Newell Rubbermaid Inc., which makes Rubbermaid, Paper Mate and Sharpie products, said Monday it is buying back $500 million of its shares through a deal with Goldman, Sachs & Co. and restructuring its debt in an effort to lower interest expenses.
The company will issue $550 million in senior notes due 2020 and launch a cash tender offer to repurchase its $300 million in 10.6 percent notes due 2019. Newell Rubbermaid is offering to buy the notes at a price of $1,437.50 per $1,000 worth of principal.
The notes will pay interest twice a year — on Feb. 15 and Aug. 15 — at a rate of 4.7 percent annual. They'll mature on Aug. 15, 2020.
The offer will expire on Aug. 9.
Later this quarter, the Atlanta-based company plans to offer to swap common stock and cash for its 5.5 percent convertible senior notes due 2014.
If it buys back 32.3 million shares, as well as all of the 2019 notes and the 2014 convertible notes in the various offers, the company will have refinanced $600 million in long-term debt at lower interest rates and increased its outstanding shares by 8 million.
The refinancing will result in a $200 million charge to 2010 earnings, but shouldn't affect the company's guidance. It is expected to help earnings in future periods due to the reduced costs.
"The convertible note financing played an important role helping us refinance our debt in the middle of last year's credit crisis, but we believe it is an appropriate time to revisit it and our overall capital structure," said CEO Mark Ketchum in a statement.
Newell shares rose 52 cents, or 3.4 percent, to close at $16.02 in Monday trading.
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