Huntsman Corporation HUN successfully completed its secondary public offering of Venator, receiving net proceeds of roughly $471 million. The company will use the proceeds along with cash in hand to fully repay the remaining $511 million on its Term Loan B due 2023.
Notably, Huntsman will not have any senior secured term loans remaining outstanding under its senior credit facilities. The company’s annual cash interest expense is estimated to reduce by roughly $20 million, incremental to the previously reported annualized interest savings achieved this year of roughly $70 million resulting from prior debt repayments.
Huntsman presently holds roughly 55% interest in Venator, which will come down to 52% in the event the underwriters exercise their option to sell up to an additional roughly 3.3 million shares within 30 days. The company plans to continue monetizing its remaining shares of Venator in an orderly manner, subject to existing lock-up agreements.
According to Huntsman, the monetization of Venator together with free cash flow alone will have repaid debt of roughly $2.1 billion in this year and in excess of $2.6 billion since start of 2016. It remains focused on generating free cash flow of $400-$600 million per year and is yet to monetize the balance interest in Venator of roughly 55%.
Shares of Huntsman have moved up 12.3% over the past three months, outperforming the industry’s 10.7% growth.
Huntsman recorded a net income of $179 million or 60 cents per share in third-quarter 2017, up from $64 million or 23 cents it earned a year ago. Barring one-time items, adjusted earnings per share were 67 cents for the quarter, which topped the Zacks Consensus Estimate of 50 cents.
Huntsman, during third-quarter earnings call, said that despite the termination of its merger of equals deal with Clariant, the company’s business continues to improve across the board. The company remains focused on expanding its margins, generating strong free cash flow and growing its downstream differentiated and specialty businesses.
Huntsman Corporation Price and Consensus
Huntsman Corporation Price and Consensus | Huntsman Corporation Quote
Zacks Rank & Other Stocks to Consider
Huntsman currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the basic materials space are Westlake Chemical Corporation WLK, Daqo New Energy Corp. DQ and Kronos Worldwide Inc. KRO. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Westlake Chemical has an expected long-term earnings growth rate of 10.6%. Its shares have moved up 74.5% year to date.
Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have surged a whopping 145.4% year to date.
Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have rallied 103.5% year to date.
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