Will New Capital Keep Navistar Afloat?
October 25, 2012 by Jon C. Ogg
The truck-maker priced a public offering of 10,666,666 shares of its common stock at a price of $18.75 per share. There was no explanation of what the company plans to use the proceeds for. Navistar’s press release simply said, “The company intends to use all net proceeds from the offering for general corporate purposes.” They should have just said, “Look, you know we ran this ship the wrong way and now we need more capital to slide by here.”
What is interesting is that the offering listed J.P. Morgan Securities, Goldman Sachs, BofA Merrill Lynch, and Credit Suisse Securities as the joint book-running managers. We have a question for these underwriters… How will they rate the firm by their analysts when the so-called quiet period ends here?
It may seem premature, but some have questioned whether bankruptcy can be avoided here by Navistar. These are all large brokerage firms which conducted the underwriting. If Navistar goes belly-up, they will have a hard time saying that they did not understand the risks.
Today’s capital raise has shares down only by 2.6% at $18.58 and that is not too bad of a drop considering that the Navistar market cap is only about $1.27 billion without the consideration of this offering. Navistar also hit a new 52-week low of $18.17 today as the prior 52-week range was $18.47 to $48.18.
Navistar just got some extra breathing room with some new capital. Now we have to wait to see if this enough to make things better or not.
JON C. OGG
Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.