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Livent Corp LTHM

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Trimming FVE to $13 as Livent Announces Pricing on Convertible Bonds; Shares Materially Undervalued

Seth Goldstein, CFA Equity Analyst

Analyst Note

| Seth Goldstein, CFA |

On June 23, Livent announced the pricing for the senior convertible notes the company will issue. The notes will carry a 4.125% interest rate and convert at a price of approximately $8.73 per share, which represents a 35% premium to the June 22 closing price of $6.47 per share. In our June 22 update, we assumed a 45% premium for the notes. As the premium is lower than our assumption, the notes will be slightly more dilutive than we had originally modeled, with each $1,000 bond converting into 114.4885 shares, versus our assumption of roughly 106.6 shares. 

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Company Profile

Business Description

Livent is a pure-play lithium producer formed when FMC spun off its lithium business in October 2018. Livent should benefit from increased lithium demand via higher electric vehicle adoption, as lithium is a key component of EV batteries. The company's low-cost lithium carbonate production comes from brine resources in Argentina. Livent also operates downstream lithium hydroxide conversion plants in the United States and China.

2929 Walnut Street
Philadelphia, PA, 19104
T +1 215 299-6000
Sector Basic Materials
Industry Specialty Chemicals
Most Recent Earnings Mar 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 800