Industrial gas producer and supplier, Praxair Inc. (PX) recently priced $650 million worth of Notes, offered under the company’s universal shelf registration statement. The offering will consummate on May 7, 2013.
The notes have been issued by Praxair in two tranches. The first lot consists of $475 million worth of notes that are due to expire on Nov 7, 2018. These carry a coupon rate of 1.250% and are expected to yield 1.258% on maturity. The second lot comprises $175 million worth of notes carrying a coupon rate of 3.550% and yield on maturity of 3.774%. These notes are due to expire on Nov 7, 2042.
The offer price for notes due 2018 and 2042 has been fixed at 99.958% and 96.035%, respectively, of principal amount. Interest will be paid semi-annually on May 7 and Nov 7. The first installment falls due on Nov 7, 2013. Praxair intends to use the proceeds from the issuance for repaying debt, share repurchases and for general corporate purposes.
Issuance of notes has been a consistent mode of raising funds from the market for Praxair. If we steal a look into the past few quarters, the company had raised funds from the market amounting to $1,400 million in Feb 2013, $700 million in Nov 2012, $500 million in Aug 2012 and $600 million in Feb 2012 through issuance of notes.
Exiting the first quarter 2013, long-term debt balance of Praxair stood at $7,772.0 million, up 16.3% sequentially. Interest paid during the quarter totaled $40 million, up 8.1% year over year. Rising debt burden will increase the company’s financial obligations all the more in the quarters ahead.
The current Zacks Consensus Estimate for the second quarter of 2013 is $1.49, representing a year-over-year increase of 5.1%. Estimates for years 2013 and 2014 are $5.99 and $6.82, reflecting annual growth of 7.6% and 13.8%, respectively.
Praxair currently has a market capitalization of $33.8 billion and carries a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Shin-Etsu Chemical Co., Ltd. (SHECY), with a Zacks Rank #1 (Strong Buy) while Celanese Corp. (CE) and Compass Minerals International Inc. (CMP) each carries a Zacks Rank #2 (Buy).
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