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Tronox Redeems $900 Million in Senior Notes

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Tronox redeems $900 million senior notes

Tronox (TROX) on September 25, 2017, announced that it had redeemed its remaining outstanding balance of $900 million, carrying a coupon rate of ~6.4% senior notes due 2020. The redemption was enabled by the issuance of $450 million in ~5.8% senior notes due 2025, along with borrowing under the company’s new credit facility.

Tronox made a cash payment of $917 million to redeem these notes—including the whole payment and the accrued interest. The redemption of these notes is expected to reduce its overall cost of debt and to improve efficiency. The average interest rate of Tronox at the end of 2Q17 was 5.0%.

Tronox stock performance

Tronox stock fell 3.9% and closed at $21.10 in the week ended September 29, 2017, and the stock has been in a downtrend for the past two weeks. However, the stock is now trading 15.5% above its 100-day moving average price of $18.26, indicating an upward trend.

On a YTD (year-to-date), the stock has returned 104.7%, while peers Chemours (CC), FMC (FMC), and Albemarle (ALB) have returned 138.5%, 57.9%, and 53.7%, respectively. Tronox is already trading 8.2% above the target price projected by the analyst consensus. TROX’s RSI (relative strength index) level of 44 indicates that the stock is neither overbought nor oversold.

Notably, investors can hold TROX indirectly by investing in the Rare Earth/Strategic Metals ETF (REMX), which had 5.7% of its portfolio in Tronox on September 29. REMX gained 7.1% in the week ended September 29 and closed at $25.83.

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