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HC2 Holdings Sells 30% Stake in Huawei Marine, To Lower Debt

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HC2 Holdings, Inc. (HCHC - Free Report) announced on May 12 that it completed the divestment of its 30% stake in Huawei Marine Networks Co., Limited. The other party to the transaction was Hengtong Optic-Electric Co Ltd.

The stake sale was originally announced by HC2 Holdings in October 2019. It is worth noting here that the company’s share price increased 0.3% yesterday, closing the trading session at $3.19.

Huawei Marine is a joint venture between HC2 Holdings and Huawei Technologies Co., Ltd. HC2 Holdings had a 49% equity stake in the joint venture prior to the above-mentioned transaction.

Inside the Headlines

As noted, HC2 Holdings accomplished the stake sale through its indirect subsidiary — in which it holds a 73% equity stake. The transaction (stake sale of 30% equity interest) was valued at $85 million.

Notably, HC2 Holdings intends on keeping the rest 19% stake in Huawei Marine with it. This is subject to a put option for a two-year period.

The company intends on using the net proceeds (after deducting transaction fees and taxes) for redemption (in June this year) of 11.5% senior secured notes worth $50 million. It is offering 104.5% of the notes’ principal amount as the redemption price.

With the completion of the redemption, HC2 Holdings’ outstanding balance of 11.5% senior secured notes will decline by $130 million since the beginning of 2020. It anticipates annual savings on interest expenses of $15 million from the reduction in notes outstanding.

The company also noted that strengthening its capital structure, reducing expenses and deleveraging balance sheet remain its priorities in the near future. Also, efforts to innovate and invest in growth opportunities will continue.

Zacks Rank, Estimates and Price Performance

HC2 Holdings currently carries a Zacks Rank #4 (Sell). In the past three months, the company’s shares have fallen 20.6% compared with the industry’s decline of 26.3%.




 

In the past 30 days, the Zacks Consensus Estimate for HC2 Holdings’ loss per share has been unchanged at $1.83 for 2020 and $1.50 for 2021.

HC2 Holdings Inc Price and Consensus

 

HC2 Holdings Inc Price and Consensus

HC2 Holdings Inc price-consensus-chart | HC2 Holdings Inc Quote

Stocks That Warrant a Look

Three better-ranked stocks are Silgan Holdings Inc. (SLGN - Free Report) , Proto Labs, Inc. (PRLB - Free Report) and Graphic Packaging Holding Company (GPK - Free Report) . While Silgan currently sports a Zacks Rank #1 (Strong Buy), both Proto Labs and Graphic Packaging carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 30 days, earnings estimates for the companies improved for the current year. Further, earnings surprise for the last reported quarter was 16.33% for Silgan Holdings, 117.86% for Proto Labs and 24% for Graphic Packaging.

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