Levi Strauss guides $500M of senior notes for refinancing effort

Levi Strauss & Co. has set price talk at 3.50%-3.75% for a $500 million intraday offering of 10-year senior notes, sources said. Books for the deal will close today at 1:30 p.m. ET.

Joint bookrunners are BofA Securities and J.P. Morgan. Co-managers are BNP Paribas, HSBC, Goldman Sachs, Scotiabank, Morgan Stanley, RBC Capital Markets, Standard Chartered, Truist and Santander. Guidance has tightened from initial price thoughts, which circulated in a high 3%-4% context.

Levi Strauss & Co. operates as an apparel company in the Americas, Europe and Asia. Proceeds will be combined with cash on hand to redeem $800 million of the company's $1 billion outstanding of 5% senior notes due 2025. The new notes will be non-callable for five years, with a first call at par plus 50% of the coupon. The debt also includes an up to 40% equity claw at par plus the coupon for the first three years.

Ratings for the new issue have surfaced as BB+/Ba2/BB. The outlook is negative at S&P Global Ratings and Fitch and stable at Moody's.

"Our negative outlook reflects that the company's credit metrics have deteriorated due to pandemic-related store closures and a decline in consumer spending on non-essential items," Ratings said today.

Moody's said its outlook on the company reflects the expectation that despite near-term challenges in the global apparel market, Levi Strauss should continue to "maintain solid market position given the iconic nature of its brand, with a return to solid revenue and earnings growth leading to substantially improved credit metrics while maintaining very good liquidity in the coming year."

The company last placed bonds in April 2020, completing a $500 million add-on to the 2025 maturity targeted in today's refinancing.