Editor's note: Prior versions of this story incorrectly reported TRW's total debt.
Tenneco Inc. is offering 12 million additional shares of stock, and TRW Automotive Inc. is selling two groups of senior debt notes totaling at least $475 million, as the suppliers aim to pay off debt and fund operations.
The moves join recent stock offerings by TRW and Dana Holding Corp. as the latest attempts by suppliers to prepare for upcoming debt maturities and production ramp-ups.
The success of the stock and debt offerings could indicate how well auto suppliers can recover from a year of financial crisis driven by automaker production cuts and a resulting credit squeeze on the entire industry.
Tenneco, which makes suspension and exhaust system parts, said late Wednesday in a statement it has priced its shares at $16.50 and expects proceeds to total at least $187 million. The supplier will use the funds to repay outstanding amounts on its revolving credit line and for corporate operations. Tenneco is giving its underwriters 30 days to purchase up to 1.8 million additional shares.
After announcing the stock offering Wednesday morning, Tenneco's shares rose 7 percent to close at $16.98. But the shares closed today down 7.4 percent to $15.72.
TRW plans to put about $233 million of the proceeds from the bond offerings toward paying down its term loan debt, which stands at about $1 billion. The new bonds will be added to the roughly $2.5 billion in outstanding debt the company had in October, spokesman John Wilkerson said.
The maker of steering, suspension, braking, engine and seat belt parts said it would use the rest of its bond funds for corporate purposes, which could include paying off debt.
On Monday, TRW said it was issuing $225 million in bonds due in 2015 in a private placement to institutional investors. TRW said it would sell up to $33.75 million of additional senior notes. Once issued, the bonds can be exchanged for a block of common stock worth 35 percent more than the face value of the bonds.
TRW's second offering, announced Wednesday, was for $250 million of senior unsecured notes due in 2017.
TRW shares today fell 1.6 percent to $23.05, just above Friday's closing price of $22.98.
The Dow Jones industrial average today fell 0.9 percent to close at 10,332.
Tenneco, of Lake Forest, Ill., ranks No. 35 on the Automotive News list of top 100 global suppliers, with sales to automakers of $4.8 billion in fiscal 2008.
TRW, of suburban Detroit, ranks 10th, with $15 billion in sales to automakers in fiscal 2008.
Ryan Beene and Reuters contributed to this report
