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Franklin (BEN) to Procure Capital With $450M of Notes Offering

Tapping the debt market for additional capital,Franklin Resources, Inc. BEN priced a public offering of two series of notes, aggregating $450 million in principal amount.

This consists of 2.950% notes due 2051 of the aggregate principal amount of $350 million and an additional $100 million of the aggregate principal amount in its 1.600% notes maturing in 2030. The notes have been issued at a price of 99.368% and 97.751% of the principal amount plus accrued interest from and including Apr 30 through but excluding Aug 12, 2021, respectively.

In October 2020, the company issued $750 million of the 1.600% senior unsecured notes maturing in 2030.

Subject to the satisfaction of customary closing norms, the offering is likely to close on Aug 12.

The company plans to use the net proceeds from the offering for general corporate purposes, which includes redeeming, satisfying and discharging, defeasing or otherwise repaying or retiring any long-term debt owed by the company or its subsidiaries. This includes all or part of its $300-MILLION, 2.800% notes due 2022 along with $250 million of Legg Mason’s 3.950% senior notes maturing in 2024.

Franklin’s efforts to strengthen its near-term liquidity in these testing times and tap the debt market amid the current low-interest-rate environment are strategic fits. Further, the notes carry an interest rate of 2.950% and 1.600%, which are lower than the 2.800% and 3.950% for the notes that will be redeemed. Hence, this will likely result in lower interest expenses.

By repaying near-term debt, the company will effectively address its near-term maturities and this will enhance its financial flexibility and extend the average debt maturity term of debt.

However, the notes offering increase Franklin’s long-term debt obligation. As of Jun 30, the company had $3.48 billion of debt, higher than the fiscal 2020 (ended Sep 30) balance of $3 billion.

Shares of this Zacks Rank #3 (Hold) company have gained 18.9% over the past six months compared with the industry’s rally of 25.6%.

 


Image Source: Zacks Investment Research

 

Stocks to Consider

Affiliated Managers Group, Inc.’s AMG Zacks Consensus Estimate for its 2021 earnings has been revised 2.3% upward over the past 30 days. Also, it carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameriprise Financial, Inc. AMP carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for its 2021 earnings has been revised marginally upward over the past 30 days.

Apollo Global Management, Inc. APO carries a Zacks Rank of 2 at present. The Zacks Consensus Estimate for its 2021 earnings has been 7.9% upward over the past seven days.


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Franklin Resources, Inc. (BEN): Free Stock Analysis Report
 
Ameriprise Financial, Inc. (AMP): Free Stock Analysis Report
 
Apollo Global Management, Inc. (APO): Free Stock Analysis Report
 
Affiliated Managers Group, Inc. (AMG): Free Stock Analysis Report
 
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