Deere & Company (DE - Analyst Report) announced that its unit John Deere Capital has sold $500 million senior unsecured medium term notes. The notes will mature on September 18, 2017, and will have an interest rate of 2.80%. The company originally made plans to issue notes worth $350 million.
Deere offered the notes at 99.817% of face value and will yield 2.829% when held till maturity. The debt-to-capital ratio of the company at the end of the third quarter 2010 was 79.6%, which will increase by 30 basis points to 79.9% following the issue of new notes.
Deere’s total long-term borrowings at the end of third-quarter 2010 were $16.37 billion versus $16.72 billion at the end of third-quarter 2009, reflecting a reduction of around $346.7 million year over year.
Interest expenses at Deere at the end of third-quarter 2010 were $193.1 million versus $249.3 million at the end of third-quarter 2009. The new issue will raise the annual interest expense of the company by $14 million. During the third quarter 2010, the Deere unit issued $500 million medium term notes with an interest rate of 1.875% and a maturity date of June 17, 2013. The issue consequently increased the interest expense by $9.4 million annually.
The adjusted earnings of Deere at the end of third-quarter 2010 were $1.44 per share compared with 99 cents in the year-ago comparable period. The Zacks Consensus Estimates for fourth quarter fiscal 2010, fiscal year 2010 and fiscal year 2011 are 91 cents per share, $4.48 per share and $5.15 per share, respectively.
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