Money Could Be Used for 'Possible Acquisitions'

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NEW YORK ( -- Grey Global Group today said it intends to borrow up to $125 million, using the money for working capital "and other general corporate purposes, which may include, without limitation, possible acquisitions."

In a statement, the agency company said it "has no specific agreements or commitments, and is not currently engaged in any negotiations, regarding any material acquisition."

$100 million debt issue
Grey plans to borrow the money by issuing $100 million in convertible subordinated debentures, which could be converted into Grey common stock. The debt issue would be made through a private placement with investors and come due in 2033. Grey may issue an additional $25 million in convertibles, meaning the total borrowing could reach $125 million.

Convertible issues, which investors can convert from debt into new shares of stock, are a popular financing vehicle for agency companies, and Grey's offering would follow convertible offerings from larger rivals Omnicom Group and Interpublic Group of Cos.

Grey's offering is far smaller than those of Omnicom and Interpublic -- but it is a big borrowing for Grey.

Outstanding debt
Grey currently has outstanding long-term borrowings of $128 million, including $125 million of loans from Prudential Insurance Co. of America. The new debt offering could nearly double Grey's long-term borrowings, but it's conceivable Grey could use some of the proceeds to repay old debt.

A spokeswoman said Grey could not comment beyond a press release announcing its intention to issue new debt.

The company announced its plans after the market closed this afternoon. Grey stock closed at $795.02, up 2 cents. Grey earlier this month hit a 52-week high of $823.25.

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