Allegheny Technologies Incorporated ATI has priced $285 million total principal amount of 3.5% convertible senior notes due 2025 to qualified institutional buyers in a private placement, pursuant to Rule 144A under the Securities Act of 1933. The company has also granted the initial purchasers with a 13-day option to buy up to an additional $40 million total principal amount of the notes.
The company expects the sale of notes to close on Jun 22, 2020, which is subject to customary closing conditions. Allegheny is expected to receive around $276.3 million in net proceeds from the transaction.
Further, the notes will be senior, unsecured obligations of the company. Interest on the notes are payable semi-annually in arrears on Jun 15 and Dec 15 each year, starting Dec 15, 2020. Unless converted earlier, redeemed or repurchased earlier, the notes will mature on Jun 15, 2025.
Allegheny intends to use around $222.3 million of the net proceeds to repurchase roughly $203.2 million total principal amount of its outstanding 4.75% convertible senior notes due 2022. The company also expects to use around $19 million of the net proceeds to pay the cost of the capped call transactions and the remainder for general corporate purposes.
Shares of Allegheny have lost 57.1% in the past year compared with the industry’s 53% decline.
Zacks Rank & Key Picks
Allegheny currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Alamos Gold Inc. AGI, B2Gold Corp BTG and Franco-Nevada Corporation FNV, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Alamos Gold has an expected earnings growth rate of 65% for 2020. The company’s shares have surged 40.1% in the past year.
B2Gold has an expected earnings growth rate of 214.3% for 2020. Its shares have returned 76.7% in the past year.
Franco-Nevada has an expected earnings growth rate of 60.2% for 2020. The company’s shares have surged 68.3% in the past year.
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