Packaging Corp. (PKG) Completes $400M Debt Offering; Pays $65.5M to Settle Interest Rate Protection Agreement
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Price: $49.74 --0%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 2.5%
Revenue Growth %: +12.5%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 2.5%
Revenue Growth %: +12.5%
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Packaging Corporation of America (NYSE: PKG) announced today that the company has completed an underwritten public offering of $400 million of 3.90% senior notes due 2022.
The company also announced that it will redeem all of its existing $400 million of ten-year 5.75% senior notes due August 1, 2013 on July 26, 2012. The total cost to redeem the notes is expected to be approximately $432 million, including an estimated redemption premium of $21 million and accrued and unpaid interest through the redemption date of $11 million. The actual redemption premium will be calculated on July 23, 2012 in accordance with the terms of the redeemed notes. The company will fund the redemption with the proceeds received from the completed debt offering and cash on hand.
The company also paid $65.5 million to settle an interest rate protection agreement on the ten-year treasury rate, which the company entered into in August 2011, to protect against interest rate increases in connection with the anticipated refinancing of the 5.75% notes. In accordance with accounting rules, net payments of $56 million, from the settlement of interest rate protection agreements and refinancing fees and expenses, will be amortized as additional interest expense over the term of the new ten-year notes.
In connection with the debt offering and note redemption, the company expects to record a second quarter after-tax charge of $2 million, or $0.02 per share, and an estimated third quarter after-tax charge of $13 million, or $0.14 per share.
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The company also announced that it will redeem all of its existing $400 million of ten-year 5.75% senior notes due August 1, 2013 on July 26, 2012. The total cost to redeem the notes is expected to be approximately $432 million, including an estimated redemption premium of $21 million and accrued and unpaid interest through the redemption date of $11 million. The actual redemption premium will be calculated on July 23, 2012 in accordance with the terms of the redeemed notes. The company will fund the redemption with the proceeds received from the completed debt offering and cash on hand.
The company also paid $65.5 million to settle an interest rate protection agreement on the ten-year treasury rate, which the company entered into in August 2011, to protect against interest rate increases in connection with the anticipated refinancing of the 5.75% notes. In accordance with accounting rules, net payments of $56 million, from the settlement of interest rate protection agreements and refinancing fees and expenses, will be amortized as additional interest expense over the term of the new ten-year notes.
In connection with the debt offering and note redemption, the company expects to record a second quarter after-tax charge of $2 million, or $0.02 per share, and an estimated third quarter after-tax charge of $13 million, or $0.14 per share.
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