PVH Completes Debt Offering - Analyst Blog
26 Dezembro 2012 - 8:20AM
Zacks
The world’s largest shirt and
neckwear company, PVH Corporation
(PVH), recently announced that it has completed
the offering of $700 million senior unsecured notes. The debt
offering has been completed on the scheduled date i.e. December 20,
2012.
The unsecured senior notes carry an
annual interest rate of 4.5% and are scheduled to mature on
December 15, 2012. A consortium of Barclays, Citigroup, BofA
Merrill Lynch, Credit Suisse and RBC Capital Markets were the
underwriters of this issuance.
The company intends to use the
proceeds from the offering along with cash on hand to pay a portion
of the cash consideration related to the acquisition of The
Warnaco Group, Inc. (WRC). In October this year, PVH
entered into an agreement with Warnaco Group to acquire the latter
for a consideration of approximately $2.9 billion.
The acquisition is expected to
close by August 20, 2013. However, if PVH fails, the company has to
redeem the full principal amount along with accrued interest if any
on the senior notes, within a period of 10 days.
As of October 28, 2012, the company
has a cash and cash equivalents of $276.6 million, long-term debt
of $1.648 billion and shareholders’ equity of $3.047 billion. The
current debt-to-capitalization ratio comes to 35.1%. However, after
the completion of this debt offering, it now approximates to
43.5%.
Moreover, for the third quarter
ended October 28, 2012, the company paid interest expense of $28.3
million. The new debt offering will increase the company’s
quarterly interest expenses by approximately $7.9 million.
We believe that the
debt-to-capitalization ratio, following the debt offering, will
gradually decline in the long run owing to the company’s consistent
track-record of generating cash flows, which may be utilized to
bring down debt.
Zacks Rank
PVH Corp., which competes with
Ralph Lauren Corporation (RL), currently has a
Zacks #2 Rank, which translates into a short-term Buy rating.
However, given the sluggish domestic economic growth coupled with
the crisis in Europe and slowdown in China, we remain slightly
cautious on the stock and uphold our long-term ‘Neutral’
recommendation.
PVH Corp., formerly known as
Phillips-Van Heusen Corporation, is headquartered in New York. PVH
Corp. designs and markets branded dress shirts, neckwear,
sportswear, footwear and other related products. The company
markets its products at a wholesale level through department store
chains and directly to consumers through retail stores. The
company's portfolio of brands includes its owned brands and its
licensed brands.
PVH CORP (PVH): Free Stock Analysis Report
RALPH LAUREN CP (RL): Free Stock Analysis Report
WARNACO GRP INC (WRC): Free Stock Analysis Report
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