) has recently announced the pricing of senior notes aggregating
$500 million. These notes carry an interest rate of 3.75% and
will mature in 2023. At the end of Mar 31, Lorillard had $3.1
billion of debt.
The offering involves a consortium of renowned banks acting as
the joint book-running managers. These include Barclays Capital
Inc - a unit of
), Goldman Sachs & Co. - a subsidiary of
The Goldman Sachs Group Inc
), Wells Fargo Securities, LLC - a unit of
Wells Fargo & Company
(WFC), J.P. Morgan Securities LLC - a wing of
JPMorgan Chase & Co.
), Fifth Third Securities, Inc - a unit of
Fifth Third Bancorp
(FITB) and RBS Securities Inc - an arm of
The Royal Bank of Scotland Group plc
Lorillard stated that the sale of notes will close on May 20.
Further, the net proceeds from the note offering will be used for
general corporate purposes, share repurchases, redemption of
securities, acquisitions, working capital needs and capital
Lorillard is one of the most efficient and aggressive
companies in the tobacco industry that regularly increases
shareholder return in the form of dividends and share repurchase
activities. The company has rewarded its shareholders and
increased dividend payment every year.
In the recently reported first quarter 2013, the company
repurchased approximately 1 million shares at a cost of $40
million under the $500 million share repurchase program announced
in Mar 2013. The company has $460 million worth of shares
remaining in its share buyback program. Lorillard also paid a
quarterly dividend of 55 cents in March, an increase of 6.5% from
the prior dividend. Over the long-term, Lorillard expects to
return approximately 70-75% of its earnings to shareholders in
the form of dividends.
This note offering will enable the company to attain financial
flexibility and position Lorillard favorably to pursue investment
opportunities and acquisitions, which will go a long way toward
enhancing its top-line growth. Lorillard holds a Zacks Rank #3
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