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LSB Industries (LXU) Prices Notes, To Use Funds for Redemption

LSB Industries (LXU) prices $500 million worth of senior secured notes offering. The funds will be used for the redemption of $435 million of 2023 not...

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This story originally appeared on Zacks

LSB Industries, Inc. LXU yesterday announced the pricing of its $500 million principal amount of senior secured notes offering. Subject to the fulfillment of closing conditions, the company anticipates completing the transaction on Oct 14, 2021.



It communicated its intention for the offering on Sep 27.



Shares of the company have declined 3.74% yesterday, ending the session at $10.04.

- Zacks

Inside the Headlines

The notes to be offered have been priced at 100% of the face value. The notes carry a coupon rate of 6.250% and are set to mature on Oct 15, 2028. The company will accomplish the offering in private placements, with only suitable purchasers participating.



LSB Industries’ current subsidiaries along with some of its future domestic subsidiaries (wholly-owned) will provide a guarantee to the secured instruments.



Proceeds from the notes offerings will likely be used by LSB Industries to pay for the redemption of $435 million worth of senior secured notes, maturing in 2023. The notes carry a coupon rate of 9.625%. The company might use part of the proceeds from the 2028 notes offering to finance any transaction-related fees and expenses as well as satisfy general corporate purposes.



In relation to the above-mentioned redemption, LSB Industries noted that a notice of redemption (conditional) has been extended. The redemption price for notes is the summation of 103.609% of the principal amount and interest (accrued and unpaid). The notes redemption is dependent on the completion of the 2028 notes offering, the expected date being Oct 29, 2021.



We believe that the offerings of senior notes will increase the company’s debts and, in turn, might inflate its financial obligations and hurt profitability. However, repurchasing notes will be a relief. Exiting the second quarter of 2021, LSB Industries’ long-term debts were $461.5 million.

Zacks Rank, Price Performance and Estimate Trend

The company currently carries a Zacks Rank #3 (Hold). It is poised to benefit from healthy demand for products, effective pricing in industrial, mining and agricultural sectors, and efforts to lower the cost of capital. However, high costs of sales are concerning.



In the past three months, the company’s shares have surged 64.5% compared with the industry’s growth of 1.1%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

In the past 60 days, the Zacks Consensus Estimate for the company’s bottom line has improved from a loss of 83 cents to a loss of 79 cents for 2021. The same for the third quarter of 2021 has become wider from a loss of 26 cents to a loss of 28 cents. Earnings estimates for 2022 increased 32.3% to 41 cents in the past couple of months.

Lsb Industries Inc. Price and Consensus

 

Lsb Industries Inc. Price and Consensus

Lsb Industries Inc. price-consensus-chart | Lsb Industries Inc. Quote

Stocks to Consider

Three better-ranked stocks in the industry are Raven Industries, Inc. RAVN, Danaher Corporation DHR and Carlisle Companies Incorporated CSL. While Raven currently sports a Zacks Rank #1 (Strong Buy), both Danaher and Carlisle carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.



In the past 60 days, earnings estimates for these stocks have improved for the current year. Earnings surprise for the last reported quarter was 100.00% for Raven, 20.59% for Danaher and 3.35% for Carlisle.



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