CommScope falls after announcing note, share offer
NEW YORK (AP) – CommScope Inc. shares sank Thursday afternoon after the network infrastructure company said it would offer 8 million common shares and $200 million in senior subordinated notes due 2015.
Shares of CommScope fell $2.61, or 10.4 percent, to $22.42 in the first day of trading after the company's late-Wednesday announcement. A company's stock often falls after a share offering is announced since this can dilute the stakes of existing shareholders.
CommScope said its underwriters will have 30 days to buy up to an additional 1.2 million shares. It also said underwriters will have 30 days to buy up to an additional $30 million principal amount of the notes.
The company intends to use proceeds from the offerings to pay down debt and for general corporate purposes.
In a client note, Morgan Keegan analyst Simon M. Leopold kept his "Outperform" rating for the stock, saying the announcement is another tool that makes it more likely that the company will be able to stay in compliance with debt covenants. He also noted that the company has asked for an amendment to its senior credit facilities.
"Although investor sentiment has improved and management has said it anticipates meeting the debt covenants, the action should reduce remaining doubts," he said.