Franklin Resources Inc. (BEN) announced on Monday that it has priced its public offering of $300 million aggregate principal amount of 2% notes due 2013 at an issue price of 99.823%, $250 million aggregate principal amount of 3.125% notes due 2015 at an issue price of 99.890%, and $350 million aggregate principal amount of 4.625% notes due 2020 at an issue price of 99.889%.
The proceeds from the offering, which is expected to close on May 20, 2010, is intended to be used for general corporate purposes. Moreover, Franklin may use the proceeds for the repayment of its previously issued commercial paper.
As of March 31, 2010, Franklin’s debt consisted of commercial paper with a total face value of $286.0 million, which was issued at a weighted-average annualized interest rate of 0.23% and matures during the quarter ending June 30, 2010.
During the first half of 2010, the global economy emerged from the recession and moved to the recovery phase, signaling a positive atmosphere. Franklin’s assets under management and fee revenues benefited with this economic recovery.
Franklin’s cash position showed a balance of $2.9 billion as of March 31, 2010, down on a six-month basis. Cash and cash equivalents decreased mainly due to a decrease in purchases of investments, partially offset by an increase in liquidations of investments and an increase in loans receivables and also an increase in net income.
The company’s closest peer, BlackRock Inc. (BLK), is in a strong position with cash and cash equivalents of $2.7 billion, and a minimal amount of debt.
The latest capital raising initiative will help the company reduce its total debt burden to some extent. In addition, this capital raising will help Franklin to meet the regulatory minimum capital requirements.
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