Diversified fuel producer CONSOL Energy Inc. (CNX) sold $250 million 6.375% senior notes. The notes were issued in accordance with Rule 144A to institutional buyers and as per Regulation S guidelines to non-U.S. investors outside the United States.
The offering comprised only one series of notes due March 1, 2021, with the proceeds from the issue netting $245 million. The company plans to utilize the proceeds to repay its outstanding 7.875% senior notes due in March 1, 2012.
After repaying the outstanding notes CONSOL plans to utilize the balance for reducing dues under the short-term credit facilities and accounts receivable securitization facility, and for general corporate purposes.
Earlier the company issued notes in two series on April 1, 2010. CONSOL Energy sold $1.5 billion of 8.0% senior notes due in 2017 and $1.25 billion of 8.25% senior notes due in 2020. The company used the net proceeds to fund its acquisition of the Appalachian oil and gas exploration and production business of Dominion Resources Inc. (D).
Total long-term debts of CONSOL Energy as of December 31, 2010 were $3.1 billion versus $0.4 billion as of December 31, 2009. The rise in debt was a fallout of increased interest expenses, which climbed sharply to $205 million in 2010 from $31.4 million in 2009. We note that the debt issue would accentuate rising interest expenses at the company.
CONSOL Energy’s earnings per share were below the Zacks Consensus estimates for both the fourth quarter and fiscal year 2010. Significantly its peer, Peabody Energy Corporation‘s (BTU) operating results for both the fourth quarter and fiscal year 2010 surpassed the Zacks Consensus estimates.
For CONSOL Energy, the current Zacks Consensus Estimates for first-quarter 2011, fiscal year 2011 and fiscal year 2012 are 72 cents per share, $2.79 per share and $4.44 per share, respectively.
CONSOL Energy currently retains a Zacks #3 Rank (short-term Hold rating). We maintain a long-term Neutral rating on the stock.
Based in Canonsburg, Pennsylvania, CONSOL Energy is a multi-fuel energy producer as well as energy services provider, primarily catering to the U.S. energy producers.
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