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International Paper Announces Its Senior Notes, Moody’s Rates


Aug. 9 2016, Published 3:40 p.m. ET

Price movement

International Paper Company (IP) rose by 0.37% to close at $45.98 per share during the first week of August 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.37%, 9.7%, and 24.9%, respectively, as of August 5.

IP is trading 2.2% above its 20-day moving average, 6.1% above its 50-day moving average, and 15.6% above its 200-day moving average.

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Related ETF and peers

The Guggenheim MSCI Global Timber ETF (CUT) invests 4.3% of its holdings in International Paper. The ETF tracks the MSCI ACWI IMI Timber Select Capped Index, a market cap–weighted index of global timber equities. The YTD price movement of CUT was 2.9% on August 5.

The market caps of International Paper’s competitors are as follows:

  • Packaging Corporation of America (PKG) — $7.0 billion
  • Domtar (UFS) — $2.5 billion
  • KapStone Paper and Packaging (KS) — $1.4 billion

Latest news on International Paper

International Paper has issued $1.1 billion of 3.0% senior unsecured notes due in 2027 at 99.6% and $1.2 billion of 4.4% senior unsecured notes due in 2047 at 99.9%.

The net proceeds from these offerings and IP’s available cash will be used to purchase the Weyerhaeuser Company’s pulp business, to fund ~$500 million in contributions toward its pension plan, for general corporate purposes, and to repurchase outstanding debt securities through open market repurchases.

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In a press release on August 5, 2016, International Paper reported, “The US Department of Justice has concluded its Hart-Scott-Rodino review of International Paper’s [IP] announced the acquisition of Weyerhaeuser’s pulp business without taking any action. Regulatory reviews in other non-US jurisdictions are ongoing.” This acquisition is expected to close in 4Q16.

Moody’s rating

Moody’s Investors Service has rated International Paper Company’s new multimaturity senior unsecured notes offering as a “Baa2.” Moody’s kept International Paper’s outlook “stable.”

Moody’s reported, “The notes will rank equally with the company’s existing unsecured senior indebtedness and most of the net proceeds will be used to finance the acquisition of Weyerhaeuser Company’s market pulp business.”

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Performance of International Paper in 2Q16

International Paper reported 2Q16 net sales of $5.3 billion, a fall of 7.0% from its net sales of $5.7 billion in 2Q15. Sales from its Industrial Packaging and Consumer Packaging segments fell by 2.6% and 37.1%, respectively, and sales from its Printing Papers segment rose by 1.8% between 2Q15 and 2Q16. IP reported net losses on sales and impairment of businesses of $28.0 million in 2Q16.

IP’s net income and EPS (earnings per share) fell to $40.0 million and $0.10, respectively, in 2Q16, compared to $227.0 million and $0.54, respectively, in 2Q15.

IP’s cash and temporary investments rose by 19.4%, and its inventories fell by 2.8% between 4Q15 and 2Q16. Its current ratio rose to 1.68x, and its long-term debt-to-equity ratio fell to 2.2x in 2Q16, compared to its current and long-term debt-to-equity ratios of 1.65x and 2.3x, respectively, in 4Q15. It reported free cash flow of $527.0 million in 2Q16, a rise of 3.1% from 2Q15.

Quarterly dividend

International Paper has declared a quarterly dividend of $0.44 per share on its common stock. The dividend will be paid on September 15, 2016, to shareholders of record at the close of business on August 15, 2016.

In the next part, we’ll take a look at how Herbalife performed in 2Q16.


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