Ferro skids after announcing $150M notes sale

Shares of chemicals maker Ferro Corp. fell more than 10 percent Wednesday, a day after announcing it will sell $150 million in notes due in 2013 to buy or redeem outstanding notes due next year.

The company also intends to use the proceeds to pay accrued and unpaid interest on the indebtedness, pay premiums and transaction expenses and finance general corporate activities.

Shares of Ferro traded at $20.91, down $2.46, or 10.4 percent, in afternoon trading.

In a filing Tuesday with the U.S. Securities and Exchange Commission, Ferro said it has a "significant amount of indebtedness."

As of June 30, assuming completion of a previous sale of notes and the repurchase or redemption of outstanding senior notes, the company's debt would have been $584.2 million, excluding unused commitments under a revolving loan facility, that would have represented approximately 54 percent of total capitalization.

Ferro said it "may still be able to incur substantially more debt."

Analyst David Begleiter of Deutsche Bank last week maintained his "Hold" rating for Ferro, saying that although its recent second quarter was its best in eight years, growth will slow in China in the second half of the year, demand will be seasonally weaker in the third quarter in Europe and Ferro will feel continuing cost pressures.

Mary Abood, a spokeswoman for Ferro, said the stock slide is expected following the filing of a convertible offering.

"It's typical of hedging activity," she said. "We don't see it as a problem."