NEW YORK, March 13, 2013 /PRNewswire/ -- Avon
Products, Inc. (NYSE: AVP) today announced that the company has
completed refinancing activities, including the completion of a
public offering of $1.5 billion in
notes. The company also entered into a $1 billion four-year unsecured Revolving Credit
Facility Agreement, which replaces the previous $1 billion Revolving Credit Facility
Agreement.
"Through this refinancing, we have achieved increased financial
flexibility, which is critical to our ability to successfully
execute Avon's turnaround," said
Kimberly Ross, Executive Vice
President & Chief Financial Officer, Avon Products, Inc.
"Our refinancing activities have improved our balance sheet, and we
are pleased with the outcome."
In summary, the company has taken or anticipates taking the
following actions to improve the health of its balance sheet:
- entered into a new four-year $1
billion unsecured Revolving Credit Facility Agreement,
replacing the previous $1 billion
Revolving Credit Facility Agreement,
- issued $1.5 billion of unsecured
notes generating net proceeds of $1.48
billion (after transaction costs) with maturities of 3, 7,
10 and 30 years,
- repaying $1.9 billion of debt
including:
- $380 million of the $550 million term loan
- $125 million 4.625% Notes due
May 15, 2013 at maturity
- $535 million private notes (plus
make-whole)
- anticipated redemption of $500
million 5.625% Notes due 2014 (plus make-whole)
- $250 million 4.80% Notes due
March 1, 2013 paid with cash on
hand,
- utilizing $400 million in cash to
reduce leverage, and
- negotiated covenants to now provide necessary flexibility to
support the turnaround.
The company expects interest expense in 2013 to increase
approximately 10% as compared to 2012 as it extended its maturity
profile and decreased reliance on floating rate debt. In addition,
interest expense will be impacted by one-time charges associated
with make-whole premiums related to the prepayment of the private
placement notes of $65 million and
$25 million if the company prepays
its Notes due in 2014.
About Avon
Avon, the company for women, is a
leading global beauty company, with nearly $11 billion in annual revenue. As the world's
largest direct seller, Avon is
sold through more than 6 million active independent Avon Sales
Representatives. Avon products are
available in over 100 countries, and the product line includes
color cosmetics, skincare, fragrance, fashion and home products,
featuring such well-recognized brand names as Avon Color, ANEW,
Skin-So-Soft, Advance Techniques, and mark. Learn more about
Avon and its products at
www.avoncompany.com.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of any securities in any state or jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or jurisdiction.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements in this release that are not historical facts or
information may be forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as
"anticipate," "expect," "will," and similar expressions, or the
negative of those expressions, may identify forward-looking
statements. They include, among other things, statements regarding
our anticipated or expected results, various strategies and
initiatives, net proceeds generated by the offering, the use of
such proceeds, expected interest expense, uses of cash and debt
obligations. Such forward-looking statements are based on
management's reasonable current assumptions, expectations, plans
and forecasts regarding the Company's current or future results and
future business and economic conditions more generally. Such
forward-looking statements involve risks, uncertainties and other
factors, which may cause the actual results, levels of activity,
performance or achievement of Avon
to be materially different from any future results expressed or
implied by such forward-looking statements, and there can be no
assurance that actual results will not differ materially from
management's expectations. Such factors include, among others, the
following:
- our ability to improve our financial and operational
performance and execute fully our global business strategy,
including our ability to implement the key initiatives of, and
realize the projected benefits (in the amounts and time schedules
we expect) from, our stabilization strategies, cost savings
initiative, multi-year restructuring programs and other
initiatives, product mix and pricing strategies, enterprise
resource planning, customer service initiatives, sales and
operation planning process, outsourcing strategies, Internet
platform and technology strategies, information technology and
related system enhancements and cash management, tax, foreign
currency hedging and risk management strategies, and any plans to
invest these projected benefits ahead of future growth;
- the possibility of business disruption in connection with our
stabilization strategies, cost savings initiative, multi-year
restructuring programs or other initiatives;
- our ability to improve our business in North America, including enhancing our
Leadership model;
- our ability to improve working capital and effectively manage
doubtful accounts and inventory and implement initiatives to reduce
inventory levels, including the potential impact on cash flows and
obsolescence;
- our ability to reverse declines in Active Representatives, to
implement our Leadership program globally, to generate
Representative activity, to increase the number of consumers served
per Representative and their engagement online, to enhance the
Representative and consumer experience and increase Representative
productivity through field activation programs and technology tools
