Lear Corp V.LEA

Primary Symbol: LEA

Consumer Cyclical Auto Parts

Lear Corporation is a global automotive technology company. The Company supplies complete seat systems, key seat components, complete electrical distribution and connection systems, high-voltage power distribution products, including battery disconnect units (BDUs), low-voltage power distribution products, electronic controllers and other electronic products to automotive manufacturers. The Company’s segments include Seating and E-Systems. Its Seating segment consists of the design, development, engineering and manufacture of complete seat systems and key seat components. Its E-Systems segment consists of the design, development, engineering and manufacture of complete electrical distribution and connection systems, high-voltage power distribution products, including BDUs, and low-voltage power distribution products, electronic controllers and other electronic products. Its software offerings include embedded control, cybersecurity software and software to control hardware devices.

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Lear Corp

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Post by biggameon Jun 14, 2012 8:05pm

273 Views

Post# 20016194

new beginning

Leader Energy Services Ltd. (LEA-V;
.50); Announces New Debt Facilities (Outperform; $1.15 target)

LEA has entered into new credit facilities with a Canadian chartered bank and as a result will be making an $8.9 million principal payment to retire its current 12% secured debt facility and as well, has transferred its demand revolving facility to its new lender (new interest rate is 4.25%). The new credit facilities include a demand revolving facility of up to $5 million, a 3 year committed non-revolving term loan of up to $9 million amortized over 60 months with provision to extend for two additional one year terms subject to lender approval, and a demand revolving reducing capex loan of up to $2 million.
This refinancing will save Leader approximately
.7 mm in cash interest per year. As a result of this refinancing, we expect the company will record a non-cash refinancing charge in Q2/12 (we estimate this non-cash charge could be in the
.7 mm -
.9 mm range). The effect of less punitive interest costs will more than offset the financing charge and will immediately improve the bottom line.
LEA continues to reduce its leverage, exiting Q1/12 with $17.6 mm of net debt (down from $24.2 mm at the end of 2011). We are currently forecasting that leader will exit 2012 with approximately $15.0 mm in net debt, which equates to 1.2x debt to 2013E cash flow in our model. LEA is committed to continuing to pay down its debt and move towards the 0.5x-1.0 debt to cash flow range.
In terms of our model, we had already assumed that LEA would refinance its high interest debt facility and previously adjusted our model accordingly. As such, we leave our 2012E EPS unchanged at
.13 and also leave our 2013E EPS estimate unchanged at
.24. In terms of valuation, we maintain our target P/E multiple of 5.0x and apply this to our 2013E EPS. After rounding, our target price remains unchanged at $1.15 and we maintain our Outperform rating.