Yahoo Finance Magna (MGA) Announces U.S. Dollar & Euro Senior Notes Offerings
Magna International MGA announced plans to offer two series of U.S. dollar-denominated senior notes and one series of Euro denominated senior notes. Magna will raise $300 million through Series 1 U.S. dollar senior notes, $500 million through Series 2 U.S. dollar senior notes and €550 million through Euro senior notes. The company will utilize the proceeds from the U.S. dollar senior notes to fund a portion of its impending Veoneer Active Safety Business Acquisition, pay related expenses and for general corporate purposes, including the repayment of existing indebtedness. The proceeds from the Euro senior notes will be utilized for general corporate purposes, including repayment of its existing indebtedness.
The Series 1 U.S. dollar Senior Notes with a maturity date of Mar 21, 2026, carry an annual interest rate of 5.98%, Series 2 U.S. dollar Senior Notes with a maturity date of Mar 21, 2033, carry an annual interest rate of 5.50% and Euro senior notes with a maturity date of Mar 17, 2032, carry an annual interest rate of 4.375%. The offerings of U.S. dollar senior notes and Euro senior notes are expected to end on Mar 21, 2023 and Mar 17, 2023, respectively.
In case the Veoneer Acquisition is not completed on or prior to Dec 19, 2023, or Equity Purchase Agreement gets terminated, Magna must redeem all the outstanding notes at a redemption price of 101% of the principal amount of the notes, along with accrued and unpaid interest.
The acquisition— valued at $1.525 billion— will expand Magna's ADAS geographic diversification and customer base. It will add 2,200 engineers to Magna’s existing talent base. The acquisition is consistent with Magna’s Go-Forward strategy to boost investment in high-growth areas and will position Magna as a full-suite ADAS solution provider.
The combination of businesses is expected to generate approximately $3 billion in revenue in 2024. Magna expects to maintain financial flexibility with an adjusted debt to adjusted EBITDA ratio slightly above its target range of 1 -1.5 by the end of 2023.
Zacks Rank & Key Picks
MGA currently carries a Zacks Rank #3 (Hold).
A few top-ranked players in the auto space include Volvo VLVLY, Wabash National WNC and Modine Manufacturing MOD, all of which sport a Zacks Rank #1 (Strong Buy).
The Volvo Group is a manufacturer of trucks, buses, construction equipment, diesel engines and marine and industrial engines. The Zacks Consensus Estimate for VLVLY’s 2023 earnings imply year-over-year growth of 6.25%.
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimates for WNC’s 2023 sales and earnings imply year-over-year growth of 13.06% and 24%, respectively.
Modine operates primarily in a single industry consisting of the manufacture and sale of heat transfer equipment. The Zacks Consensus Estimates for MOD’s 2023 sales and earnings imply year-over-year growth of 11.43% and 43.09%, respectively.
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Magna International Inc. (MGA) : Free Stock Analysis Report
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