Earlier the week, Hasbro, Inc. (HAS) announced an offering of $500 million of the 6.35% notes due 2040. Interest on the notes will be paid twice each year on March 15 and September 15. The notes will mature on March 15, 2040.

The notes will be senior unsecured obligations of the company and will be at par with all other senior unsecured debt in right of payment. There is no sinking fund for the notes. The notes will be issued only in a registered form in denominations of $2,000 and integral multiples of $1,000.

The net proceeds from the sale of the notes will be approximately $492.7 million, after deducting underwriting discounts and offering expenses. These proceeds will be used to replace outstanding 2.75% convertible debentures due 2021 and repurchase shares to nullify the dilutive effect that the debentures will have upon conversion. The remaining proceeds, if any, will be used for general corporate and working capital purposes, which includes repurchase of shares of the company’s common stock, capital expenditures and possible acquisitions etc.

The company has increased its debt equity ratio from 31:1 in 2005 to 71:1 in 2009. However, the earnings to fixed charges ratio has declined from 8.33X in 2005 to 7.96X in 2009.

The notes carry a rating of Baa2, BBB and BBB+ by rating agencies Moody’s, Standard & Poor’s and Fitch, respectively. This implies that the notes carry an investment grade status.

BofA Merrill Lynch and Citi are acting as joint book running managers for the issue.

Based in Pawtucket, Rhode Island, Hasbro is engaged in the design, manufacture and marketing of games and toys. The company principally provides children’s and family leisure time and entertainment products and services. It offers various games Incorporatedluding traditional board, card, hand-held electronic, trading card, role playing, plug- and-play and DVD games, as well as electronic learning aids and puzzles.

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