Chemicals and polymers maker LyondellBasell Industries (LYB) said that its fully-owned unit LYB International Finance B.V. has priced its public offering of $1 billion aggregate principal amount of 4.875% guaranteed notes due 2044. The notes have been fully and unconditionally guaranteed by the company.
The offering, which is subject to customary closing conditions, is expected to close on Feb 28, 2014. LyondellBasell expects to use the proceeds from the offering for general corporate purposes including share repurchases. The company bought back 27.4 million shares last year.
LyondellBasell’s shares rose to touch a new 52-week high of $87.50 yesterday, above its previous high of $87.10. The stock retraced a bit to close the day at $87.42, gaining roughly 1.3%. LyondellBasell’s shares are up around 57% over a year.
LyondellBasell, which has emerged from Chapter 11 bankruptcy in 2010, saw a roughly 89% surge in its profit in fourth quarter of 2013 (reported on Jan 31) as it continued to leverage favorable North American natural gas environment. Earnings from continuing operations of $2.11 per share trounced the Zacks Consensus Estimate of $1.39.
LyondellBasell remains committed to execute its expansion projects to leverage the U.S. natural gas liquids advantage. The company expects its olefins business in North America to continue to gain from strong margins created by cost-advantaged natural gas liquids.
LyondellBasell also sees an improvement in olefins and polyolefins demand in Europe from a seasonally-low fourth-quarter 2013. The company also expects that its refining position will strengthen in 2014.
LyondellBasell restarted its methanol plant at Channelview, TX, during the fourth quarter to gain from low-cost natural gas from shale formations. The facility had been out of operation since 2004 as a result of rising natural gas costs.
The restart of the methanol facility represents the first in a number of U.S. Gulf Coast projects to leverage the natural gas price advantage. This project along LyondellBasell’s other major debottleneck projects (including expansion of ethylene capacity at La Porte) will bring in new capacity at considerably lower cost than building new facilities.
LyondellBasell is a Zacks Rank #2 (Buy) stock.
Other companies in the chemical space worth considering are Methanex Corp. (MEOH), Northern Technologies International Corp. (NTIC) and The Dow Chemical Co. (DOW). While both Methanex and Northern Technologies carry a Zacks Rank #1 (Strong Buy), Dow Chemical holds a Zacks Rank #2 (Buy).
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