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Olin (OLN) Announces the Pricing of Senior Notes Due 2029

Zacks Equity Research

Olin Corporation OLN has priced the offering of $750 million total principal amount of senior notes due 2029, which will mature on Aug 1, 2029. The notes will bear an interest rate of 5.625% and will be issued at 100% of par value. The offering is expected to close on Jul 16, 2019, which is subject to customary closing conditions.

Per the company, interest will be paid on a semi-annual basis on the first days of February and August, starting Feb 1, 2020. Olin is expected to employ the net proceeds from the offering for prepaying all of the outstanding term loans under its senior term loan credit facility along with all of the outstanding loans under its receivables financing credit facility. It is likely to use the remaining proceeds for paying expenses and fees as well as funding general corporate purposes.

Shares of Olin have lost 29.3% in the past year compared with the industry’s 36.3% decline.


Recently, the company provided an updated outlook for the second quarter and full year 2019.

Olin expects to record net loss in the range of $15-$22 million in the second quarter and adjusted EBITDA of $200-$210 million. The updated guidance reflects more-than-expected decline in the prices of caustic soda, which fell roughly 3% quarter over quarter. Per the company, chlorine and chlorine derivative sales to titanium dioxide, refrigeration and agricultural customers were lower than expected.

The company stated that the results of the Epoxy business were negatively impacted by $10 million-$15 million. This was mainly caused by lower production in Europe stemming from a utility supplier unplanned outage and persistent customer issues arising from the Intercontinental Terminals Company storage terminal fire in the Houston, TX area. Also, weaker-than-expected demand, especially from Europe affected the Epoxy results.

However, the company believes that results in the second half of 2019 will be stronger despite challenges in the first half of the year. It expects caustic soda prices to improve during the second half. The company projects net income for 2019 between $128 million and $203 million. It anticipates corresponding adjusted EBITDA in the range of $1,075 million-$1,175 million.

Notably, the outlook provided by the company was preliminary and does not reflect transactions or events that may occur in the remainder of 2019.

Zacks Rank & Key Picks

Olin currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Materion Corporation MTRN, Flexible Solutions International Inc FSI and Rio Tinto plc RIO, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Materion has an expected earnings growth rate of 30.3% for 2019. The company’s shares have gained 15.8% in the past year.

Flexible Solutions has projected earnings growth rate of 342.9% for the current year. The company’s shares have surged 160.9% in a year’s time.

Rio Tinto has an estimated earnings growth rate of 38.7% for the current year. Its shares have moved up 12.7% in the past year.

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