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Axalta Coating Systems Prices Its 450 Million Euro Senior Notes

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Axalta to raise 450 million euros

On September 13, 2016, Axalta Coating Systems (AXTA) announced that its wholly owned subsidiary, Axalta Coating Systems Dutch Holding BBV, has priced its offering of 450 million euro senior notes. Carrying a 3.75% coupon rate, the notes are being offered to qualified institutional buyers (or QIBs), and the offer is expected to close on September 27.

The net proceeds from this offer will be used to redeem 250 million euro senior secured notes carrying an interest rate of 5.75%, which are due in 2021.

Axalta Coating Systems intends to use the remaining amount to prepay a portion of its euro-denominated term loan credit facility. It also plans to pay related transaction costs and expenses. Both transactions should help Axalta realize significant interest savings and boost its operating margins.

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Axalta stock price

On September 16, 2016, Axalta closed at $27.35, down 2.9% for the week. The First Trust US IPO Index ETF (FPX), which held 0.6% in AXTA on September 16, gained 1.6% for the week and closed at $53.64.

AXTA’s peers Sherwin-Williams (SHW), RPM International (RPM), and Valspar (VAL) fell 0.15%, 0.13%, and 0.15%, respectively, for the same period. AXTA’s stock price closed 2.1% lower than the 100-day moving average price of $27.94, indicating a downward trend in the stock.

During the week, the company’s 14-day relative strength index (or RSI) fell from 45 to 36, indicating that the stock is moving toward a temporary oversold situation. Analysts expect AXTA’s 12-month target price to be $33.40, implying a potential return of ~22% over the closing price of September 16, 2016. On a year-to-date basis, AXTA has risen 2.6%.

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