Capital Markets

Paper Gains: IP Rejiggers Its Debt

The company, which has repaid $535 million this year, gets a new $470 million infusion.
Stephen TaubMarch 13, 2009

Slowly but surely, more companies are able to refinance their debt. The latest is International Paper, which Friday announced it raised about $470 million from a syndicate of banks. With the funds, it will refinance most of its €500 million bank term loan, which was to mature in August.

The company said it used available cash on hand to pay off the outstanding loan balance of about $170 million. The new term loan matures in March 2012.

Altogether, International Paper has repaid $535 million of debt year-to-date, including $365 million of notes in January 2009. The company has $530 million of remaining debt maturities in 2009, of which it says it plans to repay $195 million with cash on hand and extend the maturity date on the balance of $335 million. It expects to do this by exercising its option to extend the maturity dates on $165 million of notes associated with timber monetization transactions and refinance about $55 million of other debt.

In addition, the company’s 50 percent—owned Sun joint venture in China plans to refinance $115 million of local bank debt with existing lenders.

At the end of February, International Paper had about $900 million in cash on hand and had no borrowings on either its revolving credit facility or accounts-receivable securitization facility, it noted.

“We are pleased to complete this transaction in a very challenging credit environment,” said chairman and CEO John Faraci. “We remain committed to reducing our debt and maintaining a solid liquidity position.”