EMC Sells Bonds to Benefit Shareholders

By IVCPOST Staff Reporter

Jun 08, 2013 02:25 AM EDT

EMC Corp. followed Apple's footstep through its bond issuance this week. A US$5.5 billion transaction was directed primarily in getting funds to benefit its shareholders.

Bankers see the step taken by the data storage equipment firm to drive other firms to take the unusual step of debt issuance. This was for the main purpose of paying a higher dividend and buyback of shares.

The pressure was to get firms return cash to its shareholders. Apple showed that it is possible to leverage piles of bulging offshore cash by issuing a debt against it.

According to a senior analyst from Jamie Rizzo, it is expected to see other debt issuance done more often after seeing Apple complete its bond issue.

In the past, tech companies often argued that they were unable to repurchase shares or pay dividends as their cash was located offshore.

Many believed that this argument is losing force after Apple set records of a US$17 billion deal.

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics