The global manufacturer and seller of apparel essentials for men, women, and children, Hanesbrands Inc. (HBI - Analyst Report) announced its intention of repaying 50% of its $300.0 million floating-rate bond debt in July 12, 2012. The company intends to pay off the entire debt by the end of this year.
The floating rate senior notes are due in 2014, and the company plans to redeem the notes at a price that will be equivalent to 100% of its principal amount, which comprises the accrued interest and unpaid till the redemption date.
The company also aims to pay off its $500 million of 8% notes in 2013. The debt repayments are in line with management expectations to reduce its long-term debt in 2012 and 2013 by using its free cash flow, as announced at the first quarter conference call. All these debt repayments are expected to bring down Hanesbrands’s total bond debt to approximately $1.0 billion. Further the substantial payback of the bond debt would bring down the interest expense by $15.0 million in 2012,versus 2011 levels.
At the end of the first quarter of 2012, Hanesbrands had $41.6 million of notes payable and $1.9 billion of long-term debt on its balance sheet. Following the payoff of $150.0 million in July 2012, the company will have $147.1 million worth of outstanding Floating Rate Notes.
Hanesbrands stiffly competes with Warnaco Group Inc. , Maidenform Brands Inc. and Gildan Activewear Inc. (GIL - Snapshot Report). Currently, we have a Neutral recommendation on Hanesbrands, which carries a Zacks #3 Rank (short-term Hold rating).