Interpublic won’t buy back stock until it pays down some of its debt

By Devika Patel

Knoxville, Tenn., Jan. 8 – Interpublic Group of Cos., Inc. has suspended its stock buyback program until the company has paid down some debt.

“We committed to the ratings agencies that we would suspend our [stock] buybacks until we start paying down some of our debt,” chairman and chief executive officer Michael I. Roth said at the Citi 2019 Global TMT West Conference in Las Vegas on Tuesday.

“We’ve already started to do that. We have stopped buybacks.

“Within a reasonable period of time, we believe, we’ll take down our debt to a level where we can return to buying back shares.

“Positive cash flow is there.”

The company is “proud” of its $2 billion sale of notes in September, which did not affect Interpublic’s credit ratings.

“What I was impressed with is we were able to borrow $2 billion over different tranches, including 30-year money, which I’m particularly proud of, and our ratings were held, so we continue to be investment-grade,” Roth said.

“We’re solid investment grade right now,” he said.

On Sept. 18, the company priced $2 billion of senior notes (Baa2/BBB/BBB+) in four tranches. The deal settled Sept. 21.

There were $500 million of two-year 3.5% notes sold with a spread of 80 basis points over Treasuries. Pricing was at 99.807.

The company sold $500 million of three-year 3.75% notes with a 90 bps spread over Treasuries. Pricing was at 99.931.

Interpublic priced $500 million of 10-year 4.65% bonds with a 165 bps spread over Treasuries. Pricing was at 99.666.

The company also sold $500 million of 30-year 5.4% bonds with a 225 bps spread over Treasuries. Pricing was at 99.439.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, BofA Merrill Lynch and Morgan Stanley & Co. LLC were the bookrunners.

Proceeds were earmarked, along with proceeds from a term loan, to acquire Acxiom Corp.’s marketing solutions business for $2.3 billion in cash.

Interpublic is a New York-based provider of advertising and marketing services.

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