Printer Friendly

RJR NABISCO 'BBB' SENIOR DEBT AFFIRMED AFTER NEW STOCK ANNOUNCEMENT -- FITCH FINANCIAL WIRE --

 NEW YORK, March 2 /PRNewswire/ -- RJR Nabisco, Inc.'s $7.1 billion 'BBB' senior debt, $3.0 billion 'BBB-' subordinated debt, and $550 million 'F-2' commercial paper are affirmed by Fitch. The action follows today's announcement of a planned initial public offering of $1.5 billion in 93 million shares of letter stock of its Nabisco Foods Group. The credit trend is improving.
 The ratings anticipate a successful public offering and a resulting reduction in outstanding debt. Mitigating these positives, however, will be the institution of a quarterly cash common dividend of 13 cents per share totalling approximately $500 million per year.
 RJR proposes to offer letter stock representing 25 percent of its Nabisco Foods Group to the public. RJR will now report results separately as the RN-Nabisco Group and the RN-Reynolds Group, each of which will have their own class of stock. However, this will not affect the legal standing of bondholders, as they are creditors of the combined entity. Fitch will therefore continue to assess RJR's creditworthiness based on its consolidated financial results and outlook.
 The offering represents another step in RJR's successful deleveraging process, which has lowered the company's annual financing costs each year since its 1989 leveraged buyout. At the time of the LBO, RJR Nabisco had total debt of approximately $30 billion at an annual interest cost of almost $3.4 billion. Since then, debt has been slashed to a more manageable $14 billion with an annual cost of less than $1.5 billion through a combination of asset sales, new equity infusions, refinancings, and cash flow from operations. This transaction will further reduce debt by $1.5 billion.
 Cash flow from operations for the consolidated company is strong and quite resilient despite the negative effects of the consumer trend toward generic cigarettes. RJR generates approximately $4.1 billion in annual cash flow. It requires $2.9 billion for annual cash needs of interest, dividends, taxes, capital expenditures, and working capital. This leaves a considerable cash cushion of almost $1.2 billion per year for debt reduction, acquisitions, or other corporate purposes, including dividends on the new letter stock. Combined common dividends for both groups are anticipated to initially cost approximately $500 million per year.
 Assuming that the remaining LBO debt is refinanced, as has been RJR's practice to date, future debt maturities are relatively modest at an average of $200 million annually over the next five years. Fitch expects that RJR will use a portion of its remaining free cash flow to further reduce high-cost debt. RJR Nabisco is a leading branded consumer products company.
 -0- 3/2/93
 /CONTACT: Thomas W. Hoens, 212-908-0569, or Leah W. Murch, 212-908-0511, both of Fitch/


CO: RJR Nabisco, Inc. ST: IN: FOD SU: RTG

LR -- NY014 -- 1766 03/02/93 08:34 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Mar 2, 1993
Words:466
Previous Article:PINKERTON OFFERS RISK ASSESSMENT SERVICES TO REPORTERS
Next Article:HARRIS POLL REVEALS HALF OF FORTUNE 1000 OUTSIDE DIRECTORS HAVE BEEN TARGETS OF LAWSUITS; MANY EXPRESS LITTLE CONFIDENCE IN COURT SYSTEM.
Topics:


Related Articles
RJR NABISCO $5.2 BILLION SENIOR DEBT UPGRADED TO 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --
RJR NABISCO $2 BILLION SENIOR SHELF DEBT RATED 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --
RJR NABISCO $750 MILLION 8 PERCENT SENIOR NOTES RATED 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --
DUFF & PHELPS AFFIRMS RJR NABISCO, INC.'S 'BBB' SENIOR DEBT RATING
RJR NABISCO FILES AMENDED STOCK PLAN
RJR NABISCO FILING SHELF REGISTRATION FOR PREFERRED STOCK OFFERING
RJR NABISCO $500 MILLION PERPETUAL PREFERRED STOCK RATED 'BBB-' BY FITCH -- FITCH FINANCIAL WIRE --
RJR NABISCO HOLDINGS CORP. $500 MILLION PREFERRED STOCK ISSUE RATED 'B+' BY DUFF & PHELPS
RJR 'BBB-' SENIOR DEBT OFF FITCHALERT AFTER ANNUAL MEETING -- FITCH FINANCIAL WIRE --
RJR NABISCO REMOVED FROM DCR RATING WATCH; 'BBB-' REAFFIRMED

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters