) has priced the previously declared private offering. The $350
million senior notes with maturity scheduled in 2019 will carry
an interest rate of 6%.
These have been priced at 100% of the principal amount. The
proceeds from the issuance will be deployed for general corporate
purposes which could possibly include expenses like maintenance
or repayment of outstanding debt, acquisitions or other
Coinstar is expected to close the transaction on Mar 12, 2013.
The new issuance will require the company to pay interests
As of Dec 31, 2012, the debt-to-capital ratio for Coinstar was
0.39x which represented an improvement of 3 percentage points
from 0.42x at 2011 end. With the issuance of the $350 million
debt, the debt-to-capital ratio is expected to increase further
17 percentage points to 0.56x. Nevertheless, the debt-to capital
ratio is better when compared to that of another industry major,
H&R Block Inc.
) with a debt-to-capital ratio of 0.68x (as of Oct 31, 2012).
The new issuance would require Coinstar to pay an annual interest
of $21 million. Nevertheless, the company's solid operational
performance generates enough funds to service the debt
uninterruptedly. Its interest expense in 2012 reduced 34.3% year
over year to $15.6 million which is expected to increase with the
issuance of the debt.
Last January one of its peers,
) announced an offer of senior notes worth $400 million with
maturity scheduled in 2021. Out of the proceeds from the
issuance, $225 million will be deployed to pay for its
outstanding 8.50% senior notes scheduled to mature in 2017. The
remaining proceeds will be utilized to pay for general corporate
purposes which include capital expenditure, investment, working
capital and potential acquisitions and strategic
Coinstar carries a Zacks Rank #3 (Hold). Online retailer
) carries a favorable Zacks Rank #2 (Buy) and is worth
COINSTAR INC (CSTR): Free Stock Analysis
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