The Netherlands based agricultural and construction equipment manufacturer, CNH Global N.V. (CNH) announced the closure of 3.625% senior unsecured notes due 2018, issued at par. The Notes offering is made by CNH Global’s wholly-owned subsidiary, CNH Capital LLC.
This issue was announced less than a week ago. The total returns from the issue of notes are around $594.2 million, after incurring expenses. CNH Global will be using the proceeds from the offering for working capital and corporate purposes, such as, purchase of receivables and other assets. The proceeds from the issue will also be used to repay CNH Capital's debts, whenever required.
The notes carry a semi-annual interest payout policy, which will be paid on Apr 15 and Oct 15 of each year, starting from Oct 15, this year. The interest is assured by two of CNH Global’s subsidiaries, CNH Capital America LLC and New Holland Credit Company LLC.
Exiting the fourth quarter of 2012, CNH Global had cash and cash equivalents of $2.0 billion, whereas the total debt balance stood at $18.1 billion. In 2012, CNH incurred a capital expenditure of $556.0 million. Total interest expense in the year was $675.0 million. We expect the interest expense for CNH Global to increase with the issue of the notes.
In late February this year, board of directors of CNH Global approved the merger of the company with NewCo, a subsidiary of Italy-based Fiat Industrial S.p.A. Subject to the completion of the merger, the shareholders of CNH Global will receive 3.828 shares of NewCo against a share of the company.
CNH Global currently has a Zacks Rank #3 (Hold). Some of the other players in the equipment sector, worth a look are Valmont Industries (VMI), Deere & Company (DE) and Alamo Group Inc. (ALG); each carrying a Zacks Rank #2 (Buy).
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