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Mueller Water Products looking to get leverage ratio below 3 times, will continue to reduce debt
By Jennifer Lanning Drey
Portland, Ore., Aug. 31 - Mueller Water Products, Inc. is working to get its leverage ratio below 3 times, but expects the ratio will remain above 2 times, Gregory Hyland, Mueller's chief executive officer, said during a Tuesday presentation at the Morgan Stanley Global Industrials conference in New York.
"I think that puts us in a position where we would feel much more comfortable making acquisitions and expanding the business," Hyland said.
The reduction in the leverage ratio will come through EBITDA growth as well as continued debt paydown, he said.
In the 12 months ended June 30, Mueller reduced debt by about $269 million, Hyland said.
The CEO also noted that the company recently announced plans to refinance its term debt with senior unsecured notes. During the process, Mueller "fought very hard" to keep a provision that allows the company to repay debt, he said.
"That gives us an opportunity to delever," Hyland said.
Specifically, he mentioned that the company now has some capacity to retire its senior subordinated notes due 2017 through open-market purchases. Mueller was unable to do so under its previous covenants, he said.
Other benefits of Mueller's recent debt refinancing include that it pushed 2012 and 2014 debt maturities to 2015 and 2020. It is expected to reduce interest expense in 2011, he said.
In addition, the refinancing eliminated nearly all maintenance covenants and increased Mueller's operational flexibility relative to acquisitions, divestitures, joint ventures and other investments, Hyland said.
Mueller Water is an Atlanta-based manufacturer and marketer of drinking water transmission, distribution and treatment facilities.
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