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Levi Strauss Announces New Senior Note Offering

NEW YORK — Levi Strauss & Co. said Monday that it is commencing a private placement of $300 million of senior notes due 2012, ranking equally with the company’s other unsecured unsubordinated indebtedness.<br><br>Levi Strauss said that...

NEW YORK — Levi Strauss & Co. said Monday that it is commencing a private placement of $300 million of senior notes due 2012, ranking equally with the company’s other unsecured unsubordinated indebtedness.

This story first appeared in the November 26, 2002 issue of WWD.  Subscribe Today.

Levi Strauss said that $115 million of the net proceeds from the offering will be used to repay indebtedness under its senior secured bank credit facility. The balance will be used to either refinance a portion of the $350 million aggregate principal amount of the company’s 6.8 percent notes due Nov. 1, 2003, for working capital or for other general corporate purposes.

Moody’s Investors Service, a ratings agency, on Monday confirmed the “B2” senior implied rating of Levi Strauss. At the same time, the agency placed the company’s “Caa1” senior unsecured debt rating under review for possible upgrade, and assigned a prospective “(P)B3” rating to the company’s proposed new senior unsecured notes. Moody’s said that the current ratings on the existing senior unsecured notes would be revised to “B3” upon completion of the new note offering.

Moody’s said its actions reflect the anticipated improvement in the company’s near-term liquidity that will result from the anticipated issuance of the new senior unsecured notes and the connected planned refinancings. It noted that the refinancings “should also provide sufficient funding to support the increased working capital needs for the company’s product introduction through the mass-merchant market (via Wal-Mart), which is scheduled for mid-2003.”

The company said separately that, based on current information, it expects to achieve previously stated fourth-quarter and full-year 2002 financial targets. The fourth quarter ended on Sunday.

Fourth-quarter sales are expected to be the same as those from the fourth quarter of 2001 on a constant-currency basis. Full-year 2002 sales are projected at flat to down 4 percent from year-ago results.