Additionally, Post plans to pay off the $100 million of unsecured bonds at par on March 16, 2005. The remarketing of the 6.85% Mandatory Par Put Remarketed Securities would have put the maturity date at March 16, 2015.
Under terms of the remarketing agreement, Merrill Lynch had the right to remarket the underlying unsecured bonds on the March 16, 2005 remarketing date for a 10-year term and at an interest rate to Post calculated as 5.715%, plus Post's then current credit spread to the 10-year Treasury.
"Based on current interest rates, the forward Treasury yield curve and out capital plans for 2005, we have concluded that it is not in the best interests of the company to permit the MOPPRS debt to be remarketed for an additional 10-year term at a substantially above-market interest rate," Christopher Papa, Post's executive vice president and chief financial officer, says in a prepared statement.
Papa adds, "Having made that decision, we elected to proceed to terminate the remarketing agreement in the fourth quarter of 2004." The $10.6-million payment to Merrill Lynch will result in a charge, equal to about 25 cents per diluted share, which will be recorded in the company's fourth quarter financials, Papa says.
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