Ball Corporation (BLL) proposed to issue $750 million of unsecured notes. The offering would yield 5.0% interest per year and the notes will mature on March 15, 2022.
Ball Corporation intends to utilize the proceeds of the new debt issue to fund the interest and expenses related to the debt issue. It will also fund for related consent solicitation for any and all of its outstanding 6 5/8% senior notes due 2018, and for general corporate purposes.
The debt-to-capital ratio at 2011 end was 69.5%, higher than 62.9% at 2010 end. The debt level of the company is expected to rise further with this note offering. In addition, the company will also have to incur a higher interest expense to service the debt.
During the fourth quarter of 2011, the company posted adjusted earnings of 48 cents per share compared to 53 cents per share in the year-ago quarter. The adjusted earnings per share fell short of the Zacks Consensus Estimate of 54 cents.
The poor performance was attributable to the weaker beverage can volumes in North America and Europe as well as six fewer accounting days. This was, however, partially offset by a strong operating performance and growth in specialty products.
The company plans to achieve 10%-15 % earnings growth in 2012 and beyond. It also expects to generate nearly $450 million of free cash flow to be used to repurchase stocks.
The company’s focus on “Drive for 10 Actions” is set to deliver better results over the next decade. The company’s efforts in maintaining continuous growth in 2011 has built the momentum for a strong start towards its goals set for the coming years.
Currently the shares of Ball Corporation retain a Zacks #3 Rank (short-term Hold recommendation). The Zacks Consensus Estimate for the first quarter of 2012 is pegged at 59 cents.
Based inBroomfield, Colorado, Ball Corp. is a manufacturer of metal and plastic packaging, primarily for beverages and foods. It also supplies aerospace and other technologies and services to government and commercial customers.
The company operates through five segments and employs 14,000 people worldwide. It competes with the likes of Crown Holdings Inc. (CCK), Rexam Plc. (REXMY) and Silgan Holdings Inc. (SLGN).
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