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Huntsman Corp.'s Asset Sale Spurs Buybacks, Sports 13% Total Yield

Published Tue, 13 Aug 2019 15:53:07 -0400 on Seeking Alpha

Huntsman Corp.'s (NYSE: HUN) Sale of $2 Billion in Assets Will Spur Aggressive Buybacks Over The Next Year

When Huntsman Corp. announced the asset sale on August 7, 2018, and gave its presentation to analysts the next day, it made clear that a major portion of the net $2.07 billion in proceeds would be used to "accelerate" share repurchases. HUN also provided detailed forecasts of both its expected adjusted EBITDA and expected free cash flow ("FCF").
HUN made it clear that investors could expect $944 million in stable EBITDA earnings once the loss-making subsidiary is sold. They also explained that 40% of EBITDA will convert into FCF. Investors can now expect stable FCF of close to $400 million next year as the sale should close by the end of the year. This can be seen in the financial tables that the company presented:

Source: HUN Presentation 8-7-19
The sale will bring in $1.66 billion in after-tax proceeds. Since there is still $608 million left on the share repurchase program, investors can now expect most of that program will be spent on share repurchases over the next year. Management even stated that if the stock price multiples stay "anywhere near" these levels (meaning today), they would "aggressively look" at accelerating the share repurchase program. They also put this in their slide presentation:

Source: HUN Aug 8, 2019 presentation to analysts on sale of assets
Total Yield is Now Expected To Be 12.7% of Market... Read more