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Palo Alto (PANW) Plans to Borrow $1.75B Through Senior Notes
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Palo Alto Networks (PANW - Free Report) recently announced plans of its public offering of $1.75 billion aggregate principal amount of senior notes. The notes, slated for maturity in 2025, would be offered in a private placement to qualified institutional buyers. The company will also grant initial buyers an option to purchase an additional $250 million worth of notes, in case of over subscriptions.
Palo Alto also noted that the interests accrued on the aforementioned senior notes would be payable semi-annually. However, the company stated that the final terms of the notes, including initial conversion rate, interest rates and other terms, shall be determined through negotiations with the initial buyers.
The company intends to use the net proceeds from this offering for general corporate purposes, including meeting the working capital requirements, acquisitions, capital expenditure, strategic transactions and repurchase of common stocks. Additionally, Palo Alto might use the proceeds to repay at maturity or repurchase its outstanding 0.75% Convertible Senior Notes due 2023 of worth $1.7 billion.
Offering to Boost Palo Alto’s Financial Flexibility
Borrowing costs continue to be low, enabling companies to obtain easy financing. With the U.S. treasuries offering low rates, corporate bonds and borrowings from banks are now witnessing high demand.
We believe the offering will boost the company’s financial flexibility and help meet its financial obligations in an efficient way. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and reward higher returns to stockholders.
At the end of fiscal third-quarter 2020, Palo Alto’s cash and short-term investments totaled $2.04 billion compared with the $3.13 billion witnessed at the end of the prior quarter. The reduction was mainly due to the company’s $1 billion worth of share repurchases.
Despite the reductions in cash and short-term investments, the company still has net cash of more than $200 million. The company ended the fiscal third quarter with a long-term debt balance of $1.82 billion.
In addition, Palo Alto continues to generate strong cash flows, which further strengthen its liquidity position. During the recently-reported quarter, this Zacks Rank #3 (Hold) company generated operating cash flow of $170 million, while for the first three quarters the figure comes in at $702 million.
Palo Alto’s latest senior notes offering and sizeable liquidity position amid the coronavirus-led economic and business uncertainties bodes well. In the wake of the pandemic, companies with improved liquidity can sail through these volatile times and Palo Alto ensured that by enhancing the same.
Earlier this month, Agilent Technologies, Inc. (A - Free Report) issued $500 million worth of 2.1% senior notes due June 2030. Last month, MGM Resorts International (MGM - Free Report) borrowed $750 million through offering 6.75% senior notes due 2025. In April, Spirit Realty Capital, Inc. fortified its balance-sheet strength by closing a new $200-million unsecured term loan facility.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Palo Alto (PANW) Plans to Borrow $1.75B Through Senior Notes
Palo Alto Networks (PANW - Free Report) recently announced plans of its public offering of $1.75 billion aggregate principal amount of senior notes. The notes, slated for maturity in 2025, would be offered in a private placement to qualified institutional buyers. The company will also grant initial buyers an option to purchase an additional $250 million worth of notes, in case of over subscriptions.
Palo Alto also noted that the interests accrued on the aforementioned senior notes would be payable semi-annually. However, the company stated that the final terms of the notes, including initial conversion rate, interest rates and other terms, shall be determined through negotiations with the initial buyers.
The company intends to use the net proceeds from this offering for general corporate purposes, including meeting the working capital requirements, acquisitions, capital expenditure, strategic transactions and repurchase of common stocks. Additionally, Palo Alto might use the proceeds to repay at maturity or repurchase its outstanding 0.75% Convertible Senior Notes due 2023 of worth $1.7 billion.
Palo Alto Networks, Inc. Price
Palo Alto Networks, Inc. price | Palo Alto Networks, Inc. Quote
Offering to Boost Palo Alto’s Financial Flexibility
Borrowing costs continue to be low, enabling companies to obtain easy financing. With the U.S. treasuries offering low rates, corporate bonds and borrowings from banks are now witnessing high demand.
We believe the offering will boost the company’s financial flexibility and help meet its financial obligations in an efficient way. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and reward higher returns to stockholders.
At the end of fiscal third-quarter 2020, Palo Alto’s cash and short-term investments totaled $2.04 billion compared with the $3.13 billion witnessed at the end of the prior quarter. The reduction was mainly due to the company’s $1 billion worth of share repurchases.
Despite the reductions in cash and short-term investments, the company still has net cash of more than $200 million. The company ended the fiscal third quarter with a long-term debt balance of $1.82 billion.
In addition, Palo Alto continues to generate strong cash flows, which further strengthen its liquidity position. During the recently-reported quarter, this Zacks Rank #3 (Hold) company generated operating cash flow of $170 million, while for the first three quarters the figure comes in at $702 million.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Companies Enhancing Liquidity Amid Coronavirus Crisis
Palo Alto’s latest senior notes offering and sizeable liquidity position amid the coronavirus-led economic and business uncertainties bodes well. In the wake of the pandemic, companies with improved liquidity can sail through these volatile times and Palo Alto ensured that by enhancing the same.
Earlier this month, Agilent Technologies, Inc. (A - Free Report) issued $500 million worth of 2.1% senior notes due June 2030. Last month, MGM Resorts International (MGM - Free Report) borrowed $750 million through offering 6.75% senior notes due 2025. In April, Spirit Realty Capital, Inc. fortified its balance-sheet strength by closing a new $200-million unsecured term loan facility.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>