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CVS Caremark initiates offer to refinance debt
November 26th, 2012
WOONSOCKET, R.I. – CVS Caremark Corp. has made cash tender offers to buy back up to $1 billion of senior notes.
The company reported Monday that under the offers, it would purchase any and all of its $1 billion in 6.60% senior notes due 2019 and up to $1 billion of its $2.45 billion in 6.125% senior notes due 2016 and 5.750% senior notes due 2017, minus the amount of the 2019 tendered and accepted for purchase.
CVS said the purpose of the tender offers is to refinance some of the company's debt.
"This tender offer allows us to take advantage of the current favorable interest rate environment," Dave Denton, executive vice president and chief financial officer, said in a statement. "We expect to record a one-time expense in the fourth quarter of 2012 related to the tender. We also expect to extend a portion of our debt at lower rates, which will reduce our interest expense going forward."
According to CVS, the company has $700 million principal amount outstanding in the 6.125% senior notes maturing in 2016 and $1.75 billion in the 5.750% senior notes coming due in 2017. Priority is being given to the 2016 notes over the 2017 notes.
Notes tendered by the early deadline of Dec. 7 would receive an early tender payment of $30 per $1,000 of face value. The tender offers expire on Dec. 21.
Also on Monday, CVS issued $1.25 billion of 10-year bonds to repurchase outstanding debt, according to published reports.