Global manufacturer and seller of apparel essentials,
) announced that it will repay the remaining 8% floating-rate
bond debt worth $250.0 million on Dec 16, 2013, which were due in
2016. The company will also complete its goal to reduce its
long-term bond debt to $1 billion.
The company expects to incur a cost of approximately $15
million in the fourth quarter 2013 related to prepayment of debt,
which has already been incorporated in the outlook of fiscal
2013. With the completion of payment of 8% senior notes, HBI will
retire all its debt barring the $1 billion of 6.375% notes.
The company had started the process of repayment of 8% notes
in 2012, when it paid 50% of its Floating Rate Senior Notes due
2016 worth $250 million on Dec 27, 2012. The prepayment of the
50% of the floating notes reduced interest expense substantially
for full year 2013.
The debt repayments are in line with management's expectations
to reduce its long-term debt by using its free cash flow. This is
encouraging, as this increases the credibility of the company. It
also reduces the interest expense and improves liquidity.
Hanesbrands intends to use its resources, henceforth to increase
its shareholder value and invest in the Innovate-to-Elevate
The company has strong cash flows and has reduced its debt
over time. In its recently concluded third quarter of fiscal
2013, it had cash and cash equivalents of $132.3 million compared
with $82.3 million in the previous quarter. Long-term debt was
$1.25 billion in the third quarter of 2013 compared with $1.37
billion in the previous quarter.
On Oct 7, 2013, Hanesbrands completed the takeover of the
underwear apparel chain, Maidenform Brands Inc., for
approximately $583 million. The acquisition was funded with cash
and cash equivalents and short-term borrowings through revolving
credit facilities. Apart from bringing Maidenform's popular under
HBI's banner, the takeover gave the company a competitive edge
Limited Brands Inc
Hanesbrands engages in the marketing of innerwear, outerwear
and hosiery apparel and carries a Zacks Rank #1 (Strong Buy).
Other companies in the same industry are
Michael Kors Holding Ltd
). While Quicksilver holds a Zacks Rank #1 (Strong Buy), Michael
Kors carries a Zacks Rank #2 (Buy).
HANESBRANDS INC (HBI): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
L BRANDS INC (LTD): Free Stock Analysis
QUIKSILVER INC (ZQK): Free Stock Analysis
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