03.14.13
Avon Products, Inc. has completed refinancing activities, including the completion of a public offering of $1.5 billion in notes. The company also entered into a $1 billion four-year unsecured Revolving Credit Facility Agreement, which replaces the previous $1 billion Revolving Credit Facility Agreement.
• Issued $1.5 billion of unsecured notes generating net proceeds of $1.48 billion (after transaction costs) with maturities of 3, 7, 10 and 30 years
• Repaying $1.9 billion of debt including: $380 million of the $550 million term loan; $125 million 4.625% notes due May 15, 2013 at maturity; $535 million private notes (plus make-whole); anticipated redemption of $500 million 5.625% Notes due 2014 (plus make-whole); $250 million 4.80% notes due March 1, 2013 paid with cash on hand; utilizing $400 million in cash to reduce leverage, and negotiated covenants to now provide necessary flexibility to support the turnaround.
"Through this refinancing, we have achieved increased financial flexibility, which is critical to our ability to successfully execute Avon's turnaround," said Kimberly Ross, EVP & CFO, Avon Products, Inc."Our refinancing activities have improved our balance sheet, and we are pleased with the outcome."
In summary, the company has taken or anticipates taking the following actions to improve the health of its balance sheet:
• Entered into a new four-year $1 billion unsecured Revolving Credit Facility Agreement, replacing the previous $1 billion Revolving Credit Facility Agreement,• Issued $1.5 billion of unsecured notes generating net proceeds of $1.48 billion (after transaction costs) with maturities of 3, 7, 10 and 30 years
• Repaying $1.9 billion of debt including: $380 million of the $550 million term loan; $125 million 4.625% notes due May 15, 2013 at maturity; $535 million private notes (plus make-whole); anticipated redemption of $500 million 5.625% Notes due 2014 (plus make-whole); $250 million 4.80% notes due March 1, 2013 paid with cash on hand; utilizing $400 million in cash to reduce leverage, and negotiated covenants to now provide necessary flexibility to support the turnaround.
The company expects interest expense in 2013 to increase approximately 10% as compared to 2012 as it extended its maturity profile and decreased reliance on floating rate debt. In addition, interest expense will be impacted by one-time charges associated with make-whole premiums related to the prepayment of the private placement notes of $65 million and $25 million if the company prepays its Notes due in 2014.