Scholastic Corp., a children's book publishing company in New York, has entered an interest-rate swap on the back of a USD300 million bond offering it issued last month. Vinnie Marizano, company treasurer, said the swap was used to convert the 5.75% coupon on the bond into a floating-rate liability. He added that the swap was included as part of the offering and executed simultaneously.
In the swap the company receives the 5.75% coupon and pays a LIBOR-based rate. The swap has a five-year maturity, matching that of the notes. Marizano declined to name the counterparty in the swap or specify the LIBOR-based rate the company is paying. The publisher plans to use the proceeds from the offering to pay off USD300 million of a USD350 million syndicated bridge loan it used to finance the acquisition of the Grolier publishing company last year. Credit Suisse First Boston and Salomon Smith Barney underwrote the bond.
Marizano said the syndicated loan is due in June and that Scholastic plans to use its current cash flow to pay off the remaining USD50 million. Moody's Investors Service rates Scholastic Baa2, while Standard & Poor's rates it BBB.
