Honeywell International Inc (HON) announced the public offering of $800 million 4.250% senior notes due 2021 and $600 million 5.375% senior notes due 2041.
Honeywell intends to utilize the proceeds of the offering to repay outstanding debt, including the repurchase of up to $400 million of senior notes due 2012. It also intends to repay commercial paper and spend the remaining for general corporate purposes.
The Notes will be senior and unsecured obligations of Honeywell and will rank equally with all of Honeywell’s existing and future senior unsecured debt and senior to all of the company’s subordinated debt.
BofA Merrill Lynch (BAC), Barclays Capital (BCS) and Citigroup Inc. (C) are joint book-running managers for the public offering of the notes.
Per the latest audited financial results as of Dec 31, 2010, cash and equivalents were $2.65 billion with long-term debt of $5.7 billion and shareowners’ equity of $10.9 billion.
Honeywell is a leading supplier of electronics, consumable hardware, engine controls, environmental controls, landing systems, power systems, propulsion engines, aerospace services and space products and systems for the aerospace industry, including commercial and regional airlines, air cargo carriers, as well as Original Equipment Manufacturers (OEMs) of commercial, regional, military aircraft and spacecraft.
Honeywell’s attractive collection of businesses has the potential to earn consistent above-average returns. The company’s focus on working capital management, free cash flow generation and balance sheet strength remain positive attributes in the current weak environment.
The company is a global leader in refrigerants, aerosols and foam-insulation blowing agents used to replace ozone-depleting Chlorofluorocarbon and Hydro chlorofluorocarbons. Those same products also improve the energy efficiency of homes, appliances and commercial refrigeration systems.
The company’s proactive restructuring initiatives have positioned it to navigate better than many of its peers, but we have yet to see signs of stabilization in a number of its major end-markets.
At Automation and Control Systems, the largest segment by revenue, industrial customers are delaying both capital and operating spending across a number of businesses, driven by weakening demand.
Honeywell International Inc. is a diversified technology and manufacturing company, serving customers worldwide with products and solutions for homes, business and transportation.
The primary competitors include Johnson Controls Inc (JCI) and United Technologies Corporation (UTX).
We currently have a Neutral recommendation on Honeywell.
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