WOONSOCKET - CVS Caremark Corp. has commenced cash tender offers for any and all 6.6 percent senior notes due 2019 and as well as for 6.125 percent senior notes due 2016 and a 5.75 percent senior notes due 2017.
Under the program, the aggregate principal amount of notes to be purchased by the company will be $1 billion, based on first purchasing outstanding 6.6 percent notes (the company has $1 billion such notes out) and making up the balance to the $1 billion maximum by buying 6.125 percent and 5.75 percent notes.
According to a company release, the purpose of the tender offers is to refinance a portion of the company’s outstanding indebtedness.
“This tender offer allows us to take advantage of the current favorable interest rate environment,” Dave Denton, executive vice president and chief financial officer, said in a statement. “We expect to record a one-time expense in the fourth quarter of 2012 related to the tender. We also expect to extend a portion of our debt at lower rates, which will reduce our interest expense going forward.”
Notes validly tendered and not withdrawn before 5:00 p.m. on Dec. 7 will be eligible for the total consideration.
CVS also issued $1.25 billion of 10-year bonds to repurchase outstanding debt. The Woonsocket-based company issued 2.75 percent notes maturing in 2022 to yield 110 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg.
The pharmacy’s $700 million of 6.125 percent debt maturing in 2016 traded at 118.4 cents on the dollar to yield 1.07 percent on Nov. 23, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Barclays Plc and Wells Fargo & Co. managed the sale of the new bonds for the Woonsocket, Rhode Island-based company.
This was reported with assistance from Bloomberg News.