Navistar International Corporation
) declared a coupon rate of 4.50% for senior subordinated
convertible notes worth $200 million due in 2018. The company
also provided an option to buy additional convertible notes worth
$30 million to the initial purchasers.
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The offering is expected to close on Oct 11, 2013, depending on
the customary closing conditions. The offering will be made to
qualified institutional buyers in the U.S. according to Rule 144A
under the Securities Act.
The 4.5% per annum interest on the notes will be paid
semi-annually. The notes can be converted to cash, shares of
Navistar common stock, or a combination of both cash and shares
of the company in case of certain circumstances. The conversion
will take place at the rate of 17.1233 shares of Navistar for
$1,000 principal amount of senior subordinated convertible notes.
This conversion rate amounts to an initial conversion price of
about $58.40 per share of common stock.
Navistar reported third-quarter fiscal 2013 (ended Jul 31, 2013)
loss from continued operations of $237 million or $2.94 per share
compared with income from continued operations of $80 million or
$1.16 per share in the year-ago quarter. Reported loss was also
significantly wider than the Zacks Consensus Estimate of a loss
of $1.39 per share.
A fall in volumes in the North America truck business, related to
Navistar's transition to SCR-based (Selective Catalytic
Reduction) vehicles and overall weakness in the industry
primarily hampered profits. However, this was partially offset by
lower selling, general and administrative (SG&A) expenses and
engineering and product development costs.
Navistar's revenues declined 125% year over year to $2.86 billion
in the quarter, missing the Zacks Consensus Estimate of $2.98
billion. The year-over-year decrease in revenues was due to a 9%
decline in industry demand in North America and a fall in truck
sales of the company due to its transition to SCR. This was
partially offset by higher sales in the engine business in South
Warrenville, Ill.-based Navistar manufactures and sells
commercial trucks, mid-range diesel engines, buses, military
vehicles and chassis for motor homes and step-vans. Currently,
the company retains a Zacks Rank #3 (Hold) on its stock.
Some stocks that are performing well in the industry in which
Navistar operates include
TRW Automotive Holdings Corp.
Allison Transmission Holdings, Inc.
). All these are Zacks Rank #1 (Strong Buy) stocks.