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(Bloomberg) – XPO Logistics Inc. sells $ 1 billion in bonds to fund share buybacks and debt refinancing by dropping acquisitions to increase share prices.
The trucking company and the warehouse operator will use the bonds to repay loans under its existing credit agreement, among other general objectives of the company, such as the repurchase of shares, according to a statement released Tuesday. Securities with a term of 5.5 years can not be redeemed before two and a half years, according to a person familiar with the case, who asked not to be identified because the details are confidential.
Managing director Brad Jacobs said during the announcement of the fourth quarter results on Friday that XPO's new target is to buy back shares rather than pursue mergers and acquisitions, thereby reducing equities. The company announced a $ 1 billion share buyback program in December, which was sold out on February 4th. It adopted a new $ 1.5 billion buyback plan less than two weeks later.
XPO also trimmed its profit forecast for 2019 on Friday for the second time in two months, due to the loss of business from its biggest customer and the slowdown in European demand. Wall Street analysts and industry consultants said it was most likely Amazon.com Inc., which has set up its own logistics network and reduced the number of its customers. need third party suppliers.
The repurchases represent "a negative development of the credit situation at this stage", said in a note on Tuesday CreditSights analysts led by Ashwin Tiruvasu, who qualify the XPO bonds as underperforming. Stock analysts also have concerns: once Morgan Stanley's choice in 2019, Ravi Shanker, an analyst, downgraded the title, as the company's change of direction "raised questions about future visibility", according to a report released Tuesday.
XPO, based in Greenwich, Connecticut, also said it could alter its $ 1 billion revolving credit facility by extending its term, according to the statement. The sale of the bonds is managed by Citigroup Inc., Morgan Stanley and JPMorgan Chase & Co., said the known person.
(Updates with redemptions beginning in the first paragraph.)
– With the help of Gowri Gurumurthy and Thomas Black.
To contact the reporters on this story: Molly Smith in New York at [email protected]; Sebastian Pellejero in New York at [email protected]
To contact the editors responsible for this story: Nikolaj Gammeltoft at [email protected], Sally Bakewell, Dan Wilchins
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