CNH Industrial N.V. CNHI, a premier global manufacturer in the capital goods sector, announced the conclusion of its private note offering of $600 million in aggregate principal amount. The issuing entity is CNH Industrial Capital LLC, a wholly-owned subsidiary of CNH Industrial.
The offering was announced last week and was issued at a price of 99.642% of the principal amount. The notes offer a coupon rate of 3.875% and are scheduled to mature on Jul 16, 2018. After taking into account payment of offering and other related expenses, the net proceeds generated from the issue will come to around $592 million.
The notes represent senior unsecured obligations of CNH Industrial Capital, and will pay interest semi-annually on Jan 15 and Jul 15 every year, beginning Jan 15, 2016. The issue is guaranteed by CNH Industrial Capital America LLC and New Holland Credit Company, LLC, both wholly-owned subsidiaries of CNH Industrial Capital LLC.
The proceeds generated from the issue will be employed to meet the company’s ongoing working capital needs and for general corporate purposes, including the purchase of receivables or other assets. The proceeds may also be used for debt repayment of CNH Industrial Capital LLC as and when it becomes due.
CNH Industrial had $3.1 billion of net industrial debt on its balance sheet as of Mar 31, 2015. In its first-quarter 2015 results, the company reported net interest expense of $106 million, a decrease of 24.8% compared to the prior-year quarter, largely due to lower cost of funding. The current note issuance will increase the company’s debt servicing costs.
CNH Industrial designs, produces, markets, sells, and finances agricultural and construction equipment, trucks, commercial vehicles, buses, and specialty vehicles, engines, transmissions and axles globally.
CNH Industrial presently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector that look promising include Autoliv, Inc. ALV, Commercial Vehicle Group Inc. CVGI and Gentherm Incorporated THRM, each holding a Zacks Rank #2 (Buy).
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