Offshore oilfield equipment manufacturer FMC Technologies Inc. (FTI) recently announced that it will be offering $800 million of senior unsecured notes. The offering is divided into two parts – $300 million 2.0% senior notes due 2017 and $500 million 3.45% senior notes due 2022.
The company plans to utilize the proceeds for the repayment of outstanding commercial paper and borrowings under its revolving credit facility.
FMC Technologies expects the proceedings to be complete on September 21, 2012, upon fulfillment of customary closing conditions.
The company ended the second quarter of 2012 with long-term borrowings of $1,216.2 million. The debt-to-capital ratio was 43.2% at the quarter end. With the issuance of $800 million of debt, the debt-to-capital ratio will increase to 55.8%.
We also expect interest expenses to increase with the sale of the new notes.
Incorporated in 2000, Houston, Texas-based FMC Technologies Inc. is a leading manufacturer and supplier of technology solutions for the energy industry. The company conducts its operations in three segments: Subsea Technologies, Surface Technologies and Energy Infrastructure.
Order flow and backlog for subsea products and services will continue to be healthy and trend higher. FMC Technologies remains well positioned to receive a large share of big contracts moving forward. We are further encouraged by the company’s recent subsea equipment deals with industry giants like Royal Dutch Shell plc (RDS.A), Petroleo Brasileiro S.A. (PBR), StatoilHydro ASA (STO) and Total SA (TOT).
FMC shares currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
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