Playboy Enterprises (ticker: PLA) announced plans to refinance its debt, thereby reducing interest expenses. As a result, PLA raised its adjusted earnings guidance for 2005.
- PLA announced plans to issue $100 million of 3% convertible debt
- PLA will use the proceeds to retire $80 million of 11% notes and repurchase $5 million of Class B common stock.
- The refinancing will result in a $19 million refinancing charge which will result in a GAAP EPS of $0.01-$(0.04) for 2005
- The refinancing will reduce interest expense by $4.6 million in 2005 and $5.8 million annually thereafter
- As a result, PLA increased its 2005 EPS forecast to $0.54 - $0.59 from $0.40 - $0.45
- The consensus EPS estimate was $0.48 prior to the announcement