S&P Ranks Tenneco Loans at BBB- - Analyst Blog
March 09 2012 - 11:38AM
Zacks
The U.S. based financial service company, Standard & Poor
(S&P) Rating Services has assigned a “BBB-’’ issue level rating
on Tenneco Inc.’s (TEN) proposed $700 million of
revolving credit facility and $250 million of term loan A. The
“BBB-’’ rating reflects lowest investment grade by market
participants.
Tenneco intends to refinance the existing credit facilities and
redeem $250 million secured notes at an interest rate of 8.125%
maturing in 2015. The company has decided to use the proceeds of
the $700 million revolving credit facility to finance the
transactions apart from funding related expenses and general
corporate purposes. On the other hand, the company has decided to
utilize the proceeds of term loan A to call and pay off the
company's $250 million senior notes.
In the fourth quarter of 2011, Tenneco’s profit surged 68% year
over year to 53 cents per share from 31 cents per share in the
year-ago quarter, missing the Zacks Consensus Estimate by 5 cents
per share. Total revenue upped 13% year over year to $1.8 billion.
Excluding substrate sales and currency impact, revenues increased
13% year over year to $1.4 billion.
The debt to capital ratio was 96.46% at the end of 2011, flat as
compared to $97.2% at the end of 2010. Cash and cash equivalents
decreased 9% to $214 million as of December 31, 2011 from $233
million as of December 31, 2010.
Pricing pressure from original equipment manufacturers (OEM)
remains a problem for Tenneco. It also faces weak demand for
aftermarket parts compared to original equipments (OE). The
aftermarket has experienced longer replacement cycles due to the
improved quality of OE parts and increases in the average useful
life of automotive parts.
Currently the shares of Tenneco retain a Zacks #3 Rank, which
implies a short-term Hold rating. It competes with the companies
including Meritor, Inc. (MTOR) and Wescast
Industries Inc.
MERITOR INC (MTOR): Free Stock Analysis Report
TENNECO INC (TEN): Free Stock Analysis Report
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