Sappi Ltd., the world’s largest producer of glossy paper, more than doubled the size of a bond offering and said it will use the funds to refinance more expensive debt.
The debt sale by Sappi’s PE Paper Escrow GmbH unit was increased to $700 million from $300 million, with the new bonds consisting of $400 million notes due in 2017 with a coupon of 7.75 percent a year and $300 million of debt due 2019 with an annual coupon of 8.375 percent, Johannesburg-based company said in a statement today.
Sappi will buy back as much as $700 million of outstanding dollar-denominated 12 percent senior-secured debt maturing in 2014 and euro-denominated 11.75 percent bonds due the same year, it said.
“The pricing of this upsized bond offering represents a further step in the execution of Sappi’s strategy, dealing with its high-cost 2014 bonds and improving its debt maturity profile,” said Chief Executive Officer Ralph Boettger. The transaction will cut Sappi’s yearly cash-finance charges by about $27 million, he said.
Sappi has total debt of $1.97 billion, including 350 million euro ($444 million) in bonds and $300 million in notes due in August 2014, according to data compiled by Bloomberg. The company will consider resuming dividend payments once net debt has dropped below $2 billion, Boettger said on Feb 8.