Japan Tobacco to Sell 150 Bln Yen Worth of Bonds to Refinance Debt

Source from:  8-July-2007 TOKYO (Thomson Financial) 07/09/2007

Japan Tobacco Inc plans to issue as early as this month about 150 billion yen worth of bonds to replace some of the short-term loans used to finance its acquisition of UK rival Gallaher Group PLC, the online Nikkei newspaper said Saturday. The firm is considering issuing the bonds in several instalments with maturities of three to five years, the report said. The issue, likely to become the largest by a domestic firm so far this fiscal year, is aimed at stabilizing financing costs before interest rates rise, it added. The 2.25 trillion yen acquisition of Gallaher, completed in April, resulted in 1.72 trillion yen in debt excluding interest-bearing liabilities. Japan Tobacco procured 900 billion yen of these funds through short-term bridge loans from U.S. investment firm Merrill Lynch & Co. and Mizuho Bank. Japan Tobacco has already rolled over Merrill Lynch's 450 billion yen portion into a syndicated loan with the participation of some 10 foreign financial institutions. It has also repaid 100 billion yen of Mizuho's loan through cash on hand. Due to the Gallaher purchase, Japan Tobacco's interest-bearing liabilities are expected to balloon to over 1 trillion yen from approximately 220 billion yen as of March 31, the report said. nikkei/mb - mb COPYRIGHT Copyright AFX News Limited 2007. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. Enditem