GE Capital, one of the operating segments General Electric Company (GE - Analyst Report), recently announced the redemption of all of its outstanding 6.50% GE Capital InterNotes due August 15, 2048. The notes will be redeemed at a redemption price of $25 per note together with unpaid accrued interest of $0.0315972.
The senior unsecured and unsubordinated notes worth $250 million were raised in 2008 to increase its liquidity. The company had offered 10 million shares at par value of $25 each, with 6.5% coupon payable quarterly. The redemption date is in line with its previously announced call date of Aug 15, 2013.
During the last reported quarter, General Electric had total debt of $387.3 billion. The redemption of the senior notes will reduce the company’s total outstanding debt to $387.05 billion. General Electric is likely to save $4.06 million quarterly in interest payments from this redemption.
General Electric is likely to use its strong cash on hand to repay its existing debt. The company’s cash & cash equivalents increased 5.2% from $125.9 billion at year–end 2012 to $132.5 billion in the last reported quarter.
Historically, General Electric has generated a strong cash flow that allows management to invest in product innovations, acquisitions, and business development to fuel both organic and inorganic growth. However, GE Capital’s loan defaults are likely to be a drag on the company’s goodwill.
General Electric is one of the most diversified technologies and financial service corporations in the world. Its segments include Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Home & Business Solutions, and GE Capital. GE Capital GE Capital meets the financial needs of businesses of all sizes. The segment includes General Electric’s Commercial Lending and Leasing, Consumer, Real Estate, Energy Financial Services and GE Capital Aviation Services businesses and General Electric Capital Corporation Corporate.
General Electric currently has a Zacks Rank #2 (Buy). Better placed stocks within the industry worth including are Hutchison Whampoa Ltd. (HUWHY), Macquarie Infrastructure Company LLC (MIC - Snapshot Report) and PACKAGING CORPORATION OF AMERICA (PKG - Snapshot Report), each carrying a Zacks Rank #2 (Buy).