Goodrich Issues $600 Million Debt – Analyst Blog

Defense contractor Goodrich Corporation (GR) sold $600 million unsecured notes, which will mature on 2021 and have an interest rate of 3.6%. The company initially decided to issue $500 million in notes, which was later increased by $100 million.

 

Goodrich offered the notes at 99.788% of face value and will yield 3.625% when held till maturity. The company intends to use the net proceeds from the note offering to redeem all of $257.5 million debt due 2012, make contribution to pension plans and also use it for general corporate purposes.

 

Goodrich’s total long-term debt at the end of second-quarter 2010 was $2,007.9 million versus $2,008.1 million at the end of 2009. The debt-to-capital ratio of the company at the end of the second quarter 2010 was 40.6%, and with the issue of new notes the present debt-to-capital ratio of the company will rise to 52.6%.

 

Interest expenses of Goodrich at the end of second-quarter 2010 were $33.6 million versus $30.7 million at the end of the year-ago quarter. With the issue of new notes, the company will have to incur additional interest expenses to service its debts.

 

As of June 30, 2010, Goodrich’s liquidity consisted of $866 million in cash and $435.9 million in borrowing capacity under a $500 million revolving credit facility, with total liquidity amounting to $1.3 billion. The adjusted earnings of the company at the end of second-quarter 2010 were $1.24 per share compared with $1.15 per share in the year-ago comparable period. Goodrich expects adjusted earnings per share in the range of $4.30 to $4.45 for 2010.

 

The Zacks Consensus Estimates for third quarter fiscal 2010, fiscal year 2010 and fiscal year 2011 are $1.13 per share, $4.47 per share and $5.19 per share, respectively.

 

Goodrich currently retains a Zacks #3 Rank (short-term Hold rating). We also maintain a Neutral rating on the stock.

 

Based in Charlotte, North Carolina, Goodrich Corporation supplies aerospace components, systems, and services to its worldwide customers.