Altria to tap European bond market to help fund Juul stake buy
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Juul brand vaping pens are seen for sale in a shop in Manhattan in New York City, New York, U.S., February 6, 2019. REUTERS/Mike Segar
(Reuters) – Altria Group will tap the European investment grade corporate bond market to help finance its $12.8 billion purchase of a stake in e-cigarette maker Juul Labs Inc, the Marlboro maker said in a regulatory filing bit.ly/2thLVTO on Monday.
The tobacco company said it would issue the bonds in four tranches in denominations of 100,000 euros as it looks to prepay a term loan arranged by JPMorgan Chase & Co to fund the deal. That loan matures on Dec. 19, 2019.
The four-year tranche is expected to price at 110 to 115 basis points above the midswaps rate, according to pricing guidance published by Refinitiv’s IFR.
Altria’s deal for a 35 percent stake in the controversial e-cigarette maker Juul, along with a stake buy in Canadian cannabis company Cronos Group Inc in December last year, roughly doubled the company’s total debt.
The sharp increase in leverage was among the reasons behind rating agencies Standard & Poor’s and Fitch’s two-notch downgrades of Altria’s credit rating in December.
Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila