Packaging Corporation of America
), the leading manufacturer of containerboard and packaging
products in the U.S., recently notified that it has closed a public
offering of 3.90% senior notes with principal amount $400 million,
due to mature in 2022. The company has also declared that it has
started a process to redeem its 5.75% senior notes worth $400
million, due to mature on August 1, 2013.
Furthermore, July 26, 2012, has been fixed by Packaging Corp.
for redemption of the notes. Total redemption cost is anticipated
to be $432 million, including $21 million of redemption premium and
accumulated and unpaid interest of $11 million.
As per the conditions governing the 5.75% senior notes, the
redemption premium is scheduled to be computed on July 23, 2012.
The net proceeds from the company's completed senior notes offering
along with its cash balances shall be used to redeem 5.75% senior
Packaging Corp. is likely to incur post-tax charges of 2 cents
and 14 cents per share in the second quarter and third quarter of
fiscal 2012, respectively, due to the debt offering and redemption
of the notes.
Earlier, Packaging Corp.reported financial results for the first
quarter of 2012 on April 17, 2012. We observed a quarterly hike of
around 4% in net interest expense to reach $9.7 million whereas
long-term debt surged almost 1.5% from the previous quarter to
reach $805 million at the end of the first quarter of 2012.
The company pertains to an industry where ominous competition is
prevalent. It should stay cautious of big players such as
Sonoco Products Co.
AEP Industries Inc.
) as it traverses through 2012.
The Zacks Consensus Estimate for second-quarter 2012 is 46 cents
while $1.89 for fiscal year 2012. In the short run, Packaging
Corp.bears a Zacks #3 Rank, which translates into a short-term
'Hold' rating. Additionally, we currently maintain a long-term
'Neutral' recommendation on the stock.
AEP INDS (AEPI): Free Stock Analysis Report
APTARGROUP INC (ATR): Free Stock Analysis
PACKAGING CORP (PKG): Free Stock Analysis
SONOCO PRODUCTS (SON): Free Stock Analysis
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