Ensco plc (NYSE:ESV) recently announced the pricing of an upsized private placement of 3.00% Exchangeable Senior Notes, due 2024, for an aggregate principal amount of $750 million. Ensco’s price chart reveals that it has lagged the Zacks sub industry Oil & Gas-Drilling Market, year to date. While the broader market has increased by 19.8%, Ensco stock has lost 31.3%. The impact of the aforesaid announcement on the stock price remains to be seen.
The notes would be issued by Ensco Jersey Finance Limited, a company organized under the laws of Jersey (the “Issuer”) and a wholly owned subsidiary of Ensco.
The initial purchasers have a 30-day option to buy up to an additional $112.5 million aggregate principal amount of notes. Subject to customary closing conditions, the offering is anticipated to close on Dec 12, 2016.
The net proceeds from the offering are expected to be used by Ensco to fund the cash portion of the company’s earlier announced exchange offers for outstanding 4.70% Senior Notes (due 2021) issued by Ensco, 8.50% Senior Notes (due 2019) and 6.875% Senior Notes (due 2020) issued by Pride International, Inc., a wholly owned subsidiary of Ensco.
In case the exchange offers are not completed or the net proceeds from the offering surpass the total cash consideration payable in the exchange offers, Ensco is likely to use the remaining proceeds to repurchase or refinance other debt and for general corporate purposes.
Ensco will fully and unconditionally guarantee the notes, which will be senior unsecured obligations of the Issuer, on a senior unsecured basis. The notes will have an interest rate of 3.00% per annum, and are semi-annually payable on Jan 31 and Jul 31, of each year. The payments are slated to start from Jul 31, 2017. The notes can be exchanged into cash, Ensco’s Class A ordinary shares or a combination of cash and Class A ordinary shares, at the company’s discretion.
The notes will mature on Jan 31, 2024, unless earlier exchanged, redeemed or repurchased in line with the terms prior to the date. Before Jul 31, 2023, the notes will be exchangeable only under certain circumstances and during certain periods, Thereafter, the exchanges can be made at any time until the close of trading on the business day immediately preceding the maturity date. The initial exchange rate will be 71.3343 Class A ordinary shares per $1,000 principal amount of notes (equal to an initial exchange price of about $14.02 per Class A ordinary share). The exchange rate might be adjusted in some events but will not be altered for accrued and unpaid interest.
Ensco currently has a Zacks Rank #3 (Hold). Some better-ranked players in the same sector include SunCoke Energy Inc. (NYSE:SXC) , Suncor Energy, Inc. (NYSE:SU) and Futurefuel Corp. (NYSE:FF) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke Energy posted a positive earnings surprise of 177.78% in the last reported quarter. It reported a positive earnings surprise in three of the four preceding quarters.
Suncor Energy posted a positive earnings surprise of 300.00% in the preceding quarter. It reported an average earnings surprise of 40.55% for the four preceding quarters.
Futurefuel Corp. posted a positive earnings surprise of 20.83% in the last reported quarter. It reported a positive earnings surprise in all of the four preceding quarters.
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SUNCOR ENERGY (SU): Free Stock Analysis Report
ENSCO PLC (ESV): Free Stock Analysis Report
FUTUREFUEL CORP (FF): Free Stock Analysis Report
SUNCOKE ENERGY (SXC): Free Stock Analysis Report
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