At the end of market trade, the equipment rental company’s shares closed the day at 98 cents apiece, up 3.70%.
Emeco price’s senior secured notes
Investors bought up Emeco shares after the company announced a positive update to the ASX.
According to its release, Emeco advised it has placed a $250 million price tag on its senior secured notes. The notes mark the company’s inaugural issuance in the domestic Australian Medium-Term Note (MTN) market.
Emeco stated that the bonds will have a fixed coupon rate of 6.25%, paid bi-annually for a 5-year period. Settlement of the bonds is expected to be completed on 2 July 2021, with the maturity date falling on 10 July 2026.
The funds received will primarily be used to pay off Emeco’s United States notes that are due in March 2024.
Emeco noted that the transaction meets a number of its strategic funding objectives. This includes:
- Extending the debt maturity profile;
- Lowering its funding costs – an annual interest saving of around $9 million;
- Establishing a presence in the domestic bond market; and
- Replacing US$-denominated debt with A$-denominated debt.
Emeco managing director and CEO, Ian Testrow touched on the notes offer, saying:
We are very pleased with the exceptional investor response to our entry into the Australian bond market. We had planned to partially refinance our US notes, however the significant investor interest has provided us with the opportunity to fully retire our legacy debt.
The Notes significantly reduce our funding costs, lengthens our maturity profile and will result in a cleaner capital structure.
In addition to the news, Emeco reaffirmed its FY21 operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $235 million to $238 million.
The company revealed it will release its full-year results for the 2021 financial year on 18 August, 2021.
About the Emeco share price
The Emeco share price has lost 8% in the past 12 months and is down roughly 15% year-to-date. The company’s shares hit a recent 52-week high of $1.245 in February but have headed lower ever since.
Emeco has a market capitalisation of about $522 million, with a tad more than 544 million shares outstanding.