) has announced the completion of the offering of $700 million
senior notes. The offering includes $350 million of senior notes
bearing an interest rate of 3.500% and maturing in 2020 and $350
million of senior notes carrying an interest rate of 4.000% and
maturing in 2023.
RockTenn intends to use the net proceeds to prepay loans under its
credit facility and pay the expenses related to the prepayment. The
company now expects to repay loans worth roughly $288 million under
its revolving credit facility, $345.5 million under its term loan A
facility and $54.5 million under term loan A2 facility.
RockTenn commenced issuing the senior notes on September 4. The
notes are guaranteed on unsecured and subordinated basis by the
company's certain existing and future domestic subsidiaries.
RockTenn's debt-to-capital ratio, as of June 30, 2012, was 48.7%,
lower than 50.5% as of September 30, 2012. The company's interest
expense was $113.2 million for the twelve months ended June 30,
2012, higher than $65.9 million for the twelve months ended June
With this note offering, the company's debt level as well as the
debt to capital ratio will increase. The company will also have to
incur a higher interest expense to service the debt.
However, the company's decision to repay loan will help it to
reduce its interest burden to some extent. This, in turn, will help
in boosting margin moving ahead.
RockTenn posted adjusted earnings of 95 cents per share in the
third quarter of fiscal 2012, trailing behind the Zacks Consensus
Estimate of $1.02. Revenues jumped 66.6% year over year to $2.30
billion in the quarter, missing the Zacks Consensus Estimate of
Based in Norcross, Georgia, RockTenn is one of North America's
leading integrated manufacturers of corrugated and consumer
packaging and recycling solutions. The Company operates in more
than 240 locations in the U.S., Canada, Mexico, Chile, Argentina
The company faces tough competition from leading companies like
International Paper Company
Bemis Company, Inc.
). RockTenn retains a short-term Zacks #3 Rank (Hold). We have a
long-term Neutral recommendation on the stock.
BALL CORP (BLL): Free Stock Analysis Report
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INTL PAPER (IP): Free Stock Analysis Report
ROCK-TENN CO (RKT): Free Stock Analysis Report
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