) announced that it has priced its senior notes at 100% of the
principal amount, generating gross proceeds of $600 million at a
coupon interest of 5.0%.
The notes will be unsecured in nature but will come with a
guarantee from NCR Corporation. The proceeds from the issue ending
on 17th Sept, 2012 is expected to be used for general company
affairs and development, which includes funding for the company's
U.S. pension plan and paying off its debts under the senior secured
The guarantee and the related notes would be offered in the
U.S.to certain qualified institutional buyers. NCR is in the
process of expanding its business operation, extending its
geographic reach and also attracting additional customers by
offering more innovative ATM and POS products. We believe that the
proceeds from these notes will also help the company as it would
require capital expenditure to fund its operations.
However, the issuance will increase the debts and raise the debt
capitalization ratio 0.43 at the end of the last quarter. Also, the
raised debt burden will have an impact on its interest charges,
which was 0.05 per share in the last quarter. We believe that the
company must use the proceeds in product and services that offer
We believe that the company has a sustainable business model in
place that will help it to achieve its long-term targets.
Management is strengthening its financial services, hospitality and
retail portfolios to increase penetration in new markets and that
may require some excess funds.
Moreover, the company is also concentrating on its core ATM
business and remains committed to taking a share of emerging growth
verticals, such as travel, telecom and technology.
ATM manufacturers like NCR Corporation and
are likely to benefit from new product introductions with some
added features, as they are focusing on better security needs and
ADA compliance. So, we believe that the company has sufficient
scope for using the funds raised in a prudent way.
We remain positive about NCR's deal wins from various industrial
sectors. But a high debt burden, European exposure and stiff
and Wincor Nixdorf in the ATM market keep us concerned.
Currently, NCR has a Zacks #3 Rank, implying a short-term Hold
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