) recently commenced an offering of senior unsecured notes worth
$600.0 million in two parts. Arrow filed for registration with
the U.S. Securities and Exchange Commission. Merrill Lynch and
J.P. Morgan Securities LLC will be acting as administrative
agents, along with certain other lenders.
The first part of the notes offering will raise $300.0 million,
carrying an interest rate of 3.0%. The notes will mature on Mar
1, 2018. The second part of senior notes worth $300.0 million
carries an interest rate of 4.5%. These notes will mature in
The raised amount will enable Arrow to pay back its notes
scheduled in Jul 2013. The notes carry an interest of 6.875%.
Also, the fund will help the company to increase fund
availability, finance its continuing working capital
requirements, capital expenditure and also fund potential
In a separate development, Arrow announced to repay its
outstanding 6.875% senior notes scheduled in Mar 2013. The
redemption price will consist of a premium and any accrued or
unpaid interest due till the day before maturity date.
As of Dec 31, 2012, the company had 6.875% senior notes worth
$335.4 million. Following the recent issuance, the senior notes
balance will go up by an additional $600.0 million. But the
consequent repayment of senior notes issued earlier will
neutralize the debt to some extent.
Arrow exited the fourth quarter of 2012 with $409.7 million in
cash and cash equivalents, up from $358.5 million reported in the
previous quarter. Cash generated from operations was $187.8
million compared with $176.3 million generated in the prior
quarter. This indicates good liquidity position of the company,
which can boost lender confidence.
Overall, Arrow's performance was decent in the second quarter
with the bottom line surpassing the Zacks Consensus Estimate.
Like the previous quarter, revenues witnessed a year-over-year
decline, but the rate of decline moderated. First-quarter
guidance was disappointing reflecting macro concerns.
However, the company's positive commentary about enhanced
productivity, annual cost savings and successful ERP (Enterprise
Resource Planning) system implementation across Europe is
encouraging. We believe that Arrow could get better contribution
from Europe as soon as the ERP program becomes operational.
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We are also encouraged by Arrow's recent deal wins. In the past
two weeks, the company signed distribution agreements with
) American arm and
Currently, Arrow has a Zacks Rank #3 (Hold). Its archrival
), which posted decent second-quarter 2013 results, has a Zacks
Rank #1 (Strong Buy).