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Colfax (CFX) to Redeem $700M Worth Senior Notes Due 2024 & 2026

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Colfax Corporation CFX yesterday announced that it intends to redeem $700 million worth of its senior notes. The redemption price has been set higher than the principal amount and the redemption date is fixed at Apr 24, 2021.

It is worth mentioning here that Colfax’s shares gained 1.4% yesterday, with the trading closing at $45.19.

Inside the Headlines

As mentioned, the to-be-redeemed notes include $600 million worth of 6.000% senior notes, with maturity in 2024, and $100 million worth of 6.375% senior notes, with maturity in 2026. The 2024 notes will be redeemed at 103.000% of the principal amount, while the company is ready to pay 106.375% of the principal amount for each of its 2026 notes. Notably, the redemption price in both cases will include interest amount (accrued and unpaid), if applicable.

Post redemption, the company will no longer have any outstanding 6.000% senior notes due 2024, while will still hold $300 million worth of the principal amount of 6.375% senior notes due 2026.

Exiting fourth-quarter 2020, the company’s long-term debt balance was $2,204.2 million, up 0.6% sequentially. Notably, it repaid borrowings under revolving credit facilities of $939 million in 2020. Colfax also raised $860.7 million in cash through revolving credit facilities. The aforementioned redemption will help the company to lower its debt balance.

Important Event This Month

Earlier this month, Colfax communicated about its intention to form two independent companies, one focused on its fabrication technology business and the other on its medical technology. The separation, to be accomplished in a tax-free manner, is anticipated to be beneficial for both businesses.

Completion of the separation is expected in the first quarter of 2022. (For more information please read: Colfax Plans to Split Businesses Into Separate Companies)

Also, Colfax started an offering of 14 million of its common shares to the public. It intends to use the proceeds raised from the offering to pay for offering expenses as well as fund general corporate purposes and working capital needs.

Zacks Rank, Estimate Trend and Price Performance

Colfax has a market capitalization of $5.3 billion and a Zacks Rank #3 (Hold) at present.

The company’s shares have gained 22.4% in the past three months as compared with the industry’s growth of 84.8%.

In the past 60 days, the Zacks Consensus Estimate for its earnings has been increased by 3.5% to $2.09 per share for 2021 and has been raised by 0.4% to $2.43 for 2022. The consensus estimate for the first quarter of 2021 declined 2.5% to 39 cents.

Colfax Corporation Price and Consensus

Colfax Corporation Price and Consensus
Colfax Corporation Price and Consensus

Colfax Corporation price-consensus-chart | Colfax Corporation Quote

Stocks to Consider

Some better-ranked companies in the industry are EnPro Industries, Inc. NPO, Applied Industrial Technologies, Inc. AIT and Chart Industries, Inc. GTLS. While EnPro currently sports a Zacks Rank #1 (Strong Buy), both Applied Industrial and Chart Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these stocks improved for the current year. Further, positive earnings surprise, on average, for the last four quarters was 310.81% for EnPro, 21.92% for Applied Industrial and 30.80% for Chart Industries.

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