Huntsman to Issue Senior Notes

Zacks Equity Research

Chemical company Huntsman Corporation (HUN) said that it plans to issue €200 million (roughly $275 million) of senior notes due 2021 through Huntsman International LLC, its fully-owned subsidiary.

The Utah-based company plans to use the net proceeds from the notes offering to repay a part of the principal amount outstanding under its Term Loan C and pay associated fees and expenses. A portion of the proceeds will also be used for general corporate purposes.

Huntsman, which has annual sales of more than $11 billion, makes differentiated chemicals. Its makes products for an array of industries including chemicals, plastics, automotive, aviation, textiles, paints and coatings, construction, technology, agriculture, health care, appliances and packaging.
 
Huntsman saw its third-quarter 2013 profit (reported on Oct 29) slide 45% year over year to $64 million or 26 cents a share as it had to contend with pricing pressure in its pigment business. The bottom line was also hit by higher expenses which offset a rise in sales.
 
Revenues rose roughly 4% year over year to $2,842 million in the reported quarter. Lower sales across advanced materials and pigments franchises were more than offset by gains in textile effects, performance products and polyurethanes businesses.
 
Huntsman, in Oct 2013, divulged its plans to reposition its European surfactants business in an effort to make it more closely aligned to its targeted markets. The surfactants business is a part of its Performance Products division.

The move underscores Huntsman’s strategy to move away from a number of commoditized surfactant assets and product lines and focus on developing and advancing the remaining differentiated surfactants business in strategic markets.   
 
The restructuring, which is expected to consummate by the end of next year, is likely to affect roughly 250 jobs in Huntsman’s Performance Products European unit over the next 18 months. The company envisions annual EBITDA benefit of around $20 million from the move. The repositioning, however, will not affect Huntsman's surfactants business in other parts of the world as well as other product lines in the Performance Products segment.
 
Huntsman currently carries a short-term (1 to 3 months) Zacks Rank #3 (Hold).

Other companies in the chemical industry worth considering include Asahi Kasei (AHKSY), Johnson Matthey plc. (JMPLY) and BASF SE (BASFY). While Asahi Kasei and Johnson Matthey carry a Zacks Rank #1 (Strong Buy), BASF holds a Zacks Rank #2 (Buy).

Read the Full Research Report on BASFY
Read the Full Research Report on HUN
Read the Full Research Report on AHKSY
Read the Full Research Report on JMPLY


Zacks Investment Research