) concluded the earlier announced redemption of its 5% Notes
worth $250 million. This Zacks Rank #4 company utilized its
available cash and short-term borrowings for redemption
The strategy signifies the company's ability to generate cash
flow, which has been used to bring down debts, leading to
reduction in interest expenses.
The redemption of the Notes, which were due in 2014, will
result in a pre-tax interest savings of about $2 million and $8
million in fourth-quarter of fiscal 2013 and fiscal 2014,
respectively. However, it is expected that the company has
incurred a pre-tax expense of approximately $9 million related to
Borrowing costs have gone down significantly, helping the
companies to obtain easy financing at compelling prices.
Corporate bonds and borrowings from banks are in high demand as
the U.S. treasuries are yielding low rates.
On Dec 12, 2012, Brown-Forman completed its offering of $750
million unsecured senior notes. According to the company, the
notes were offered in three different tranches having distinct
maturity dates. The first $250 million notes, carrying an annual
interest rate of 1.00%, will mature on Jan 15, 2018. Another $250
million worth of senior notes, which were issued at an annualized
interest rate of 2.25%, is due on Jan 15, 2023. The last $250
million of notes carry an annual interest rate of 3.75% and
maturity date of Jan 15, 2043.
Debt offerings of big companies are being oversubscribed,
providing corporations the option to price offerings at lower
rates. Hence, several companies are coming up with debt offerings
to lower interest expense either by refinancing outstanding
borrowings or redeeming the higher interest-bearing debts.
Over the last 2-3 months, several companies including
FelCor Lodging Trust Inc.
) completed offering and redemption of debt simultaneously to
reduce interest expenses.
Moreover, some companies are offering debts to finance
long-term investments, such as
). In late Dec 2012, the company had issued $700 million of
senior unsecured notes to pay a portion of the cash consideration
related to the acquisition of The Warnaco Group, Inc.
BROWN FORMAN B (BF.B): Free Stock Analysis
FELCOR LODGING (FCH): Free Stock Analysis
PVH CORP (PVH): Free Stock Analysis Report
STAPLES INC (SPLS): Free Stock Analysis
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