) recently commenced a public offering of senior notes worth
$400.0 million. The notes will carry an interest rate of 4.875%
and are set to mature on Mar 15, 2020.
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Lexmark filed for the registration with the U.S. Securities and
Exchange Commission. J.P. Morgan Securities LLC (an unit of
J.P. Morgan Chase & Co.
)) and Citigroup Global Markets Inc. (an unit of Citigroup Inc.
(C)) are acting as administrative agents for the purpose, along
with certain other lenders. The offer will cease on Mar 4.
The raised amount (after deducting issue-related expenses) will
enable Lexmark to increase fund availability and finance its
continuing working capital requirements, capital expenditure,
facilitate the repayment of its 5.90% senior notes due in 2013,
and also fund potential acquisitions.
In a separate development, Lexmark also announced to repay its
outstanding 5.90% 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.
Lexmark exited fourth quarter 2012 with $905.8 million in cash
and cash equivalents, up from $859.3 million reported in the
previous quarter. Lexmark has a senior notes balance of $649.6
million, which will go up another $400.0 million after this
issue. Of the total senior notes outstanding, $350.0 million
notes are scheduled to be repaid in the shot term. The company is
also repaying 5.90% senior notes, which will bring down the total
Lexmark's fourth quarter results were not encouraging as its
earnings per share (EPS) missed the Zacks Consensus Estimate by a
wide margin. Revenues came below the year-ago period but were
better than expected. Guidance for the first quarter was
deterring, too, reflecting inkjet exit and macro uncertainty.
Though constant pricing pressure from competitors such as Canon
) is a concern, we expect Lexmark to turn the table with
increased focus on software and services.
Currently, Lexmark has a Zacks Rank #3 (Hold).