Owens-Illinois Inc. (OI) is refinancing its debt, using a new $2
billion bank credit agreement to redeem more expensive fixed rate
bonds and other borrowings.
Chief Financial Officer Ed White said the current favorability
of credit markets "presented an ideal opportunity" to refinance.
The glass-container maker said it expects a lower interest expense
this year thanks to the refinancing, though its total debt
outstanding should stay roughly the same.
Owens-Illinois estimated this year's net interest expense would
be $280 million at current foreign currency rates and debt levels,
excluding the impact of redemption premiums and the write-off of
finance fees.
The new agreement includes $1.1 billion in term loans and a $900
million revolving credit facility. The company plans to use
proceeds from the new borrowings to repay and end its 2006 credit
agreement maturing next year as well as to redeem 6.75% senior
notes due 2014.
The company--which makes containers for beverages in 21
countries--in its latest quarterly results posted higher revenue,
and though profit slipped on higher costs such as inflation, it's
bottom line did better than expected. It had been reporting falling
revenue and margins of late, with demand up globally for wine, food
and spirits but sluggish for beer bottles in more mature
markets.
Owens-Illinois shares closed Monday down 2.3%, at $31.10, in the
midst of a wide market downturn, and they weren't active after
hours.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com