Ingersoll-Rand Company Limited, a diversified industrial firm, today announced a series of actions designed to strengthen its financial flexibility and enhance its credit profile. The company also reduced its dividend and provided comments on its first-quarter and full-year 2009 revenues and earnings outlook.
Under the plan, Ingersoll-Rand Global Holding Company Limited, a wholly-owned subsidiary, will offer, subject to market and other conditions, a benchmark-sized amount of senior notes. In addition, it will offer $300 million in aggregate principal amount of exchangeable senior notes due 2012. The notes are exchangeable into cash and shares of the company's class A common shares, if any.
Ingersoll Rand proposes 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, the company said in a release.
The company also 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 1April 2009.
The net proceeds from the notes offerings along with the expansion of the receivables financing facility will be used to repay the bridge loan that matures in June 2009 and provide additional liquidity for the company, it said.
The board of Ingersoll Rand also authorised a reduction in the quarterly common stock dividend to $0.07 per share from $0.18 per share, effective September 2009 dividend payment.
The company expects estimated first-quarter adjusted diluted earnings per share (EPS) to be at the low end of its previously forecasted range of $0.15 to break even. This earnings estimate excludes non-recurring costs such as those related to the acquisition of Trane and restructuring costs.
Like most industrial companies, Ingersoll-Rand also experienced an accelerated decline in business compared with prior expectations. However, because of cost reduction and productivity programs initiated in 2008, first quarter earnings per share are expected to remain in the prior range, although at the low end, it said.
"First-quarter revenues are projected to be in the range of $2.9 billion, a decrease of approximately 25 per cent to 27 per cent compared with proforma 2008 results of $3.9 billion. The company's original forecast for the quarter was for proforma revenues to decrease by 19 per cent, in the $3.1 to $3.2 billion range.
For the full year, assuming current business conditions continue, and without any improvement in the economy or any positive impact from economic stimulus packages, the company expects revenues to be in the range of $13.6 billion, down approximately 17 per cent from 2008 on a proforma basis, versus previous guidance of down by 8 per cent to 9 per cent. Earnings per share from continuing operations would be approximately $0.45 below the bottom end of the previous guidance range of $1.85 to $2.25 per share, it said.
Credit Suisse, Goldman, Sachs & Co. and J.P. Morgan Securities Inc. will act as the joint book-running managers of the offerings.