In order to finance its cash tender offer,
FTI Consulting Inc.
), a global investment advisory firm, recently announced the
pricing of its private offering of senior notes worth $300
million. The senior notes, which are scheduled to mature in 2022,
bear an interest rate of 6.0% and will be issued at par value.
The Baltimore, Maryland-based company expects the public offering
to be completed by November 27, 2012, upon the fulfillment of
certain customary conditions. The notes are also assured with
some exceptions by FTI's existing and future domestic restricted
Apart from repurchasing its senior notes worth $215 million with
an interest rate of 7.75% and due in 2016 under its cash tender
offer, the company also plans to utilize the proceeds from the
offering for the senior secured bank credit facility and general
As of September 30, 2012, the company had cash and cash
equivalents of $126.9 million and long-term debt and capital
lease obligations, net of current portion, of $636.8 billion.
Recently, FTI reported third quarter 2012 adjusted earnings of 60
cents per share, which beat the Zacks Consensus Estimate by a
penny. However, revenues lagged due to frail performance of
Technology, Forensic and Litigation Consulting, and the Strategic
Communications segments. Moreover, on a geographic basis, except
Latin America, sales dipped in all the regions due to a sluggish
However, we believe that the company's strategy to expand through
acquisitions, particularly in the international markets, remains
one of its key growth drivers. FTI provides specialized
consulting services across 24 countries with a total headcount of
more than 3,800 employees. The company recently acquired
KMQ, which will likely strengthen its position in Australia.
Furthermore, management's plan to drive profitability by
restructuring the company's business and enhancing shareholders'
value through share repurchase is likely to be favorable.
Currently, FTI, which competes with the likes of
), carries a Zacks #3 Rank, implying a short-term 'Hold' rating.
Our long-term recommendation on the stock remains Neutral.
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