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Element Solutions (ESI) Closes $800M Senior Notes Offering

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Element Solutions Inc. ESI stated that its earlier-announced private offering of $800 million total principal amount of senior notes due 2028 has been closed. The notes carry an interest rate of 3.875% per year, payable semi-annually in arrears, and will mature on Sep 1, 2028.

The notes are completely and unconditionally guaranteed by some of the company’s existing domestic subsidiaries on a senior-unsecured basis.

Element Solutions also issued a conditional notice of redemption providing for the redemption of the $800 million total principal amount of its 5.875% senior notes due 2025. The company plans to employ the net proceeds from the notes offering along with cash on hand to pay the consideration for redemption plus accrued and outstanding interest on existing notes coupled with fees and expenses associated with the notes offering and the redemption.  

Further, the notes were offered only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 and to non-U.S. residents, pursuant to Regulation S of the Securities Act.

Shares of Element Solutions have moved up 18.5% in a year against the industry’s 8.9% decline.

During second-quarter earnings call, Element Solutions stated that it expects adjusted EBITDA of $80 million in the third quarter of 2020. Moreover, it anticipates to generate free cash flow of more than $185 million in 2020.

The company also noted that it is difficult to predict macroeconomic conditions or operating results at this time due to the impact of the coronavirus outbreak.

Zacks Rank & Key Picks

Element Solutions currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Golden Star Resources Ltd. GSS, Eldorado Gold Corporation EGO and Yamana Gold Inc. AUY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Golden Star Resources has an expected earnings growth rate of 12.5% for 2020. The company’s shares have surged 72.4% in the past year.

Eldorado Gold has an expected earnings growth rate of 2,225% for 2020. Its shares have returned 30.8% in the past year.

Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 81.8% in the past year.

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