Airborne Freight Plans an Offering To Cut Bank Debt
Airborne Freight Corp. said it plans to sell $75 million of 10-year debentures and use the proceeds to pay down bank debt.
A registration statement for the proposed offering was filed Monday with the Securities & Exchange Commission.
The Seattle airfreight company has about $177 million of bank debt outstanding.
In a statement Monday, Airborne Freight said it planned to sell covertible subordinated debentures through Goldman, Sachs & Co., the sole underwriter.
Lanny Michael, Airborne's treasurer, said the company has drawn $150 million on a $225-million revolving credit line and $27 million on a separate $45 million money-market facility.
Six Banks Involved
The revolver, which expires at the end of 1993 but can be extended through 1996, was provided by a group of five banks. They are the banking units of Seafirst Corp., First Wachovia Corp., ABN Amro, Security Pacific Corp., and Chase Manhattan Corp.
The money-market facility was provided by Seafirst, ABN, and Bank of New York.
Airborne is currently paying a little under 7% on the floating rate bank debt, which is priced off the London interbank offered rate.
The debentures are expected to be priced next week, Mr. Michael said.
Strong Balance Sheet
Kevin Murphy, an analyst at Morgan Stanley & Co., said Airborne Freight has one of the strongest balance sheets in the airfreight industry, with a ratio of debt to total capital of 27%.
The company is also growing at an above average rate; volume was up 24% in the second quarter.
"In the midst of a recession, that's a very good sign," Mr. Murphy said.
Airborne has a history of tapping the market for equity equivalents, such as convertible debentures.
The company's bank lines will continue to be available for working capital purposes, the Airborne official added.