Tenneco Prices Private Offering - Analyst Blog

Tenneco Inc. (TEN) announced that it has priced a private offering of $500 million of 6 ⁷/₈% senior notes due December 15, 2020. The company will use the net proceeds to purchase any or all of its outstanding $500 million 8 ⁵/₈% senior subordinated notes, tendered recently, to redeem any of such notes that are not tendered and to pay fees, premiums, expenses and accrued interest related to the tender offer or redemption.

These transactions are expected to reduce Tenneco's annual interest expense by approximately $9 million. The company expects to record approximately $21 million in non-recurring pre-tax charges related to retirement of the senior subordinated notes.

The new notes will mature on December 15, 2020 with interest payable semi-annually on June 15 and December 15, beginning next year. The offering is expected to close on December 23, 2010.

Tenneco issued $225 million of 7 ¾% senior notes due August 15, 2018 in a private offering on August 3, 2010. The net proceeds of this transaction have been used to finance the redemption of 10 ¼% senior secured notes due in 2013.

As of September 30, 2010 Tenneco's outstanding debt included $225 million of 7 ¾% percent senior notes due August 15, 2018, $250 million of 8 ¹/₈% senior notes due November 15, 2015, and $500 million of 8 ⁵/₈% senior subordinated notes due November 15, 2014.

Tenneco, a Zacks #3 Rank (Hold) stock, recorded a profit of $24 million or 39 cents per share (before special items) during the third quarter of 2010, which was significantly up from $3 million or 7 cents per share (before special items) in the same quarter of previous year. However, the company's profit barely exceeded Zacks Consensus Estimate by a penny during the quarter.

Revenues in the quarter rose 23% to $1.54 billion on the back of higher original equipment production volumes across all the regions (especially in North America) and strong aftermarket sales globally.