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RJR Nabisco Plans to Offer Another 75 Million Shares

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From Associated Press

RJR Nabisco Inc., which scored a big hit with investors seven weeks ago by issuing new common stock, said Wednesday that it plans to offer another 75 million shares to the public.

The food-tobacco conglomerate, which makes products ranging from Oreo cookies to Winston cigarettes, said it will also issue $750 million in new bonds, with proceeds from both sales going toward lowering its debt burden.

RJR Nabisco went private two years ago in a record $24.53-billion leveraged buyout financed partly by high-priced junk bonds. During the past year, the company has been aggressively repurchasing that debt, and the recent issuance of 129 million shares of common stock has helped fund the bond buyback.

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If the performance of that stock is an indication, the new issues will sell well.

RJR Nabisco shares initially sold for $5.50 when they began trading Feb. 1. They closed Wednesday at $11, up 87 cents a share, in New York Stock Exchange trading.

The stock has been one of the most popular on Wall Street since its debut and topped the NYSE most active list Wednesday.

The company has received high marks from analysts and investors since the buyout for cutting its debt load and costs.

After its LBO, RJR Nabisco’s debts totaled $29 billion. Asset sales and a recent $7.6-billion recapitalization--which included the first post-buyout sale of common stock--have slashed that figure by about $11 billion and sharply reduced its interest expenses.

In the fourth quarter, RJR Nabisco had a $13-million loss, a big improvement over the $144 million it lost a year earlier as the result of its debt-reduction program.

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