Japan Tobacco to Sell Bonds After Gallaher Purchase

Source from:  By Junko Fujita and Takashi Ueno July 2 (Bloomberg) 07/03/2007

Japan Tobacco Inc., the world's third-largest traded cigarette maker, said it plans to sell about 150 billion yen ($1.2 billion) of bonds to repay debt for the purchase of Gallaher Group Plc. Tokyo-based Japan Tobacco hired Daiwa Securities SMBC Co. and Nomura Holdings Inc. to handle the sale, said Yukiko Seto, a spokeswoman for Japan Tobacco. The company is aiming to price the bonds this month, Seto said in a telephone interview. Japan Tobacco completed in April its purchase of Gallaher, the maker of Benson & Hedges cigarettes in Europe, for 7.5 billion pounds ($15 billion) in the biggest international takeover by a Japanese company. Japan Tobacco borrowed 450 billion yen from Mizuho Bank Ltd., part of Mizuho Financial Group Inc., Seto said. The maker of Camel cigarettes also borrowed 1.9 billion pounds from a group of banks led by Merrill Lynch & Co. The borrowing was refinanced on June 26 using cash and loans from banks including Citigroup Inc., ING Groep NV and Royal Bank of Scotland Group Plc, Seto said. Japan Tobacco plans to sell bonds maturing in three, four and five years, she said. Japan Tobacco's senior credit rating is Aa3, the fourth-highest level, by Moody's Investors Service. Standard & Poor's rates the company's local issue A+, or the fifth highest. Enditem