Alliant Techsystems Inc.
) announced that it intends to offer senior notes worth $0.3
billion in aggregate principal amount. The notes are expected to
mature in 2021.
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The company aims to utilize the net proceeds to finance its
previously announced acquisition of Bushnell Group Holdings, Inc.
("Bushnell") and use the rest for other general corporate
purposes. In Sep 2013, the company announced that it will
purchase Bushnell from MidOcean Partners for approximately $0.99
billion. Alliant is expected to complete the acquisition in the
third or fourth quarter of fiscal 2014, subject to regulatory
approvals and customary closing conditions.
Alliant issues senior notes from time to time to accumulate funds
for repaying its existing debts and for several corporate
purposes. In Sep 2010, the company issued senior subordinated
notes, worth $0.35 billion, due 2020. The company utilized the
net proceeds to redeem all of its outstanding 2.75% convertible
senior subordinated notes due 2024 and for general corporate
A few weeks ago, the company announced that it intends to resort
to a new external financing program to meet the new debt
requirement of $1.86 billion. Per the financing program, the new
debt of $1.86 billion will comprise a $1.01 billion term loan A,
a $0.25 billion term loan B and $0.6 billion under the revolving
As of Jun 30, 2013, the company had a cash balance of $99.3
million compared with $417.3 million as of Dec 31, 2012.
Long-term debt, as of Jun 30, 2013, was $1.01 billion versus
$1.02 billion as of Mar 31, 2013. The company's long-term
debt-to-capitalization ratio is 41.1%, much higher than the peer
group average of 26.5%. The ratio is expected to climb further
following the current offering. Alliant's weak debt position is
reflected in its credit ratings. Moody's Investors Services, a
credit rating agency, has assigned a Ba3 rating on the notes,
symbolizing an instrument with significant credit risk.
However, we appreciate Alliant's constant focus on technological
innovation, which will enable it to secure more domestic and
foreign orders. Moreover, the proposed Bushnell acquisition will
enable the company to expand its product coverage, global reach
and enhance its customer base.
Alliant currently has a Zacks Rank #3 (Hold). However, other
stocks from the industry that are presently performing well
B/E Aerospace Inc.
), each with a Zacks Rank #2 (Buy).