Newell Rubbermaid Inc.
), the manufacturer of Sharpie pens and Rubbermaid containers,
recently announced the sale of $500 million senior notes. The new
debt is divided into two parts -$250 million senior notes due 2015
and $250 million senior notes due 2022.
The senior notes due 2015 carry an interest rate of 2.0% p.a.
and will mature on June 15, 2015, whereas the senior notes due 2022
will mature on June 15, 2022 and will pay interest at the rate of
4.0% p.a. Interest on both notes will be paid semi-annually on June
15 and December 15 of every year.
The company intends to use the net proceeds from the issuance to
pay in full its 5.25% Convertible Quarterly Income Preferred
Securities, lower its debt under its commercial paper program and
receivables financing facility and for general corporate
Borrowing costs have gone down significantly, and in turn,
facilitating the companies to obtain easy financing at compelling
prices. Debt offerings of big companies are being oversubscribed,
providing the corporations the option to price their offerings at
lower rates. Hence, several companies are coming up with debt
offerings to generate interest expense savings by refinancing their
Prior to this, in December 2011, in an effort to enhance its
financial flexibility, Newell entered into an $800 million
five-year unsecured revolving credit agreement with a consortium of
the world's leading investment bankers maturing on December 2,
2016.This credit line facility helps the company to borrow funds at
various interest rates with an additional facility of issuing
letters of credit of up to $100 million.
Under a revolving credit facility, a company can borrow again
once it repays all dues under the old credit facility. The company
may utilize this fund for general corporate purposes, including
repayment of outstanding commercial papers, working capital and
capital investment or acquisitions.
Newell Rubbermaid is one of the leading manufacturers of home
and office products in the U.S. The company also possesses a strong
portfolio of widely popular brands, such as Sharpie, Paper Mate,
Dymo, Expo, Waterman, Parker, Irwin, Lenox, Rubbermaid, Levolor,
Graco, Calphalon and Goody. Leveraging its strong brand equity,
Newell Rubbermaid expects modest earnings going ahead, provided the
market scenario improves.
The company faces intense competition from numerous
manufacturers and distributors of consumer and commercial products,
Cooper Industries plc
Avery Dennison Corporation
Newell Rubbermaid currently has a Zacks #3 Rank, implying a
short-term 'Hold' rating on the stock. The company retains a
long-term 'Neutral' recommendation.
AVERY DENNISON (AVY): Free Stock Analysis
COOPER INDS PLC (CBE): Free Stock Analysis
NEWELL RUBBERMD (NWL): Free Stock Analysis
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