) recently completed its previously announced offering of $250
million of 7.875% convertible senior notes due 2026. The offering
was made to qualified institutional buyers in a private
placement. The offering may not be made in the U.S. as the 7.875%
notes are not registered under the Securities Act of 1933, as
amended or applicable state securities laws.
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Initially, Meritor offered convertible senior notes worth $225
million due 2026. The company offered the initial buyers an
option to purchase an additional $25 million 7.875% notes in a
30-day period. Following the exercise of the option, the total
offer value rose to $250 million.
Meritor utilized the proceeds of around $218.1 million from the
offering to purchase a portion of its outstanding 4.625%
convertible senior notes due 2026. The company has purchased
roughly $245 million of $300 million 4.625% notes for an
aggregate purchase price of approximately $235.7 million
(including accrued interest). The company may redeem the
remaining portion of 4.625% notes on or after March 1, 2016.
Meritor reported adjusted earnings per share of 32 cents in the
fourth quarter of 2012, down 28.9% from 45 cents in the year-ago
quarter. However, the results outpaced the Zacks Consensus
Estimate by 14 cents. The year-over-year fall in earnings was
attributable to lower earnings from unconsolidated affiliates
resulting from a decline in sales volume in the respective
Revenues decreased 19% to $986 million in the quarter, missing
the Zacks Consensus Estimate of $1 billion. The decline was due
to lower sales volumes in global markets and adverse impacts of
Headquartered in Troy, Michigan; Meritor is a global automotive
parts manufacturer and supplier to various customers in North
America, Europe and other parts of the world. The company
operates manufacturing facilities in North America, South
America, Europe and Asia-Pacific. Some of its big customers
Navistar International Corporation
Currently, Meritor retains a Zacks #3 Rank, which translates into
a short-term (1 to 3 months) Hold rating. We have a long-term
Neutral recommendation on the stock.