Alimentation Couche-Tard Inc. operates over 8,000 convenience stores in North America, Scandinavia, Poland, the Baltics, and Russia. The Laval, Quebec–based company generates income primarily from the sale of tobacco products, grocery items, beverages, fresh food, including quick service restaurants, other retail products and ser- vices, and road transportation fuels, among other chemicals. It operates in Canada mainly under the Mac’s and Couche-Tard brands. Note 19(b) from the company’s 2013 annual report in Exhibit 10-11 details Couche-Tard’s senior unsecured notes (in millions).
a. Looking at Couche-Tard’s three tranches (which are portions of a bond issue that have different maturity dates, interest rates, etc.) of senior unsecured notes, comment on the relationship between the interest rates and the length of time to maturity of the notes. As an investor, explain why this relationship would be important to you.
b. Explain why Couche-Tard may have wanted to spread this borrowing across three tranches with different maturities.
c. What do we know about these notes given that the effective rates of interest are higher than the coupon rates for all three tranches?

  • CreatedJune 12, 2015
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