Altria Group Inc.
) has commenced a public offering of new unsecured notes in four
series. Altria has also revised its reported fiscal 2013 guidance
to reflect the charges incurred for the offering.
The first two series of the public offering comprise notes
worth $1.5 billion carrying an interest rate of 9.95% and 10.2%
due on 2038 and 2039, respectively. The third and fourth series
comprise of notes worth $1.94 billion and $1.35 billion carrying
interest rates of 9.7% and 9.3%, respectively. The third
and fourth series of notes will mature on 2018 and 2019,
Leading financial institutions like
), RBS Securities Inc. and Deutsche Bank Securities, Inc. of
) are acting as the joint book-running managers for the
The tender offer is scheduled to close on Nov 25, 2013 by
midnight. Altria's senior unsecured notes issuance has been rated
'BBB- (Stable)' by Fitch Ratings.
The offering of senior notes is expected to reduce the
weighted average coupon rate and interest expense thus improving
the liquidity of the company. As of Sep 30, 2013, Altria had $4.2
billion of cash and cash equivalents and revolving credit
availability of $3 billion. Altria had a total debt of $14.9
billion as of Sep 30, 2013.
Altria is also active in returning wealth to its shareholders.
During the recently concluded third quarter, Altria authorized an
extension of share repurchase program started in Apr 2013, from
$300 million to $1 billion. Altria repurchased 4.5 million shares
at a total cost of approximately $156 million during the third
quarter of 2013.
In Aug 2013, Altria hiked its regular quarterly dividend by
9.1% to 48 cents per share as part of its strategy to maintain a
dividend payout ratio of 80%.
Altria revised its 2013 full-year reported earnings per share
to reflect the impact of the estimated one-time charge related to
the cash tender offer. However it reaffirmed its 2013 earnings
guidance range of $2.36 to $2.41, representing 7% to 9% growth
rate from $2.21 per share in 2012. This reflects the benefits of
the company's cost reduction initiatives and positive
Headquartered in Richmond, Virginia, Altria engages in the
manufacture and sale of cigarettes, smokeless products and wine
in the United States and internationally. Currently, the stock
carries a Zacks Rank #3 (Hold).
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