Moody's Investors Service - the credit rating agency of
), raised its rating outlook on
) to positive from stable. Subsequent to this ratings upgrade,
shares of Teleflex climbed 0.6% to close at $105.50 till the last
Teleflex's new $250 million senior unsecured note offering also
obtained a Ba3 rating from Moody's Investors Service. At the same
time, Moody's upgraded Teleflex's Speculative Grade Liquidity
Rating to SGL-2 from SGL-3 and reaffirmed its other existing debt
Teleflex's $250 million worth of senior notes offering is slated to
mature in 2024, bearing an annual interest rate of 5.25%. Teleflex
intends to use the net proceeds from the offering to repay
approximately $245 million of borrowings under its revolving credit
As of Mar 30, 2014, Teleflex's outstanding revolving credit
facility, due on Jul 16, 2018, stood at $680 million. With the
refinancing of revolver borrowings and the repatriation of overseas
cash, Moody's is confident of an improvement in Teleflex's
Moody's believes that an enhanced liquidity outline will enable
Teleflex to carry out small- to moderate-sized acquisitions and
fund a possible conversion of its $400 million in convertible
notes. Based on this rationale, the rating agency raised its
Speculative Grade Liquidity Rating for Teleflex to SGL-2.
Moody's is highly optimistic with regard to the acquisition of
Vidacare Corporation by Teleflex in December last year, which was
financed through borrowings raised under its revolving credit
facility. The agency anticipates margin and cash flow improvement
on the back of synergies from the buyout as well as the company's
cost saving initiatives.
Furthermore, Moody's positive outlook on Teleflex stems from the
belief that the latter will pursue small- to moderate-sized
acquisitions, remain conservative in its shareholder initiatives,
witness improvement in organic growth rates, and maintain good
As far as the company's other debt ratings are concerned, Moody's
reiterated its Corporate Family Rating (CFR) at Ba3, Probability of
Default Rating (PDR) at Ba3-PD, senior subordinated notes at B1 and
convertible senior subordinated notes at B2.
Teleflex's Ba3 CFR reflects Moody's expectations of moderately high
leverage and limited free cash flow relative to debt. Moody's
further expects revolver borrowing repayment and cash repatriation
to bring down the debt/EBITDA ratio to about 3.4 times from its
current level of 4.0 times.
As of Mar 30, 2014, Teleflex's total long-term borrowings stood at
$1,289.3 million, marginally up by 0.2% from $1,286.3 million as of
Dec 31, 2013.
Teleflex currently carries a Zacks Rank #3 (Hold).
Alphatec Holdings, Inc.
RTI Surgical Inc.
) are better-ranked medical instruments stocks with a Zacks Rank #1
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