Pope & Talbot, a pulp and wood-chip producer with annual revenue of roughly USD500 million, is considering entering an interest-rate swap to covert a fixed-rate liability into floating, said Maria Pope, cfo in Portland, Ore. The interest comes on the heels of a bond offering last month, in which it raised USD60 million in 11-year notes with a fixed coupon. "We have not [done any swaps] and we're considering it," she said, noting the company is talking to potential counterparties about entering a swap. Pope & Talbot has used interest-rate swaps in the past, she added, declining to say what factors would influence its decision-making.
In any swap, Pope & Talbot would look to pay a spread over six-month LIBOR and receive the bond's 8.375% fixed-rate coupon. Pope said the wool producer did not enter a swap at the time the deal was sold because it wanted to get the transaction executed when the fixed-income markets were volatile. "It was something we wanted to get done quickly," she said, noting the company expects to decide in the course of the next month whether to enter a swap. The Rule 144a bond sale was underwritten by BMO Nesbitt Burns. Pope declined further comment, except to say the company, which has exposure to the Canadian dollar, has also used foreign exchange options in the past.
Moody's Investors Service rates Pope & Talbot Baa3 and Standard & Poor's rates it BB. here