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Union Pacific Corporation (NYSE:UNP), a leading railroad operator with a market capitalization of $151.8 billion, has entered into an agreement to issue $2 billion in corporate notes, according to a recent 8-K filing with the Securities and Exchange Commission. The transaction, which took place on Monday, involves the sale of two sets of notes: $1 billion of 5.100% notes due in 2035 and another $1 billion of 5.600% notes due in 2054.
The offering was made under a shelf registration statement previously filed with the SEC. The notes are being issued pursuant to an indenture dated April 1, 1999, between Union Pacific and The Bank of New York Mellon (NYSE:BK) Trust Company, N.A., which acts as trustee.
BoA Securities, Inc., Citigroup (NYSE:C) Global Markets Inc., Morgan Stanley (NYSE:MS) Co. LLC, and Wells Fargo (NYSE:WFC) Securities, LLC served as representatives of the underwriters for the sale. According to the terms of the underwriting agreement, these financial institutions have agreed to purchase the notes, subject to certain conditions.
The proceeds from the issuance of the notes are expected to be used for general corporate purposes. This may include refinancing existing debt, funding capital expenditures, or other corporate expenses. According to InvestingPro data, Union Pacific operates with a moderate level of debt, maintaining a debt-to-equity ratio of 1.9 and generating strong EBITDA of $12.17 billion in the last twelve months.
The legal aspects of the notes, including their legality, have been validated by John A. Menicucci, Jr., Assistant Secretary of Union Pacific Corporation. His opinion, along with the consent, is attached to the 8-K filing as an exhibit.
Investors and market observers will be watching closely to see how this capital raise influences Union Pacific’s financial structure and future investment strategies. The issuance of these notes reflects the company’s proactive approach to managing its long-term debt profile and liquidity needs.
This financial move by Union Pacific Corporation is based on information provided in the company’s SEC filing.
In other recent news, Union Pacific Corporation has been the subject of various analyst revisions. Loop Capital downgraded Union Pacific’s stock rating from Hold to Sell, reducing the price target to $200 due to concerns about the impact of new tariffs on the North American auto industry. In contrast, Benchmark, Baird, Citi, and TD Cowen have all increased their price targets for Union Pacific, following a strong fourth-quarter earnings report.
Union Pacific’s fourth-quarter earnings per share (EPS) of $2.91 surpassed both the consensus estimate and analysts’ forecasts, primarily due to reduced expenses. The company achieved record levels of workforce productivity, train length, and terminal dwell time over the year. Despite challenges, Union Pacific’s focus on operational improvements positions the company to attract new business and implement pricing strategies that outpace inflation.
Union Pacific’s management has expressed confidence in delivering an industry-leading operating ratio and achieving a three-year EPS compound annual growth rate in the high single to low double digits. However, the company’s exposure to cross-border tariffs and potentially challenging year-over-year comparisons in 2025 may lead to EPS growth at the lower end of the company’s multi-year target range. Despite these potential headwinds, the recent developments indicate a mixed outlook for Union Pacific.
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