Flowserve Prices Senior Notes to Boost Liquidity Position - Analyst Blog
In order to reduce its debt level, Flowserve Corp. FLS disclosed the pricing of its 1.250% senior notes worth €500 million. In particular, this fluid motion and control products & services provider has priced these notes at 99.336% of the aggregate principal amount. The offering of the notes, due 2022, is slated to complete by Mar 17, upon fulfillment of the customary closing conditions.
Leading financial institutions like J.P. Morgan Securities plc of J.P. Morgan Chase & Co. JPM and Merrill Lynch International of Bank of America Corporation BAC acted as the joint book running managers for the offering.
Flowserve expects to reap net proceeds of €491.8 million from this latest offering, after deducting related fees & expenses as well as discounts to underwriters. Aiming toward a buoyant financial health, management has decided to use the net proceeds diligently for repaying the current balance on the revolving credit facility. The remaining funds will be used for financing future strategic acquisitions and other corporate needs.
The offering comes as a prudent move, considering the company leveraged its revolving credit facility to finance the recent €298 million buyout of Germany-based engineered vacuum and fluid pumps provider, SIHI Group B.V, in January this year (read more: Flowserve Closes SIHI Buyout, IPD Segment to Gain by 2017).
We believe, Flowserve ’s decision to issue senior notes for reducing long-term debt and ensuring financial flexibility highlights a judicious strategy. Reduction of long-term debt will automatically slash interest expense that will ultimately help drive top-line growth. As of Dec 31, 2014, the company’s cash and cash equivalents stood at $450.3 million, with long-term debt of $1.10 billion.
Flowserve currently has a Zacks Rank #3 (Hold). A better-ranked player in the same sector include Danaher Corp. DHR, holding 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
JPMORGAN CHASE (JPM): Free Stock Analysis Report
DANAHER CORP (DHR): Free Stock Analysis Report
FLOWSERVE CORP (FLS): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
