GrafTech (EAF) offers senior notes to use funds for loan repayments

GrafTech International Ltd. EAF announced the price of $ 500 million of private senior ticket offerings. In particular, the offers will be carried out by GrafTech Finance Inc. – a wholly owned subsidiary of the company.

It’s worth mentioning here that the company’s shares have gained 1.3% in the past two days, closing the trading session at $ 9.80 yesterday.

In the headlines

As mentioned, the Notes will be considered senior secured obligations of GrafTech as well as its US subsidiaries. These bonds carry a coupon of 4.625% and expire in 2028. The offer price remains the same as the principal amount.

Subject to the fulfillment of the usual conditions, the public bond offer should close on December 22, 2020.

GrafTech Finance will use the funds raised through the Note Offer to repay term loans (secured) raised under the available credit agreement. In addition, he plans to use part of the funds raised to finance certain costs and expenses.

We believe that the senior note offerings will increase the company’s indebtedness and, in turn, could inflate its financial obligations and hurt profitability. However, the repayment of term loans will be a relief.

At the end of the third quarter of 2020, GrafTech’s long-term debts amounted to $ 1,564.4 million. In addition, its total debt to total capital was 141.6% and the number of interest earned was 6.7 times the industry’s respective figures of 72.9% and 6.0x.

Zacks Ranking, Trend Estimation and Price Performance

With a market capitalization of $ 2.7 billion, GrafTech currently holds a Zacks Rank # 4 (Sell). Strong product offerings, healthy production capacities and a focus on strengthening the balance sheet are its priorities. However, the challenges associated with the pandemic are of concern.

Over the past three months, the company’s share price has risen 59.6% compared to 38% growth for the industry.

Zacks’ consensus estimate for its earnings is set at $ 1.54 for 2020 and $ 1.71 for 2021, reflecting 5.5% growth and 6% decline from figures from a year ago. 60 days. In addition, earnings estimates of 38 cents for the fourth quarter have been raised 5.6% in the past two months.

GrafTech International Ltd. Price and consensus

Price and consensus of GrafTech International Ltd.

GrafTech International Ltd. Price and consensus

GrafTech International Ltd. price-consensus-chart | Quote GrafTech International Ltd.

Actions to consider

Three best-ranked stocks in the industry are Ampco-Pittsburgh Corporation AP, The Timken Company TKR and TriMas Corporation TRS. All of these companies currently carry a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.

Over the past 60 days, earnings estimates for these companies have improved for the current year. In addition, the earnings surprise for the last reported quarter was 16.67% for Ampco-Pittsburgh, 24.18% for Timken and 10.26% for TriMas.

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Perry Perrie

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