Waste Management Issues $500M Notes - Analyst Blog
26 August 2011 - 1:48AM
Zacks
Integrated waste management company Waste
Management Inc. (WM) issued $500 million unsecured notes
yielding 2.6% interest per year and maturing on September 1, 2016.
The notes were offered at $99.991 (per $100.00 principal). The new
note offering secured a ‘BBB’ rating from Fitch Rating.
Waste Management intends to utilize the proceeds of the new
debts issue to fund the $425 million acquisition cost of Oakleaf
Global Holdings and use the remaining proceeds for general
corporate purposes.
Long-term debts of the company were $8.83 billion as of June 30,
2011, and the debt-capitalization ratio was 58.9%. With the new
issuance, the debt-capitalization ratio of the company increased to
60.2%.
Interest expenses of the company in the second quarter 2011 rose
by $3 million year over year mainly due to higher debt levels from
the year-earlier quarter. With the issue of new debts, interest
expenses of the company will rise further in the coming
quarters.
Earlier, in February 2011, the company issued $400 million notes
yielding 4.6% interest per year and maturing on March 1, 2021. The
company utilized the proceeds to repay $147 million 7.65% Senior
Notes due in March 2011 and used the balance for general corporate
purposes.
The adjusted earnings of Waste Management at the end of
second-quarter 2011 were 54 cents per share, which surpassed the
year-ago comparable period results of 51 cents per share, but came
short of our expectation by a penny.
During the earnings call the company lowered the earnings per
share guidance for 2011 to the range of $2.14 to $2.18 from the
prior outlook of $2.24 and $2.30 per share. Waste Management stands
to benefit from its cost reduction and growth initiatives but
weaker volumes expected in the second half of the year is the prime
reason for the lower earnings expectation.
The Zacks Consensus Estimates for third quarter fiscal 2011,
fiscal year 2011 and fiscal year 2012 are currently 62 cents per
share, $2.14 per share and $2.41 per share, respectively.
Waste Management retains a Zacks #4 Rank, which translates into
a short-term Sell rating. The company competes with Casella
Waste Systems Inc. (CWST) and Republic Services,
Inc. (RSG).
Based in Houston, Texas, Waste Management is a provider of
comprehensive waste management services in North America. The
company is also a leading developer, operator and owner of
waste-to-energy and landfill gas-to-energy facilities in the United
States.
CASELLA WASTE (CWST): Free Stock Analysis Report
REPUBLIC SVCS (RSG): Free Stock Analysis Report
WASTE MGMT-NEW (WM): Free Stock Analysis Report
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