Element Solutions Inc. ESI entered a purchase agreement to sell $800 million total principal amount of 3.875% senior notes due 2028 at an issue price of $1,000 per $1,000 principal amount in connection with its earlier-announced private offering.
Notably, the offering is slated to close on Aug 18, 2020, subject to customary closing conditions.
The notes will be completely and unconditionally guaranteed by some of the company’s existing domestic subsidiaries on a senior unsecured basis. Moreover, the notes are offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. It is also being offered to non-U.S. residents, pursuant to Regulation S of the Securities Act.
Notably, the company expects gross proceeds from the sale of the notes to be roughly $800 million before deducting estimated fees and expenses. Moreover, it plans to use the net proceeds from the notes offering along with cash on hand to pay the consideration for the redemption plus accrued and outstanding interest on existing notes coupled with fees and expenses associated with the notes offering and the redemption.
Shares of Element Solutions moved up 21.5% in a year against the industry’s 7.4% decline.
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On its second-quarter earnings call, the company noted that it expects adjusted EBITDA of $80 million for the third quarter of 2020. Moreover, it anticipates generating free cash flow of more than $185 million for the year.
Element Solutions also noted that it is difficult to predict macroeconomic conditions or operating results at this time due to the impact of the coronavirus outbreak.
Element Solutions Inc Price and Consensus
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Harmony Gold Mining Company Limited HMY, Equinox Gold Corp. EQX and Royal Gold, Inc. RGLD.
Harmony Gold has a projected earnings growth rate of 264.3% for the current year. The stock has rallied around 116% in a year. It currently has a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Equinox Gold has a projected earnings growth rate of 255.2% for the current year. The company’s shares have gained around 107% in a year. It currently has a Zacks Rank #2.
Royal Gold has an expected earnings growth rate of 62.1% for 2020. The company’s shares have gained 8.7% in the past year.It is presently a Zacks #2 Ranked player.
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