Jewelry retailer, Tiffany & Co. (TIF) announced the pricing of two sets of senior notes worth $550 million for private offering.
The initial buyers of the notes are Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., and BNY Mellon Capital Markets, LLC. The first set of notes, due 2024, are worth $250 million and carry an interest rate of 3.8%, while the second set, due 2044, are valued at $300 million and has an interest rate of 4.9%. The offering is scheduled to conclude on Sep 25, 2014.
The net proceeds will be deployed to redeem outstanding principal amounts of $100 million of its 9.05% Senior notes (due Dec 23, 2015), $125 million of its 10.0% Series A-2009 Senior Notes (due Feb 13, 2017), $50 million of its 10.0% Series A Senior Notes (due Apr 9, 2018) and $125 million of its 10.0% Series B-2009 Senior Notes (due Feb 13, 2019) before maturity. Remaining proceeds will be used for general business purposes.
Redemption of these notes is likely to generate a debt extinguishment charge that will squeeze $55—$70 million out of net earnings and 43—53 cents out of net earnings per share for the fiscal year ending Jan 31, 2015.
Apart from this, the company also announced its plans to replace the existing 3-year and 5-year unsecured revolving credit facility worth $275 million (due Dec 19, 2014) and $275 million (due Dec 21, 2016), respectively, with a new 4-year and 5-year unsecured revolving credit facility worth $375 million each.
At present, Tiffany’s is a Zacks Rank #3 (Hold) stock. Other better-ranked retailers worth consideration include Citi Trends, Inc. (CTRN), Signet Jewelers Limited (SIG) and Foot Locker, Inc. (FL). While Citi Trends sports a Zacks Rank # 1 (Strong Buy), Signet and Foot Locker are Zacks Rank #2 (Buy) stocks.
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