Amdocs Limited DOX recently announced the pricing of senior notes offering worth $650 million, maturity due in 2030. The company stated that the senior notes would be sold at 100% of the principal amount. The notes carry an annualized interest rate of 2.538%, payable semi-annually on Jun 15 and Dec 15 of every year. The offering is anticipated to close on Jun 24.
Per the company, J.P. Morgan Securities LLC, RBC Capital Markets, LLC and Morgan Stanley & Co. LLC are acting as joint book-running managers for the offering. Additionally, Citigroup Global Markets Inc., MUFG Securities Americas Inc. and HSBC Securities (USA) Inc. are acting as book-runners for the offering.
The company intends to use the net proceeds from this offering for general corporate purposes, including the repayment of debts.
Amdocs Limited Price and Consensus
Amdocs Limited price-consensus-chart | Amdocs Limited Quote
Offering to Boost Amdocs’ Financial Flexibility
Borrowing costs continue to be low, enabling companies to obtain easy financing. With the U.S. treasuries offering low rates, corporate bonds and borrowings from banks are now witnessing high demand.
We believe the offering will boost this Zacks Rank #3 (Hold) company’s financial flexibility and help meet its financial obligations efficiently. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and reward higher returns to stockholders.
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At the end of fiscal second-quarter 2020, Amdocs’ cash and cash equivalents totaled $763 million, significant improvement from the $472 million witnessed at the end of the first quarter. Moreover, the company has lesser debt obligations, which provides it ample financial flexibility to continue investing in growth initiatives.
The company had ended the fiscal second quarter with a total debt (including maturities) of $568 million, significantly lower than its cash and cash equivalents. Therefore, it has a net cash (total cash minus total debt) balance of $195 million.
Companies Enhancing Liquidity Amid Coronavirus Crisis
Amdocs’ latest senior notes offering and sizeable liquidity position amid the coronavirus-led economic and business uncertainties bode well. In the wake of the pandemic, companies with improved liquidity can sail through these volatile times.
Last week, world’s largest PC maker, HP Inc. HPQ issued senior unsecured notes worth $3 billion. In the same week, Palo Alto Networks PANW also announced its plan of borrowing $1.75 billion through a senior notes offering. Earlier this month, Agilent Technologies, Inc. A issued $500 million worth of 2.1% senior notes due June 2030.
Last month, MGM Resorts International MGM borrowed $750 million through offering 6.75% senior notes due 2025. In April, Spirit Realty Capital, Inc. SRC fortified its balance-sheet strength by closing a new $200-million unsecured term loan facility.
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