CVR Partners Prices Senior Notes Offering Worth $645 Million

CVR Partners UAN and its fully-owned unit, CVR Nitrogen Finance Corporation, have declared the pricing of their offering of senior secured notes worth $645 million in total principal amount to eligible purchasers. The notes will mature on Jun 15, 2023 and pay annual interest at a rate of 9.25%. They were priced at 97.499% of par.

The notes offering, which is subject to customary closing conditions, is expected to close on Jun 10, 2016. CVR Partners plans to utilize the net proceeds of the notes offering to repay in full and terminate its outstanding credit facility, finance its earlier announced tender offer and pay related fees and expenses.

CVR Partners’ share rose 1.6% to close at $9.47 on Monday.

CVR Partners’ revenues and earnings for first-quarter 2016 topped Zacks Consensus Estimates. The company noted a steady demand for nitrogen fertilizer to meet the projected spring planting on corn acres in the U.S.

CVR Partners completed the buyout of nitrogen fertilizer maker – Rentech Nitrogen Partners, L.P. – in a cash and stock deal on Apr 1. The addition of Rentech Nitrogen's East Dubuque fertilizer plant in Illinois enhances CVR Partners’ scale and diversifies its geography and raw material feedstock.

While CVR Partners remains focused on ramping up its urea ammonium nitrate (“UAN”) production capacity and is progressing well with its capacity expansion projects, it is exposed to headwinds from lower nitrogen fertilizer prices.

The company is seeing lower prices for UAN as witnessed by a roughly 21% decline in first-quarter 2016. Urea prices have been under pressure due to higher supply from Chinese producers. CVR Partners’ operations are also subject to the risks of production outages. It also faces intense pricing competition from other producers.

CVR Partners currently has a Zacks Rank #4 (Sell).

Some better-ranked companies in the basic materials sector include Akzo Nobel N.V. AKZOY, Innospec Inc. (NASDAQ:IOSP) and BASF SE (DE:BASFN) BASFY, all sporting a Zacks Rank #1 (Strong Buy).



BASF SE (BASFY): Free Stock Analysis Report

AKZO NOBEL NV (AKZOY): Free Stock Analysis Report

INNOSPEC INC (IOSP): Free Stock Analysis Report

CVR PARTNERS LP (UAN): Free Stock Analysis Report

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