High Yield Weekly Insight 12/21/2017
(CNN) White House, GOP celebrate passing sweeping tax bill
- Republican lawmakers joined President Donald Trump on Wednesday afternoon to celebrate their largest legislative achievement of 2017, in a public ceremony spotlighting the most sweeping overhaul of the US tax system in more than 30 years.
- The bill passed the House Wednesday 224-201, with no Democrats backing it. The measure now heads to the Trump’s desk for his signature.
- In a vote in the early Wednesday morning hours, the Senate approved the final version of the first overhaul of the US tax code in more than 30 years. The bill passed along party lines, 51-48, with the final result announced by Vice President Mike Pence, who presided over the vote.
- The plan drops the corporate tax rate down from 35% to 21%, repeals the corporate alternative minimum tax, nearly doubles the standard deduction for individuals and restructures the way pass-through businesses are taxed.
- The bill keeps seven personal income tax brackets and lowers that tax rates for most brackets.
(Reuters) Humana, private-equity firms buy Kindred Healthcare for $4 billion
- U.S. health insurer Humana and two private-equity firms agreed to buy home health-care and long-term care operator Kindred Healthcare on Tuesday for about $4 billion, the latest expansion by a U.S. health insurer into patient care.
- Humana, TPG Capital, and Welsh, Carson, Anderson & Stowe will pay $9 per share in cash for the home health-care provider and hospice operator, a 4.7 percent premium over the stock’s Friday close, and split the company into two parts.
- Humana, the fourth-largest U.S. health insurer, will pay $800 million for a 40 percent stake in Kindred at Home, which will contain Kindred’s 40,000 caregivers that serve about 130,000 patients daily. It will not have a stake in the second Kindred unit, which will contain long-term acute care and rehabilitation assets.
- Humana’s insurance business is focused on individuals in the U.S. government’s Medicare program for the elderly and disabled, and the acquisition builds on Humana’s focus on using health providers in members’ homes to improve health outcomes and save costs.
- The deal comes after deals by competitors Aetna and UnitedHealth that will expand the reach of those insurers into healthcare services in locations and sites that charge less than hospitals.
(Bloomberg) Mattel Pays Up to Refinance Debt at Tough Time for Toymakers
- Mattel Inc. sold $1 billion of bonds due 2025 with a yield of 6.75 percent as investors demanded the struggling toymaker pay a premium to refinance short-term debt.
- While the pricing was at the tighter end of initial talk of up to 7 percent, it’s more than 2 percentage points above the average for similarly rated bonds, according to Bloomberg Barclays indexes. The maker of Barbie dolls and Hot Wheels cars was cut to junk by two major bond-grading firms recently.
- Mattel, in its first bond offering this year, sold the debt at a difficult time for the toy industry. The company lowered its full-year sales and guidance in October, prompting Chief Executive Officer Margo Georgiadis to increase Mattel’s cost-cutting plan by threefold and suspend its dividend. Fourth-quarter sales could also be hurt by underperforming brands and retailers exerting tighter control over their inventories, Mattel said in a filing.
- The proceeds of the bonds, which can’t be bought back for three years, will refinance debt due next year and repay Mattel’s commercial paper borrowings, the filing said. The company also plans to replace its revolving credit facility with a new $1.6 billion credit line secured by assets including its inventory.
- The lower forecasts led Moody’s Investors Service, S&P Global Ratings and Fitch Ratings to downgrade the toymaker. Moody’s, assigning the second-highest junk rating with a stable outlook, cited the bankruptcy of retailer Toys “R” Us Inc. for Mattel’s drop in sales during the several “critical weeks” at the end of the third quarter ahead of the holiday shopping season. S&P cut the company one level to BB-, three steps below investment grade. Fitch rates it one step higher at BB.
(PR Newswire) Crown Holdings Announces Acquisition of Signode Industrial Group Holdings
- Crown Holdings, a global leader in consumer packaging, announced that it has entered into an agreement to acquire Signode Industrial Group Holdings, a leading global provider of transit packaging systems and solutions, from The Carlyle Group, in a cash transaction valued at $3.91 billion subject to customary closing adjustments. The acquisition, which is subject to review by various competition authorities, is expected to close during the first quarter of 2018 and to significantly increase free cash flow. Debt financing has been fully committed in support of the transaction.
- With pro forma sales and adjusted EBITDA of $2.3 billion and $384 million, respectively, for the twelve months ended November 30, 2017, Signode is the world’s leading supplier of transit packaging systems and solutions, which consist of strap, stretch and protective packaging consumables and the application equipment and tooling for each. Based in Glenview, Illinois, Signode’s global footprint includes operations in 40 countries across 6 continents, with sales to customers in approximately 60 countries.
- Commenting on the transaction, Timothy J. Donahue, President and Chief Executive Officer of Crown, stated, “With this acquisition, we add a portfolio of premier transit and protective packaging franchises to our existing metal packaging business, thereby broadening and diversifying our customer base and significantly increasing our cash flow. Signode’s products supply critical in-transit protection to high value, high volume goods across a number of end-markets, including metals, food and beverage, corrugated, construction and agriculture, among others. Combined with its highly engineered equipment and service business, Signode offers full solutions to meet customers’ transit packaging needs. In addition to its equipment and protective packaging businesses, geographic and product mix provide a strong platform for value-creating growth.”