NXP's latest debt buy-back offer has ended with offers for $270m and Euros166m of bondholder debt being received. This reduces the overall indebtedness of NXP by $504.2m and the related interest payments by approximately $31.8m.
NXP had been loaded up with around $6bn of debt by its private equity owners Kohlberg Kravis and Roberts (KKR) following their purchase of NXP in the autumn of 2006. The total annual interest on the debt was some $480m.
In late June, NXP drew down $300m from its revolving credit facility and there was unconfirmed speculation that this money was to be used for the debt buy-back.
It seems that NXP will continue to try to buy back this debt. A statement from the company reads: 'NXP may from time to time seek to retire or purchase its outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. Such repurchases, exchanges or transactions, if any, will depend on prevailing market conditions, NXP's liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.'
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In its first attempt to reduce the $6bn debt burden, NXP only managed to reduce its debts by $465m.
NXP appears to be suffering negative cash flow. At the end of March the company had $1.71bn in cash, but at the end of May 2009, it had $1.14bn in cash.