Source: Janie Gabbett, MEATINGPLACE.COM, 9/4/08
Springdale, Ark.-based Tyson Foods announced it intends to offer 20 million shares of common stock for sale, as well as $450 million in convertible senior notes due 2013, and use the proceeds from both to grow its business.
"Net proceeds from the offerings are expected to be used to repay portions of the outstanding borrowings under Tyson's accounts receivable credit facility and for other general corporate purposes such as acquisitions, strategic investments and initiatives to grow the Company's business," Tyson said in a news release.
An entity controlled by former Chairman Don Tyson has indicated it intends to purchase 3 million shares of the common stock being offered.
Analysts see acquisitions
Wall Street analysts foresee Tyson using the proceeds of the offerings for acquisitions.
"We believe that the bulk of the proceeds will be used to fund international acquisitions — in China, Brazil, Mexico, and India," Stephens Inc. analyst Farha Aslam wrote in a note to investors, also predicting some proceeds would be used to fund alternative fuels strategies.
Wachovia Capital Markets analyst Jonathan Feeney also noted the prospect of acquisitions as a positive.
Aslam estimated Tyson would receive about $700 to $800 million from the offerings, which she saw as diluting the company's fiscal 2009 earnings by about 5 to 10 cents per share.
Canadian beef sale proceeds
In a filing with the Securities and Exchange Commission, Tyson also said it will receive an additional $85 million from the sale of its Canadian beef operations to XL Foods Inc. for cattle inventory, fertilizer inventory and packaging assets.
The sale of its beef packing operations in Brooks, Alberta, was originally valued at about $107 million, plus the assets described above, which were to be valued at the close of the sale. Tyson shares were trading down over 8 percent at $13.90 per share in early afternoon trading on the New York Stock Exchange.
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