Axalta (AXTA) Announces Pricing of Notes Offering Due 2027

Axalta Coating Systems Ltd. AXTA recently announced the pricing of senior notes offering by its two indirect fully-owned subsidiaries, Axalta Coating Systems Dutch Holding B B.V. and Axalta Coating Systems, LLC.

The issuers priced their offering of $500 million in total principal amount of 4.75% senior notes due 2027. The company stated that the notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended and in compliance with Regulation S under the Securities Act for outside the United States. The offering is expected to close on Jun 15, which is subject to customary conditions.

The notes are expected to be fully guaranteed by Axalta and each of its existing restricted subsidiaries, which are subject to certain exceptions. The net proceeds of this offering are expected to be used by the issuers for general corporate purposes as well as to pay associated transaction costs and expenses.

Axalta’s shares have declined 3.9% in the past year against 42.7% rise of the industry.

In first-quarter 2020 earnings call, the company stated that the most severe demand impacts to its business due to coronavirus are likely to occur in April and May. It expects net sales for April and May to decline around 50% on a year-over-year basis.

The company is actively pursuing reduction in fixed costs to offset the impact of volume declines. It is also focused on cash generation for offsetting any decremental impacts stemming from lower volumes. Axalta expects to deliver more than $225 million in cash flow from cost-saving measures undertaken by the company.

Zacks Rank & Key Picks

Axalta currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are The Scotts Miracle-Gro Company SMG, Royal Gold, Inc. RGLD and Franco-Nevada Corporation FNV, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Scotts Miracle-Gro has an expected earnings growth rate of 21.5% for fiscal 2020. The company’s shares have surged 50.2% in the past year.

Royal Gold has an expected earnings growth rate of 67.6% for fiscal 2020. Its shares have returned 34.5% in the past year.

Franco-Nevada has an expected earnings growth rate of 19.2% for 2020. The company’s shares have surged 69.3% in the past year.

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