New to Zacks? Get started here.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.
If you wish to go to ZacksTrade, click
OK. If you do not, click Cancel.
Back to top
Coinstar Inc. has priced the previously declared private offering. The $350 million senior notes with maturity scheduled in 2019 will carry an interest rate of 6%.
These have been priced at 100% of the principal amount. The proceeds from the issuance will be deployed for general corporate purposes which could possibly include expenses like maintenance or repayment of outstanding debt, acquisitions or other investments.
Coinstar is expected to close the transaction on Mar 12, 2013. The new issuance will require the company to pay interests half-yearly.
As of Dec 31, 2012, the debt-to-capital ratio for Coinstar was 0.39x which represented an improvement of 3 percentage points from 0.42x at 2011 end. With the issuance of the $350 million debt, the debt-to-capital ratio is expected to increase further 17 percentage points to 0.56x. Nevertheless, the debt-to capital ratio is better when compared to that of another industry major, H&R Block Inc. ( HRB - Analyst Report) with a debt-to-capital ratio of 0.68x (as of Oct 31, 2012).
The new issuance would require Coinstar to pay an annual interest of $21 million. Nevertheless, the company’s solid operational performance generates enough funds to service the debt uninterruptedly. Its interest expense in 2012 reduced 34.3% year over year to $15.6 million which is expected to increase with the issuance of the debt.
Last January one of its peers, Netflix Inc. ( NFLX - Analyst Report) announced an offer of senior notes worth $400 million with maturity scheduled in 2021. Out of the proceeds from the issuance, $225 million will be deployed to pay for its outstanding 8.50% senior notes scheduled to mature in 2017. The remaining proceeds will be utilized to pay for general corporate purposes which include capital expenditure, investment, working capital and potential acquisitions and strategic transactions.
Coinstar carries a Zacks Rank #3 (Hold). Online retailer
Priceline.com Inc. ( PCLN - Analyst Report) carries a favorable Zacks Rank #2 (Buy) and is worth noting.