Monday, diversified industrial company Ingersoll-Rand Co. Ltd. (IR), in a bid to consolidate its financial flexibility and enhance credit profile, revealed its intention to offer benchmark-sized amount of senior notes. The company also plans to a $300 million in aggregate principal amount of exchangeable senior notes offering due 2012 and expansion of 364-day trade receivables financing facility and a reduction of dividend. The company now anticipates first-quarter earnings per share in the lower end of previously issued range and slashed its revenue outlook. Ingersoll-Rand also lowered its fiscal year 2009 earnings and revenue expectations.
The Hamilton, Bermuda-based company intends to offer, a benchmark-sized amount of senior notes. Additionally, Ingersoll-Rand also plans to offer $300 million in aggregate principal amount of exchangeable senior notes due 2012, exchangeable into cash and shares of the company's Class A common shares, if any. The company also intends to grant the underwriters an option to purchase up to an additional $45 million aggregate principal amount of exchangeable senior notes to cover over-allotments, if any.
Ingersoll-Rand stated that it has arranged an expansion of a 364-day trade receivables financing facility to provide an additional $200 million of financing over current levels and expects agreement execution by April 1, 2009. The company plans to use net proceeds from the notes offerings along with the expansion of the receivables financing facility to repay the bridge loan that matures in June 2009 and provide additional liquidity for the company.
Ingersoll Rand's Board of Directors also authorized a reduction in the quarterly common stock dividend to $0.07 per share from $0.18 per share, effective with the September 2009 dividend payment. The company believes that the coordinated actions will address anticipated financing needs through the end of 2010 and fortify the groundwork for an even stronger future.
Herbert Henkel, Chairman and CEO said, We recognize the importance of the dividend to our shareowners but we believe that the reduced payment will enhance liquidity and our ability to pay down debt in the short-term and make investments for our future growth.
Looking forward, the company now expects first-quarter adjusted loss at the low end of its previous forecast of loss in the range of $0.15 to breakeven per share.
On average, sixteen analysts polled by Thomson Reuters estimated a loss of $0.02 per share for the quarter. Analysts' estimates typically exclude special items.
Ingersoll-Rand lowered first-quarter revenue expectation to the range of $2.9 billion, a decrease of approximately 25% to 27% from pro forma 2008 results of $3.9 billion. The company's original forecast for the quarter indicated 19% decline in the pro forma revenues in the range of $3.1 billion to $3.2 billion. Analysts currently estimate revenue of $3.15 billion for the quarter.
The company underlined that its initial forecast for the first quarter of 2009 was based on a significant decline in key end markets. Ingersoll-Rand said that, like most industrial companies, it has experienced an accelerated decline in business compared with prior expectations.
For full year 2009, the company lowered its earnings from continuing operations to approximately $0.45 per share, which is way below the bottom end of the previous guidance range of $1.85 to $2.25 per share. Analysts currently estimate earnings of $1.78 per share for the fiscal year 2009.
The company also lowered its revenue outlook for fiscal 2009 to approximately $13.6 billion, down approximately 17% from 2008 on a pro forma basis, versus previous guidance of down by 8% to 9%. Analysts currently estimate full year 2009 revenue of $14.48 billion for the year.
Henkel expects the company to meet debt-reduction targets for 2009. Ingersoll-Rand will continue to focus on generating earnings, aggressively manage working capital, control capital expenditures and reduce dividend payments. The company is currently assessing forecast for the full-year based on updated market expectations and available contingency actions.
The company is scheduled to report its first-quarter earnings on April 22, 2009.
Ingersoll-Rand closed Monday's regular trading at $13.98, down $0.97 or 6.49% on a volume of 3.36 million shares on the NYSE. In after-hours, the stock lost 29 cents or 2.07% trading at 13.69.
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