Thursday, April 8, 2010

Notable financing, at Avery Dennison (AVY)

Avery Dennison (AVY) demonstrated its enviable cost of capital this afternoon, as $250million in 10year debt priced to yield about 5.375%.

The release:
PASADENA, Calif.--(BUSINESS WIRE)--Avery Dennison Corporation (NYSE: AVY - News) announced today that it has priced an underwritten public offering of $250,000,000 aggregate principal amount of 5.375% Senior Notes due 2020. The Senior Notes were priced at 99.931% of their face amount.

Hell, I'd rather own these notes that treasuries of the same duration yielding 3.9%, especially since most people buying 10 year treasuries are assuming a medium-term hit to their principal.

\The equity looks nice too. The company's $465million in 2009 Free Cash Flow works out to a Free Cash Flow Yield(FCFY%) of 12% on today's market value. 2009 of course benefited by a slashed capital expenditure program, so assuming that CAPEX increases substantially this year and next, we're still looking at a FCFY% of about 11% in 2010 and 2011...almost twice their cost of capital. Nice.

Copyright 2010 AlphaNinja

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