UPDATE: Morgan Stanley Reiterates on McDermott International Following Equity Offering Announcement
In a report published Tuesday, Morgan Stanley analyst Ole Slorer reiterated an Underweight rating on McDermott International (NYSE: MDR), and lowered the price target from $6.30 to $6.00.
In the report, Morgan Stanley noted, “MDR announced that it is offering 10MM tangible equity units, each with a stated value of $25, with a greenshoe option of 1.5MM units. We estimate that MDR will receive $287.5mm, assuming the option is exercised. We understand that the conversion price would ultimately be determined by where the stock is trading 3 years from now, but bound by where the offering prices and 20% above that level.
"We estimate a range of $7 (10% below where the stock has closed) and $8.40 (20% above that price). This implies that each Unit would convert to 3-3.6 shares, for a total of 35-41mm shares or 14-17% dilution. As part of this offering, MDR would also be required to pay $10-15mm/year for 3 years on an amortizing note.”
McDermott International closed on Monday at $7.82.
Latest Ratings for MDR
|Nov 2015||Citigroup||Initiates Coverage on||Neutral|
|Sep 2015||Imperial Capital||Maintains||Outperform|
|Jun 2015||Cowen & Company||Initiates Coverage on||Outperform|
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.