(Bloomberg) – XPO Logistics Inc. sells $ 1 billion bonds to fund stock purchases and refinance debt as it leaves acquisitions to increase stock prices.
Trucking company and stock operator will use the bonds to repay loans under their existing credit agreement, including general corporate purposes such as share repurchase, according to a statement Tuesday. The 5.5-year-old securities cannot be bought back for 2.5 years, according to a person familiar with the case, who requested not to be identified as the details are private.
XPO also reduces its forecast for 2019 Friday for the second time in two months, referring to the loss of business from its largest customer and soft European demand. Although it did not identify the company that reduced the business by two-thirds, Wall Street analysts and industrial consultants said it was absolutely Amazon.com Inc., which has built up its own logistics network, reduced the e-commerce giant's need for third-party vendors.
The buybacks are "a negative development for the credit world at this point", CreditSights analysts led by Ashwin Tiruvasu, who considers XPO bonds as underperformers, said in a note Tuesday. Equity analysts also have concerns – when Morgan Stanley's top pick for 2019 downgraded analyst Ravi Shanker share as the company's change in guidance "has raised forward-looking visibility issues," according to a report Tuesday.
XPO, based in Greenwich, Connecticut, also said it could change its existing $ 1 billion revolving credit facility by extending its term, according to the statement. The tape sales are managed by Citigroup Inc., Morgan Stanley and JPMorgan Chase & Co., the well-known person.
(Buy-back updates beginning in the first paragraph.)
– With help from Gowri Gurumurthy and Thomas Black.
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