Reynolds American Inc.
) has recently commenced the public offering of senior notes
worth $1.1 billion in two parts.
The first part of the notes offering, carrying an interest
rate of 4.9% and scheduled to mature in 2023, will raise $550.0
million. The second part of senior notes worth $550.0 million,
carrying an interest rate of 6.15%, will mature in 2043.
Reynolds is selling the notes under its effective shelf
registration statement filed with the Securities and Exchange
Fifth Third Bancorp
Mizuho Financial Group
), RBC Capital Markets, LLC and Scotia Capital (USA) Inc are
acting as administrative agents for the purpose, along with
certain other lenders.
The notes will be sold until Sep 17, 2013. The proceeds from
the sale will be used to redeem outstanding notes worth $200
million carrying 7.3% interest due to mature in 2015 and $775
million worth of notes carrying 7.625% interest and due in 2016.
The balance is expected to be used to repay some or all of the
$150 million term loan, to pay accrued and unpaid interest, and
for other general corporate purposes.
Reynolds American, which carries a Zacks Rank #3 (Hold),
exited the second quarter with a cash and cash equivalents of
$1.7 billion, compared with $2.8 billion in the prior quarter.
Long-term debt in the quarter remained flat sequentially at $5.02
billion. RAI spent $150 million to purchase 3.1 million shares
under the company's $1.8 billion share repurchase program.
In its recently concluded second quarter of fiscal 2013,
Reynolds surpassed both year-ago results as well as the Zacks
Consensus Estimate on the back of positive pricing and higher
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