotts Miracle-Gro Company SMG has started a registered exchange offer to exchange all and any of its $450 million total principal amount of 4.5% senior notes due 2029 (referred to as original notes). The notes were issued through a private placement on Oct 22, 2019 for an equal principal amount of its 4.5% senior notes due 2029, which have been registered under the Securities Act of 1933 as amended (referred to as the exchange notes).

Scotts Miracle-Gro stated that the exchange offer will meet its obligations under a registration rights agreement entered on Oct 22, 2019, related to the issuance of the original notes. Notably, the exchange does not mark a new financing transaction and the company will not receive any additional proceeds from the exchange offer.

Moreover, the terms of the original notes and exchange notes are substantially identical except some transfer restrictions, additional interest provisions and registration rights are not applicable to the exchange notes. The original notes that are not exchanged will continue to be subject to prevailing transfer restrictions. The company will not have the obligation to provide for the registration of those notes under the Securities Act of 1933.

Unless extended by the company, the exchange offer is slated to expire on Feb 10, 2020. The tenders of the original notes must be validated at or prior to the time of expiry. They may also be withdrawn at any time prior to the expiration time.

Shares of Scotts Miracle-Gro have rallied 58.2% in the past year against the industry’s 11.5% decline.

In November 2019, the company stated that it expects company-wide sales growth in the range of 4-6% for fiscal 2020. Moreover, it projects Hawthorne’s sales to expand 12-15% and U.S. Consumer sales to rise 1-3%.

Adjusted earnings per share for fiscal 2020 are expected to in the range $4.95-$5.15. Free cash flow is expected to be $300 million.   

Zacks Rank & Key Picks

Scotts Miracle-Gro currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp DQ, Pan American Silver Corp (PAAS - Free Report) and Commercial Metals Company CMC, 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 315.4% for 2020. The company’s shares have skyrocketed 117.4% over a year.

Pan American Silver has an estimated earnings growth rate of 46.3% for 2020. Its shares have returned 50.9% in the past year.   

Commercial Metals has an expected earnings growth rate of 17.3% for fiscal 2020. The company’s shares have rallied 42.6% in the past year.

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