Polo Ralph Lauren Corp. said Thursday it will trade some of its cash for reduced debt.
The firm is offering to buy back up to 100 million euros, or $142 million at current exchange, of 4.5 percent notes due in 2013 in a modified Dutch auction.
The fashion house said it plans to use cash on hand to repurchase the notes. It had $820 million in cash and cash equivalents at the end of fiscal 2009. With the bonds trading at a discount, the company felt buying back a portion of them would constitute efficient use of its cash, financial sources said.
The aggregate value of the notes is 300 million euros.
The structure of the buyback is a modified Dutch auction, in which the noteholder specifies the minimum offer price it would be willing to accept. Polo said that amount must be in increments of 2.5 euros and between 900 euros and 950 euros for every 1,000 euros of principal.
Polo said it has the option of modifying the offer and announcing a fixed price for the notes on or around 2 p.m. London time on June 18.