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Terex Shares Gain 4% on Completion of New Credit Facility

Zacks Equity Research

Terex Corp. (TEX) has refinanced its existing senior secured credit facility with a new $1.1 billion senior secured credit facility on Aug 13. The shares of this global equipment manufacturer gained over 4% since the announcement and closed at $37.48 on Aug 19.

The new credit facility includes a revolving line of credit of $600 million, a $230 million term loan and a €200 million term loan (around $267 million) and increases the size of Terex’s revolving line of credit from $500 million to $600 million.

In addition, the new facility extends the maturity date for the revolving line of credit from 2016 to 2019. The maturity of the term loans provided under the new credit facility has also been extended to 2021 from 2017.

Further, the new facility will lower Terex’s borrowing rates by about 300 basis points. It will also help in enhancing operating flexibility and financial efficiency.

Terex reported a decline in cash and cash equivalents to $364 million in second-quarter 2014 compared with 2013-end. The company repurchased shares worth about $21 million under its previously authorized share repurchase program during the quarter.

Terex reiterated its 2014 earnings per share guidance in the band of $2.50–$2.80. The company however trimmed the upper end of its previous sales guidance range to $7.3–$7.5 billion. The company expects continued strength in the AWP (Aerial Work Platforms), Cranes and MHPS (Material Handling & Port Solutions) segments to drive growth in the near term.

The company will benefit from recovery in the construction sector. While weaker end-market, a lower anticipated share count and continued market uncertainty remain headwinds.

Westport, CT-based Terex is a global equipment manufacturer, catering to the construction, infrastructure and surface mining industries. The company’s manufacturing facilities are located in the U.S., Canada, Europe, Australia, Asia and South America. It also offers a complete line of financial products and services to assist in the acquisition of equipment through Terex Financial Services.

Terex currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include ACCO Brands Corporation (ACCO), AO Smith Corp. (AOS) and ARC Document Solutions, Inc. (ARC). All these stocks carry a Zacks Rank #2 (Buy).

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