Tuesday, February 3, 2009
Harley-Davidson sets USD 600M debt sale to fund finance arm
Harley-Davidson Inc. of Milwaukee said Tuesday that it has priced a debt offering of USD 600 million to finance the ongoing lending activities at its wholly owned finance company, Harley-Davidson Financial Services Inc.
The offering of senior unsecured notes is being made under the heavyweight motorcycle manufacturer's existing shelf registration for public offerings of securities, including debt. The notes will be due in 2014 and will bear interest at a rate of 15 percent per year.
Davis Selected Advisers LP, a long-time investor in Harley-Davidson Inc. and the largest holder of Harley stock, and billionaire Warren Buffett's firm Berkshire Hathaway Inc. each committed to purchase equal portions of the aggregate principal amount of the notes, Harley-Davidson said.
In late January, Harley-Davidson unveiled a three-part strategy to attempt to address the current economic environment. That three-part strategy focuses on stimulating consumer demand by investing in the Harley-Davidson brand, getting the company's cost structure right -- which included the cutting of 1,100 jobs, mostly in the Milwaukee area -- and securing additional funding for Harley-Davidson Financial Services (HDFS), which makes wholesale loans to dealers and retail loans to consumers.
"This offering represents an important next step in executing our stated strategy for funding the lending activities of HDFS," said Tom Bergmann, chief financial officer of Harley-Davidson and interim president of HDFS.
Last week, ratings services firm Fitch Ratings said it placed Harley-Davidson Inc. and Harley-Davidson Financial Services on rating watch negative, in part because of concerns over the finance company's ability to continue to support Harley-Davidson sales at the typical level of about 53 to 55 percent of retail volumes.
The offering was arranged by Morgan Stanley, with Citigroup, Deutsche Bank Securities, J.P. Morgan and Morgan Stanley acting as lead underwriters for the transaction.
The offering of senior unsecured notes is being made under the heavyweight motorcycle manufacturer's existing shelf registration for public offerings of securities, including debt. The notes will be due in 2014 and will bear interest at a rate of 15 percent per year.
Davis Selected Advisers LP, a long-time investor in Harley-Davidson Inc. and the largest holder of Harley stock, and billionaire Warren Buffett's firm Berkshire Hathaway Inc. each committed to purchase equal portions of the aggregate principal amount of the notes, Harley-Davidson said.
In late January, Harley-Davidson unveiled a three-part strategy to attempt to address the current economic environment. That three-part strategy focuses on stimulating consumer demand by investing in the Harley-Davidson brand, getting the company's cost structure right -- which included the cutting of 1,100 jobs, mostly in the Milwaukee area -- and securing additional funding for Harley-Davidson Financial Services (HDFS), which makes wholesale loans to dealers and retail loans to consumers.
"This offering represents an important next step in executing our stated strategy for funding the lending activities of HDFS," said Tom Bergmann, chief financial officer of Harley-Davidson and interim president of HDFS.
Last week, ratings services firm Fitch Ratings said it placed Harley-Davidson Inc. and Harley-Davidson Financial Services on rating watch negative, in part because of concerns over the finance company's ability to continue to support Harley-Davidson sales at the typical level of about 53 to 55 percent of retail volumes.
The offering was arranged by Morgan Stanley, with Citigroup, Deutsche Bank Securities, J.P. Morgan and Morgan Stanley acting as lead underwriters for the transaction.
 |
# posted by (hris @ 10:19 PM 
Subscribe to Posts [Atom]
