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Leucadia Prices $250M Senior Notes

Zacks Equity Research

Second of its kind in a week, Leucadia National Corporation (LUK) announced pricing of $250 million worth of senior unsecured fixed rate notes. The notes, due to expire on Oct 23, 2043, has been offered at 98.781% of the principal amount.

These senior notes carry a coupon rate of 6.625%. Interest will be paid semi-annually on Apr 23 and Oct 23. The first interest installment will commence from Apr 23, 2014. These notes are expected to yield 6.720% on maturity.

The offering is anticipated to contribute roughly $244.8 million, before expenses, to Leucadia. Net proceeds from the issuance are expected to be used by the company for general corporate purposes.

Leucadia’s senior unsecured notes issuance has been rated ‘BBB- (Stable)’ by Fitch Ratings while ratings of ‘Ba2 (Stable)’ and ‘BBB (Stable)’ are expected from Moody's Investors Service  and Standard & Poor's, respectively.

The offering will consummate on Oct 24, 2013.

Prior to this offering, Leucadia had issued $750 million worth of 5.5% Senior Notes due to expire on Oct 18, 2023. Proceeds from the issuance, likely $736.4 million before expenses, are expected to be used by the company for the repayment, repurchase and/or redemption of 8.125% senior notes maturing in 2015 as well as for general corporate purposes.

Exiting the second quarter 2013, long-term debt balance of Leucadia stood at $7,559.5 million, down 2.6% sequentially. Interest paid during the quarter totaled $21.2 million, roughly flat year over year. Increase in debt levels will increase the company’s financial obligations further in the quarters ahead.

Leucadia is engaged in beef processing, manufacturing, gaming entertainment, real estate activities, medical product development operations and various other investment-related activities in the United States. The company has a market capitalization of $10.5 billion.

Others companies to watch out for in the industry are Marubeni Corporation (MARUY) with a Zacks Rank #1 (Strong Buy) while 3M Company (MMM) and Honeywell International Inc. (HON) each come with a Zacks Rank #2 (Buy).

Read the Full Research Report on MMM
Read the Full Research Report on HON
Read the Full Research Report on LUK
Read the Full Research Report on MARUY

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