Abercrombie to Initiate Debt Refinancing - Analyst Blog

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In a move to take advantage of the current favorable credit market and enhance its financial flexibility, the teen apparel retailer, Abercrombie & Fitch Company ( ANF ) recently announced the decision to refinance its existing credit facilities.

Currently, the company has $500 million worth of existing credit facilities which includes an unsecured Revolving Credit Facility of $350 million maturing on Jul 27, 2016 and a Term loan A of $150 million maturing on Feb 23, 2017.

Abercrombie intends to refinance the above mentioned credit facilities with a new credit facility of worth $725 million of which $400 million will be issued under Asset-Based Revolving Credit Facility and $325 million will be issued under Term Loan B. The maturity period of both the facilities will be five and seven years, respectively.

At the end of first-quarter fiscal 2015, the company had borrowings of $131.5 million under the Term loan A and $60 million under the Revolving Credit Facility. After paying the entire outstanding amounts, the balance of proceeds from the new credit agreements will be used for general corporate purposes which includes share repurchases. For the fiscal year ended Feb 1, 2014, the average interest rate stood at 1.85% on its existing credit facilities.

Borrowing costs are still very low, enabling companies to obtain easy financing. Corporate bonds and borrowings from banks are in high demand as the U.S. treasuries are yielding low rates. We believe that the aforementioned moves by the company will provide it with financial flexibility to drive long-term growth.

Other Stocks to Consider

Currently, Abercrombie carries a Zacks Rank #3 (Hold). However, some better-ranked stocks in the shoe/apparel retail industry include Citi Trends, Inc. ( CTRN ), The Men's Wearhouse Inc. ( MW ) and Christopher & Banks Corp. ( CBK ), all carrying a Zacks Rank #1 (Strong Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ANF , CBK , CTRN , MW

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