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Levi Strauss gets ‘great’ coupon rates and ‘very decent cost of debt’
By Devika Patel
Knoxville, Tenn., Oct. 10 – Levi Strauss & Co. is “in a good spot” as far as its capital structure is concerned and has a “very decent cost of debt,” with management saying that “some of the investment-grade companies would probably be jealous of that.”
“Our balance sheet continues to improve and free cash flow remains strong,” executive vice president and chief financial officer Harmit Singh said on the company’s third quarter earnings conference call on Tuesday.
The company’s leverage target is “one notch below investment grade” and the company gets “great” coupon rates.
“We are very happy where we are in terms of our current leverage target,” Singh said.
“We’re one notch below investment-grade.
“We’ve been able to finance at dramatically great coupon rates.
“We like where we are,” he said. “We’re in a good spot.”
Singh said that the company is in an enviable position.
“We look at the capital structure as one that allows us to get access to capital and, importantly, invest to drive shareholder value in the long-term,” he said.
“We refinanced earlier this year in Europe, got some great rates and, looking at our capital structure, we have long-term maturities, a very decent cost of debt.
“I would say some of the investment-grade companies would probably be jealous of that,” Singh said.
As of Aug. 27, cash and cash equivalents were $491 million were complemented by $681 million available under the company’s revolving credit facility, resulting in a total liquidity position of approximately $1.2 billion.
Net debt at the end of the third quarter was $578 million.
Leverage was flat at 1.8x at quarter end.
Free cash flow for the first nine months of 2017 was $149 million, an increase of $161 million compared to the first nine months of 2016.
Levi Strauss is a San Francisco-based apparel and jeanswear company.
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