and enablers, execution of Service Model Transformation and other
investments in the direct-selling channel, and to compete with
other direct-selling organizations to recruit, retain and service
Representatives and to continue to innovate the direct-selling
model;
- our ability to reverse declining margins and net income;
- general economic and business conditions in our markets,
including social, economic and political uncertainties in the
international markets in our portfolio;
- our ability to achieve profitable growth, particularly in our
largest markets, such as Brazil
and the United States ("U.S."),
and developing and emerging markets, such as Mexico and Russia, and our ability to realize sustainable
growth from our investments in our brand and the direct-selling
channel;
- the effect of economic factors, including inflation and
fluctuations in interest rates and currency exchange rates, as well
as the designation of Venezuela as
a highly inflationary economy, foreign exchange restrictions and
the potential effect of such factors on our business, results of
operations and financial condition;
- any developments in or consequences of investigations and
compliance reviews, and any litigation related thereto, including
the ongoing investigations and compliance reviews of Foreign
Corrupt Practices Act and related U.S. and foreign law matters in
China and additional countries, as
well as any disruption or adverse consequences resulting from such
investigations, reviews, related actions or litigation;
- a general economic downturn, a recession globally or in one or
more of our geographic regions, or sudden disruption in business
conditions, and the ability of our broad-based geographic portfolio
to withstand an economic downturn, recession, cost inflation,
commodity cost pressures, economic or political instability,
competitive or other market pressures or conditions;
- the effect of political, legal, tax and regulatory risks
imposed on us in the U.S. and abroad, our operations or our
Representatives, including foreign exchange or other restrictions,
adoption, interpretation and enforcement of foreign laws, including
in non-U.S. jurisdictions such as Brazil, Russia, Venezuela and Argentina, and any changes thereto, as well as
reviews and investigations by government regulators that have
occurred or may occur from time to time, including, for example,
local regulatory scrutiny in China;
- the impact of changes in tax rates on the value of our deferred
tax assets and declining earnings on our ability to realize foreign
tax credits in the U.S.;
- our access to cash, short-term financing, and ability to secure
financing or financing at attractive rates;
- any changes to our credit ratings and the impact of such
changes on our financing costs, rates, terms, debt service
obligations and access to lending sources;
- the impact of any significant restructuring charges or
significant legal or regulatory settlements on our ability to
comply with certain covenants in our debt instruments;
- our ability to attract and retain key personnel;
- competitive uncertainties in our markets, including competition
from companies in the cosmetics, fragrances, skincare and
toiletries industry, some of which are larger than we are and have
greater resources;
- the impact of the typically seasonal nature of our business,
adverse effect of rising energy, commodity and raw material prices,
changes in market trends, purchasing habits of our consumers and
changes in consumer preferences, particularly given the global
nature of our business and the conduct of our business in primarily
one channel;
- other sudden disruption in business operations beyond our
control as a result of events such as acts of terrorism or war,
natural disasters, pandemic situations, large-scale power outages
and similar events;
- key information technology systems, process or site outages and
disruptions;
- the risk of product or ingredient shortages resulting from our
concentration of sourcing in fewer suppliers;
- the impact of possible pension funding obligations, increased
pension expense and any changes in pension regulations or
interpretations thereof on our cash flow and results of
operations;
- our ability to successfully identify new business opportunities
and strategic alternatives and identify and analyze acquisition
candidates, secure financing on favorable terms and negotiate and
consummate acquisitions, as well as to successfully integrate or
manage any acquired business;
- the challenges to our businesses, such as Silpada and
China, including the effects of
rising costs, macro-economic pressures, competition, any potential
strategic decisions, including the review of strategic alternatives
for Silpada, and the impact of declines in expected future cash
flows and growth rates, and a change in the discount rate used to
determine the fair value of expected future cash flows, which have
impacted, and may continue to impact, the estimated fair value of
the recorded goodwill and intangible assets;
- disruption in our supply chain or manufacturing and
distribution operations;
- the quality, safety and efficacy of our products;
- the success of our research and development activities;
- our ability to protect our intellectual property rights;
and
- the risk of an adverse outcome in any material pending and
future litigations or with respect to the legal status of
Representatives.
Additional information identifying such factors is contained in
Item 1A of our 2012 Form 10-K/A for the year ended
December 31, 2012. We undertake no obligation to update any
such forward-looking statements.
SOURCE Avon Products, Inc.