Priceline.com (PCLN) recently announced its intention to price Senior Unsecured Notes in an underwritten public offering. The amount, interest rate, conversion rate and other terms have not yet been decided.
Priceline stated that the transaction proceeds will be used for general corporate purposes, share repurchases, repayment of debt and acquisitions. Deutsche Bank AG, London Branch, The Royal Bank of Scotland plc, Wells Fargo Securities, LLC, Citigroup Global Markets Limited and Goldman, Sachs & Co. will be acting as joint book-running managers for the offering.
Priceline.com is one of the leading online travel companies in the world. In second-quarter 2014, the company generated $690.0 million of cash from operations and spent less than a million on share repurchases.
At quarter-end, Priceline had cash and short-term investments balance of $7.16 billion, up $454.2 million during the quarter. The company had $1.76 billion in long-term debt and $41.3 million in short-term debt, totaling $1.81 billion. The net cash position at quarter-end was $5.36 billion, up $502.4 million.
We believe that Priceline has a strong balance sheet, which will help it to capitalize on investment opportunities and pursue strategic acquisitions, further improving its growth prospects. We believe the Senior Notes offering will lower its cost of capital, thus strengthening the balance sheet and supporting future growth.
Currently, Priceline has a Zacks Rank #3 (Hold). Other better-ranked stocks that are performing well at current levels include Mercadolibre, Inc. (MELI) and World Energy Solutions, Inc. (XWES), carrying a Zacks Rank #1 (Strong Buy), while Callidus Software (CALD), carrying a Zacks Rank #2 (Buy).
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