Global manufacturer and seller of apparel essentials, Hanesbrands Inc. (HBI - Analyst Report) announced that it will initiate the completion of repayment of its roughly $300.0 million floating-rate bond debt due 2014.
The company had started the process of repayment in July 2012, when it paid 50% of its Floating Rate Senior Notes due 2014 worth $150 million on July 12, 2012. The company expects to repay the remaining 50% worth $147.1 million on Oct. 17, 2012.
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.
At the end of the second quarter of 2012, Hanesbrands had $1.7 billion of long-term debt on its balance sheet with a debt to capital ratio of 71.6%.
The company also aims to pay off its $500 million 8% notes in 2013. The debt repayments are in line with management’s expectations to reduce its long-term debt in 2012 and 2013 by using its free cash flow.
In July 2012, Hanesbrands successfully negotiated an amendment to its revolving loan facility credit agreement that reduced the company’s revolving loan facility borrowing rate by 100 basis points. It also reduced its unused revolver fee by 15 basis points. The agreement extends the revolver’s maturity period initially to September 2016 and could eventually extend it to July 2017.
In conjunction with its presentation at the Goldman Sachs Global Retailing Conference, Hanesbrands has reaffirmed its 2012 guidance for continuing operations of $2.50 to $2.60 of earnings per diluted share, net sales of $4.52 billion to $4.57 billion, and free cash flow of $400 million to $500 million.
The Zacks Consensus Estimate is pegged at $2.56 for the full year 2012.
Hanesbrands competes against Warnaco Group Inc. , Maidenform Brands Inc. and Gildan Activewear Inc. . Currently, we have a Neutral recommendation on Hanesbrands, which carries a Zacks #3 Rank (short-term Hold rating).