Beckman to Issue $100 Million in Notes to Pay Off U.S. Bank Debt

Putting its newly acquired, high-grade commercial debt ratings to work, Beckman Instruments said Thursday that it plans to retire its long-term U.S. bank debt and replace it with cheaper money raised by selling corporate IOUs.

Dennis Wilson, Beckman vice president and treasurer, said company officials have authorized the sale of up to $100 million in commercial paper, an amount that should allow the company to pay off most of its domestic bank debt.

He said the interest rate that the company will pay to purchasers of its commercial paper--basically short-term, unsecured promissory notes--is between one-quarter and one-third of a percentage point lower than the best interest rates Beckman can get from its banks.

While those numbers seem small, the difference between paying 8% a year and 7.75% a year on $90 million in debt is $225,000.

The first corporate paper, to raise between $50 million and $60 million, will be issued today, Wilson said. Goldman Sachs is underwriting the issue. Wilson said Beckman is able to issue paper at lower interest rates than banks charge because of its high-quality credit ratings.

Standard & Poor’s assigned Beckman an A-1 commercial paper rating last week--the highest it awards. And Moody’s Investment Service gave the company a mid-level Prime-2 rating earlier this week.

The ratings qualify the commercial paper as investment grade and show that both credit rating services believe Beckman is in good financial shape and unlikely to have problems repaying its debt.

Beckman, which merged with SmithKline Corp. in 1982, became an independent public company again in July.

The company is an international manufacturer and marketer of scientific instruments, analytical systems and related products for the fields of life-sciences research and clinical diagnostics.