Whole Foods Reveals More Details in its Plan to Buy Back $1 Billion in Stock
AUSTIN, TX - More details surfaced this week about Whole Foods’ planned share buyback program, with the Austin, TX-based company revealing that it will issue $1 billion in ten-year senior unsecured notes at an interest rate of 5.2 percent.
Whole Foods will use the proceeds for "general corporate purposes," Standard & Poor’s Ratings Services (S&P) told the Wall Street Journal, including the recently announced, open-ended $1 billion share repurchase program.
Last month in an announcement that coincided with its Q4 financial report, Whole Foods unveiled plans to enter into a $500 million five-year revolving credit facility, as well as initiate a buy back of $1 billion of its own shares. Analysts believe this move may be a signal that the company believes its stock is undervalued at its current price.
“Whole Foods remains the leader in the natural and organic sub-segment of the highly fragmented food-retail industry yet its overall share of the food-retail industry is still relatively small and under pressure,” S&P said in a release
In an announcement that followed Whole Foods' Q4 report, Standard & Poor’s downgraded its outlook of Whole Foods from “stable” to “negative,” explaining, "The negative outlook reflects our view that credit protection measures could erode more than we had previously anticipated given the increase to debt and continued competitive headwinds that pressure sales and margins.”
Prior to Whole Foods’ announcement, the company’s shares had reached a month low of $29.15, but as of 1:20 PM EST, shares were on the rise to $29.88.
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