Lincoln Electric (LECO) to Offer Senior Notes Worth $350M - Analyst Blog

Manufacturer and reseller of welding and cutting products, Lincoln Electric Holdings Inc.LECO announced its intention to offer $350 million of senior unsecured notes. These notes will be offered and sold in four tranches with certain fixed interest rates and maturities. Lincoln Electric intends to use the proceeds from the private placement for general corporate purposes.

The Series A Notes which will carry an annual interest rate of 3.15% will mature in Aug 20, 2025, while the series B Notes with an interest rate of 3.35% have a maturity date of Aug 20, 2030. These are expected to be funded and issued on Aug 20, 2015. Further, the Series C Notes, which will carry an annual interest rate of 3.61%, will mature in Apr 1, 2035 and the Series D Notes with an interest rate of 4.02% have a due date of Apr1, 2045.

Lincoln Electric ended 2014 with cash and cash equivalents of $278 million, compared with $300 million as of 2013-end. Cash flow from operations came in at $133.6 million in the reported quarter as against $96.8 million in the year-ago quarter. The company returned $57.8 million to shareholders through share repurchases during the quarter. Lincoln Electric's 2015 share repurchase target is $400 million.

Looking ahead, in 2015, Lincoln Electric expects to benefit from diversified end market and geographic exposure. The company is focused on executing its 2020 initiatives. Continuous investment in the development of automation portfolio will also drive growth.

However, the company remains cautious about the near-term factors such as foreign exchange and oil prices . Lincoln Electric expects contraction in the energy sector in 2015, as lower oil prices will impact capital projects in up and midstream sectors.

There will be slight moderation in the heavy fabrication sector as construction machinery would be steady to flat, while agricultural equipment is expected to contract slightly year over year. Further, concerns remain regarding any substantial improvement in the mining sector in 2015.

Lincoln Electric currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include AO Smith Corp. AOS , Astec Industries, Inc. ASTE and Bemis Company, Inc. BMS . All of these stocks carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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