MONTRÉAL - Gildan Activewear Inc . (NYSE:GIL: TSX and NYSE), a manufacturer of everyday basic apparel, has announced a private placement agreement with Caisse de dépôt et placement du Québec (CDPQ) to issue CAD$200 million in senior unsecured notes. The notes, bearing a 6.0% annual interest rate, are set to mature five years from the issuance date.
The transaction is expected to close on or around June 4, 2024, subject to the completion of due diligence and customary closing conditions. Gildan plans to allocate the net proceeds towards funding its common share repurchase program and for repaying maturing outstanding debt.
In conjunction with this financial move, Gildan has committed to maintaining its global headquarters in Québec for at least seven years and to adhere to the Global Minimum Tax regulations.
Kim Thomassin, Executive Vice-President and Head of Québec at CDPQ, expressed confidence in Gildan's business plan and the company's commitments, which influenced CDPQ's decision to support Gildan's growth and potentially increase its shareholding in the future.
Tim Hodgson, Chairman of Gildan Activewear, regarded the investment as a testament to the company's strong governance and dedication to shareholder value. Vince Tyra, CEO of Gildan, echoed this sentiment and anticipates creating value for all shareholders from Montréal, his new home city.
This financial arrangement will not be open to the public market in Canada or the United States, as the notes have not been registered under the U.S. Securities Act of 1933 or Canadian securities laws. The offering is made in reliance on exemptions from the prospectus requirements under applicable securities legislation.
About Gildan Activewear Inc., it is known for its large-scale manufacturing facilities primarily located in Central America, the Caribbean, North America, and Bangladesh. The company is committed to industry-leading labor, environmental, and governance practices as part of its comprehensive ESG program.
CDPQ is a global investment group managing funds for public pension and insurance plans, with net assets totaling CAD 434 billion as of December 31, 2023.
InvestingPro Insights
Gildan Activewear Inc. (GIL: TSX and NYSE) has recently announced a strategic financial move with its private placement agreement. As investors consider the implications of this decision, it is essential to look at the company's financial health and market performance through key metrics and insights from InvestingPro.
With a market capitalization of $5.61 billion, Gildan shows a solid presence in the market. The company's P/E ratio stands at 11.03, indicating a potentially favorable valuation compared to industry peers. Gildan's commitment to shareholder returns is evident, as it has not only maintained dividend payments for 14 consecutive years but also raised its dividend for three consecutive years, showcasing a stable financial policy. The current dividend yield is 2.51%, which is attractive to income-seeking investors.
One of the InvestingPro Tips highlights that management has been aggressively buying back shares, which could signal confidence in the company's future performance and a commitment to enhancing shareholder value. Additionally, the company operates with a moderate level of debt, which is a reassuring sign for investors concerned about financial stability.
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These insights, combined with the company's recent financial maneuver, could help investors make more informed decisions regarding Gildan Activewear's stock. As the company prepares to close the private placement agreement, these data points offer a glimpse into Gildan's financial strength and market position.
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