Levi Strauss expects to have refinancing plan in place in first quarter

By Peter Heap

New York, Oct. 31 - Levi Strauss & Co. said it expects to put in place a refinancing plan for next year's debt maturities during the first quarter.

Discussions have already begun with financial institutions, Levi Strauss treasurer and vice president Joe Maurer said during a presentation to the financial community.

He noted that the company has "excellent relationships with each of our financial partners.

"We expect to address the debt maturities in a timely manner," Maurer added.

The upcoming debt to be repaid is a $620 million revolver and $150 million of term loans due August 2003 and $350 million of 6.80% notes due November 2003.

Options being examined for the refinancing include new bank debt and high-yield bonds, either secured or unsecured.

"We will know more about that as we complete our plans," Maurer said. "We expect to complete those plans in the first quarter of next year" although he added that the precise timing is subject to market conditions.

Levi Strauss is confident of being able to refinance the debt, he added.

As far as turning its business around is concerned, Maurer said: "We have reached an inflection point. We saw that in our third quarter results."

In addition, the company has stable margins and strong cash flow and a competitive cost structure. It also continues to pay down debt.

"We have done that in each of the last several years and expect to continue to do so into the future."

Since 1999, the San Francisco clothing company has reduced borrowings by $700 million.

At the end of its third quarter at the end of August, the company had $1.9 billion of debt. By the end of the year, debt is expected to be lower than that level, Maurer continued.

Over next year borrowings are expected to rise $200 million to finance new distribution through Wal-Mart and then decline towards the end of the year as revenues come in to end at about the same level as the end of 2002, Maurer said.

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