EnPro Industries (NPO) recently announced that roughly $51.3 million worth of its 3.9375% Convertible Senior Debentures due 2015 has been validly tendered till the expiration of the offer on Sep 12. This represented nearly 68.6% of the $74.78 million tender offer for debentures, announced by the company on Aug 11.
Each $1000 worth debentures were priced at $2,048.96, reflecting the product of volume-weighted average price (VWAP) of $67.4542 with 29.5972 and a cash amount of $52.50. In addition to the purchase price, EnPro Industries will be paying accrued and unpaid interest on these debentures.
EnPro Industries will finance the tender offer through funds raised from its senior secured revolving credit facility. Few days prior, the company offered $300 million of Senior Notes due 2022 to qualified institutional buyers and non-U.S. persons through offshore transactions. A portion of the net proceeds from this offering will be utilized to repay debts under the revolving credit facility.
While the company will be reducing its debt balance through the debentures tender offer on one hand, the senior notes offering will be enhancing it on the other. Exiting second-quarter 2014, EnPro Industries had long-term debt balance of $49.5 million and cash and cash equivalents of $64.9 million. Interest expense stood at $10.4 million. Any further increase in debt level will worsen the company’s financial burden and thus, prove detrimental to earnings growth.
The Zacks Consensus Estimate for EnPro Industries is pegged at $2.20 for 2014 and $2.88 for 2015, representing year-over-year decline of 8% and growth of 31.1% respectively.
With a market capitalization of $1.6 billion, EnPro Industries currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Metso Corporation (MXCYY), IDEX Corporation (IEX) and Middleby Corp. (MIDD). While Metso Corporation sports a Zacks Rank #1 (Strong Buy), both IDEX Corporation and Middleby Corp. hold a Zacks Rank #2 (Buy).
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