Meritor Sets Prices for Notes

Zacks

Meritor Inc. (MTOR) announced the pricing of senior unsecured notes of $275 million due to mature on Jun 25, 2021 and carrying interest of 6-3/4%. The sale of the notes is expected to close on May 31, 2013, subject to customary closing conditions.

The proceeds from this offering will be utilized to buyback all or part of the company’s 8-1/8% notes due 2015, which was previously announced in the cash tender offer and consent solicitation and for general corporate purposes. Citigroup, JP Morgan, BofA Merrill Lynch, RBS and UBS Investment Bank will act as the joint book-running managers for the offering.

Headquartered in Troy, Mich., Meritor is a global automotive parts manufacturer and supplier to various customers in North America, Europe and other parts of the world. The company operates manufacturing facilities in North America, South America, Europe and Asia-Pacific. Currently, shares of the company retain a Zacks Rank #3 (Hold).

Meritor reported a significant fall in adjusted income to $6.0 million or 6 cents per share in the second quarter of fiscal 2013 compared with $32.0 million or 33 cents in the year-ago quarter. However, earnings per share surpassed the Zacks Consensus Estimate by 5 cents.

Revenues went down 21.7% to $908.0 million, missing the Zacks Consensus Estimate of $934.0 million. The decline in revenues was due to lower sales volumes in global markets excluding South America.

Some stocks that are performing well in the industry include Tower International, Inc. (TOWR), Federal-Mogul Corp. (FDML) and Visteon Corp. (VC). All these companies carry a Zacks Rank #1 (Strong Buy).
 

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