Canada Post to issue up to $1bn in long-term debt
Canada Post Corporation today announced its intention to issue up to $1bn in long-term debt, consisting of two series of bonds with terms up to and including 30 years. Net proceeds of the offering will be used primarily to finance the company’s “Postal Transformation” modernisation programme.
“This multi-year investment in new facilities, equipment and systems will enable Canada Post to protect and enhance service to Canadians, increase its competitiveness, improve working conditions and safety for employees and improve the financial sustainability of the company. The modernisation plan is expected to generate $250m in annual cost savings by 2017,” said a company statement.
The Government of Canada recently increased Canada Post’s external borrowing limit to $2.5bn from $300m in order to facilitate financing of Postal Transformation.
“By increasing our debt to a level that is appropriate for a company of our size and financial profile, Canada Post will be able to invest in its critically-needed modernisation” said Wayne Cheeseman, CFO, Canada Post. “This debt offering will enable the company to increase its financial flexibility, invest in its future and keep serving Canadians while remaining financially self-sufficient.”
As Canada Post is an agent of the Government of Canada, the bonds will be obligations of Canada Post and the Government of Canada. The debt has received the following credit ratings: Standard & Poors – AAA; DBRS – AAA; and Moody’s Investor Service – Aaa.
The debt offering is being co-led by TD Securities and RBC Capital Markets.
