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Mattel pulls a bond sale over a whistleblower letter, and its stock plunges

Mattel Hot Wheels
Mattel, whose brands include Hot Wheels, said it terminated a bond sale “to investigate the matters set forth” in an anonymous whistleblower letter.
(Rick Bowmer / Associated Press)

Mattel Inc. stock fell nearly 16%, the most in almost six months, on Friday after the company said it would pull a bond sale as it looks into “an anonymous whistleblower letter.”

The El Segundo-based toymaker became aware of the letter Aug. 6, according to a filing late Thursday. Mattel said it was terminating the sale of senior notes due in 2027 “to provide the company with an opportunity to investigate the matters set forth in the letter.”

The sale had been scheduled to close Thursday. Mattel said it plans to refinance bonds that are due in October 2020 before maturity. It didn’t offer any further details about the letter. Spokeswoman Dena Cook said the company had no comment to add beyond what’s in the filing.

Although Mattel didn’t detail the claims in the letter, Jefferies analyst Stephanie Wissink said they are likely “material enough to prevent” the bond deal rather than just delay it.

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“We can only espouse from the timing of the filing that a legal test was conducted and determination made that the matters contained in the letter were meaningful enough to affect an investor’s ability to assess merit and risk,” Wissink said.

Matte shares dropped 15.8% on Friday, their biggest single-day drop since February. They’re still up 13.2% this year, boosted last month as the company signaled it is making progress in revamping operations and reported quarterly revenue that outpaced expectations.

Mattel’s bonds were among the biggest decliners in the market Friday morning. Its 6.75% bonds due in 2025 dropped 4.625 cents on the dollar to 100.25 cents, the most since they were issued, according to Trace. Its notes due in 2020 declined more than 2 points to trade around par.

Junk-rated Mattel has about $3 billion of debt on its books. About $250 million of that comes due next year. The toymaker had planned to refinance its 2020 obligation with the pulled bond, which had been sold to investors Aug. 1.


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