NXP is aggressively continuing with its debt reduction and replacement programme with two new cash buy-backs of bonds, and the issue of a new set of bonds to raise $100m in new funding.
As a result of these new deals, NXP's indebtedness will be reduced by $225m and the annual interest payments it has to make to service its debt burden will be reduced by $16m.
Under the new proposals:
- NXP will buy back $54m worth of bonds for $25.65m in cash.
- NXP will also buy back $150.4m worth of bonds plus €87.34m worth of bonds for $102,6m in cash.
- NXP will sell $131.3m of new bonds, due to be repaid in 2013, for $102.6m in cash.
The initial debt, amounting to some $6bn and costing NXP some $480m a year in interest charges, was loaded onto NXP by its private equity owners Kohlberg Kravis and Roberts after they bought 80% of NXP from Philips in the autumn of 2006.
Earlier this month NXP, in another buy-back, managed to reduce its debt by $504.2m which reduced its related interest payments by about $31.8m.
In its first attempt to buy back its debt, NXP managed to reduce the debt mountain by $465m.
So if the new debt buy-back goes through, NXP will have succeeded in reducing its debt burden by around $1bn.