Nuplex may replace some bank debt with first issue of bonds in US private placement market
Nuplex Industries, which cut its bank debt by a third in August only to increase it again to fund a European acquisition, may convert some of the debt into bonds sold in the US.
The specialty chemicals maker, which scraped through the global financial crisis by selling discounted shares, now has a strong balance sheet, with gearing at just 11.7 percent. Gearing will more than double to 27 percent with the 75 million euro acquisition of Bayer MaterialScience’s Viverso unit in Germany.
As a result, bank facilities were increased to A$300 million, from the A$200 million level agreed in August.
“We will explore options to convert some of this to 7-10-year debt via the US private placement market,” chairman Rob Aitken told shareholders at their annual meeting in Auckland.
“Our balance sheet is strong and we are committed to ensuring that our gearing levels do not exceed those levels which are appropriate for an industrial company such as ourselves,” he said.
A foray into the US private placement market would be a first for Nuplex, which has $52.6 million of September 2012 bonds carrying a coupon of 9.3 percent that trade on the NZDX market.
The US private placement market “has really evolved in the past three-to-five years,” investors relations manager Josie Ashton told BusinessDesk. The market is increasingly being used by corporate in this part of the world, she said. The company didn’t have a deadline for such a placement, given current uncertainties in global financial markets.
Among recent sales in the US private placement market, liquor company Pernod Ricard sold US$1.5 billion of 10-year notes at 230 basis points over Treasuries, or about 4.3 percent at today’s yield. Pernod has an investment grade credit rating.
Shares of Nuplex fell 1.1 percent to $2.57 and are down 26 percent this year. The stock is rated ‘outperform’ based on six recommendations compiled by Reuters, with a price target of $3.09.
The acquisition of Viverso and earlier purchase of Acquos’s Masterbatch business would lift earnings by about 10 percent in 2012, the company reiterated today. Excluding the acquisitions, EBITDA would be little changed from last year’s $130.0 million.
At the AGM today, shareholders re-elected Peter Springford to the board and voted for Jeremy Maycock as a director.
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