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Fitch: Lorillard notes BBB
Fitch Ratings said it assigned a BBB rating to Lorillard Tobacco Co.'s proposed senior notes offering.
Lorillard Tobacco has a long-term issuer default rating of BBB, senior unsecured credit facility rating of BBB, senior unsecured notes rating of BBB and short-term issuer default rating of F2.
Lorillard Inc., the parent company, has a long-term issuer default rating of BBB and short-term issuer default rating of F2.
The outlook is stable.
The notes are senior unsecured obligations and will rank equal in right of payment to all of Lorillard Tobacco's existing and future senior unsecured indebtedness, Fitch said.
The notes will be guaranteed on a senior unsecured basis by Lorillard. The proceeds will be used for general corporate purposes, which include among other things share repurchases.
The ratings are supported by the company's consistent and substantial operating earnings and cash flow generation resulting from industry-leading EBITDA and free cash flow margins, which exceed those of its much larger competitors, Fitch said.
The ratings also consider Lorillard's competitive position in the domestic cigarette market, the agency said, and its ownership of the Newport brand, which has a strong market share in menthol cigarettes.
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