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Amkor (AMKR) to Partially Redeem $200 Million Notes Due 2021


Amkor Technology, Inc. AMKR has announced its plans of redeeming $200 million of the outstanding $400 million, 6.625% senior notes, due 2021. The redemption will be effective July 19, 2017.

The company has already sent a notice of partial redemption to all the registered holders of the notes.

Following the news, the company’s share price increased 2.27%. Also, in the last one year, shares of Amkor outperformed the Zacks categorized Electronics Semiconductors industry. While the industry gained 45.4%, the stock returned 79.4%.

Details about the Partial Redemption

The notes will be redeemed at 101.656% of the principal amount of the notes or $1,016.56 per $1,000 principal amount, paid in cash. Additionally, the company will pay the accrued and unpaid interest to the registered holders of the Notes.

The notes will be repaid with the company’s cash on hand. The redemption is expected to result in potential annualized interest savings of approximately $13.3 million. In regard to the early retirement of debt, Amkor also expects to record a one-time charge of approximately $4.4 million in the third quarter of 2017.

This is likely to add further flexibility to its already sturdy financial position.

Bottom Line

Amkor Technology is one of the largest providers of semiconductor packaging and test services. It packages and tests integrated circuits (ICs) for chip manufacturers, fabless semiconductor companies and contract foundries.

The company has always been committed to increasing shareholders’ value. The company’s strategic initiatives to improve profitability and reduce liabilities make it well positioned for future growth. Also, its high revenues and strong cash flow generation is a big positive.

In the last reported quarter, cash flow from operations was $103 million compared with $238 million in the prior quarter. Also, total cash, cash equivalents and restricted cash were $616 million, up from $551.5 billion in the prior quarter.

Though we remain concerned about weakness in the smartphone market, Amkor is well positioned in growing markets such as industrial and auto and communication.

Zacks Rank and Stocks to Consider

Amkor carries a Zacks Rank #2 (Buy).Some other favorably placed stocks in the broader technology sector include KLA-Tencor KLAC and Applied Materials AMAT, each sporting a Zacks Rank #1, while Advanced Energy Industries, Inc. AEIS, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.

Applied Materials delivered a positive earnings surprise of 3.35%, on average, in the trailing four quarters.

Advanced Energy Industries, Inc. delivered a positive earnings surprise of 10.46%, on average, in the trailing four quarters.

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