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Lubrizol sells $500m in notes to pay off debt

Marine fuel additives supplier to repay senior notes due in October 2009.





Updated on 27 Jan 2009 08:03 GMT

Leading marine fuel additives supplier The Lubrizol Corporation has announced that it has agreed to sell $500 million worth of 8.875 percent senior notes due in 2019 in order to pay off existing debt.

In a statement released by the company, Lubrizol said it intends to use the net proceeds from the offering for general corporate and other purposes, including repayment in full at maturity of the approximately $382 million worth of 4.625 percent senior notes due in October 2009.

The joint book-running managers for this offering were Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc..

The announcement follows news earlier this month that Lubrizol was lowering its earnings guidance for 2008 to approximately $4.09 per diluted share excluding restructuring and impairment charges.

Lubrizol said the revised guidance was due to weaker demand for the company’s products during the fourth quarter of 2008 following the downturn in the global economy. Comparable earnings for the full year 2007 were $4.06 per diluted share.

Commenting on the new guidance, CEO James Hambrick said, “During the first nine months of 2008, our volume growth was solid and we managed margins very well in a year marked by unprecedented volatility in raw material costs. However, we were not immune to the significant economic weakness and inventory destocking that affected our industry, as well as many others in the fourth quarter.

"As a result of the year-end volume decline, we are reducing our estimated 2008 earnings, as adjusted, which are approximately the same as 2007 results. In response to the current economic challenges, we are taking aggressive cost reduction initiatives across the corporation.”

The company estimates that cost reduction actions will result in savings of approximately $40 million to $50 million in 2009 compared with 2008. These actions reflect reductions in selling, testing, administrative and research expenses, reductions in manufacturing costs and the postponement of pay increases. Additionally, the company will defer some capital spending. Capital expenditures are estimated to be approximately $30 million lower in 2009 compared with 2008.

Remarking on the current year, Hambrick stated, “Despite the headwinds that we currently face in 2009, I am confident that we can manage through this downturn. Our balance sheet is strong, we are taking the necessary steps to meet the challenges of 2009, and we are prepared to implement additional cost reductions if necessary.”






Related Links:

Lubrizol declares quarterly dividend
Lubrizol announces staff changes
Lubrizol posts solid Q2 earnings
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