Altria Offers Senior Notes, Revises Outlook - Analyst Blog

Tobacco maker Altria Group Inc. ( MO ) has commenced a public offering of new unsecured notes in four series. Altria has also revised its reported fiscal 2013 guidance to reflect the charges incurred for the offering.

The first two series of the public offering comprise notes worth $1.5 billion carrying an interest rate of 9.95% and 10.2% due on 2038 and 2039, respectively. The third and fourth series comprise of notes worth $1.94 billion and $1.35 billion carrying interest rates of 9.7% and 9.3%, respectively. The third and fourth series of notes will mature on 2018 and 2019, respectively.

Leading financial institutions like Goldman Sachs ( GS ), RBS Securities Inc. and Deutsche Bank Securities, Inc. of Deutsche Bank ( DB ) are acting as the joint book-running managers for the tender offer.

The tender offer is scheduled to close on Nov 25, 2013 by midnight. Altria's senior unsecured notes issuance has been rated 'BBB- (Stable)' by Fitch Ratings.

The offering of senior notes is expected to reduce the weighted average coupon rate and interest expense thus improving the liquidity of the company. As of Sep 30, 2013, Altria had $4.2 billion of cash and cash equivalents and revolving credit availability of $3 billion. Altria had a total debt of $14.9 billion as of Sep 30, 2013.

Altria is also active in returning wealth to its shareholders. During the recently concluded third quarter, Altria authorized an extension of share repurchase program started in Apr 2013, from $300 million to $1 billion. Altria repurchased 4.5 million shares at a total cost of approximately $156 million during the third quarter of 2013.

In Aug 2013, Altria hiked its regular quarterly dividend by 9.1% to 48 cents per share as part of its strategy to maintain a dividend payout ratio of 80%.


Altria revised its 2013 full-year reported earnings per share to reflect the impact of the estimated one-time charge related to the cash tender offer. However it reaffirmed its 2013 earnings guidance range of $2.36 to $2.41, representing 7% to 9% growth rate from $2.21 per share in 2012. This reflects the benefits of the company's cost reduction initiatives and positive pricing.

Headquartered in Richmond, Virginia, Altria engages in the manufacture and sale of cigarettes, smokeless products and wine in the United States and internationally. Currently, the stock carries a Zacks Rank #3 (Hold).

DEUTSCHE BK AG (DB): Free Stock Analysis Report

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ALTRIA GROUP (MO): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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