DuPont's Unit Chemours Completes Financing Transactions - Analyst Blog
DuPont’s DD fully-owned subsidiary – The Chemours Company – has completed notes offering and entered into a credit agreement with a syndicate of banks.
Chemours – a new company created from DuPont’s performance chemicals businesses – closed an offering of its $1,350 million 6.625% senior notes due 2023, $750 million 7.000% senior notes due 2025 and €360 million 6.125% senior notes due 2023. The entity also entered into a credit agreement with a consortium of banks, which provided a 7-year $1.5 billion senior secured Term Loan B facility and a 5-year $1 billion senior secured revolving credit facility.
These financing transactions are in connection with DuPont's earlier announced proposed pro-rata distribution of common shares of Chemours to holders of DuPont's common stock, subject to customary closing conditions.
DuPont, in Dec 2014, announced that the new company created following closure of the pending spinoff of its Performance Chemicals division will be named “The Chemours Company”. Following its separation from DuPont, which is expected in mid-2015, Chemours will be a publicly traded company and a global leader in titanium dioxide (TiO2), fluoroproducts and chemical solutions.
Chemours utilized the proceeds from the financing transactions to fund a distribution of around $3.9 billion to DuPont in recognition of the assets contributed to it by DuPont in anticipation of the spinoff. According to management, support from debt capital markets was critical as Chemours’ launch as an independent company is expected on July 1. Following its separation, the entity is expected to trade as a public company on the NYSE under the ticker symbol “CC”.
DuPont, which is under significant pressure from activist investor Nelson Peltz’s Trian Fund Management, remains focused on executing strategic actions including portfolio optimization, disciplined capital allocation and cost control. The company is spinning off the struggling performance chemicals unit as it is gradually shifting its focus to high growth, less cyclical businesses including agriculture and nutrition.
DuPont is also executing its company-wide redesign actions to support its more focused portfolio of businesses following the spinoff of the performance chemicals business. These initiatives are expected to deliver cost savings through reduction of costs associated with the separation of the unit and productivity improvements across the board. DuPont sees annual savings of around $1 billion from these actions by end-2015.
DuPont is a Zacks Rank #3 (Hold).
Better-ranked stocks in the chemical space include LyondellBasell Industries N.V. LYB, Celanese Corporation CE and Eastman Chemical Co. EMN. While LyondellBasell sports a Zacks Rank #1 (Strong Buy), both Celanese and Eastman Chemical retain a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
DU PONT (EI) DE (DD): Free Stock Analysis Report
EASTMAN CHEM CO (EMN): Free Stock Analysis Report
CELANESE CP-A (CE): Free Stock Analysis Report
LYONDELLBASEL-A (LYB): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
