12:34 PM EST, 12/24/2024 (MT Newswires) -- ATS Automation closed $200 million in additional senior notes financing last week.

According to Stifel, the 6.5% note has identical terms to the $400 million (due 2032) raised last August. The combined $600 million will be used to repay amounts owed under a revolving facility.

"We estimate ATS has $300 million in capacity (pro-forma) and leverage is currently above a comfort range of 2.0x-3.0x at 3.4x," notes analyst Justin Keywood. The higher leverage is anticipated to improve with progressive quarters and could more materially reduce, upon payment of $155 million in overdue receivables from an OEM customer. "We believe the associated automation equipment is currently in-use by the OEM, supporting payment," Keywood adds.

Stifel continues to favor the medium-term case for ATS as a relatively low-valuation platform automation play, despite near-term EV headwinds.

Maintain Buy rating, $52 target.

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