Mattel shares plunge after it abruptly cancels debt offering

NEW YORK (AFP) – Barbie-maker Mattel saw its share price sink on Friday after the company cancelled a debt offering due to a “whistleblower” complaint.

The toymaker revealed few details about the situation in a terse securities filing late Thursday, saying only that the debt issue was “terminated” to give the company opportunity to investigate an “anonymous whistleblower letter”.

The company planned to refinance USD250 million in debt, had been scheduled to close the offer on Thursday.

“The company intends to refinance its 4.350 per cent Senior Notes due October 2020 prior to maturity,” Mattel said.

The share price fell more than 12 percent to USD11.81 in late-morning trading on Friday.

The Mattel logo. – AP

Analysts said suspending a planned debt issue is highly unusual and the drop in shares reflected increased uncertainty over the company’s financial position.

But the lack of information in the filing made it impossible to speculate on the content of the whistleblower complaint, they said. “You would think there is something related to a financial component in the financing, but is it meaningful? Is it negligible? There is no frame of reference,” said Morningstar Analyst Jaime Katz.

CFRA Research Analyst Camilla Yanushevsky said the filing adds to concerns about the Mattel’s financial position and high debt level that skews the risk of newer ventures “heavily to the downside”.

Mattel’s chief executive Ynon Kreiz has described the company as being in a “multi-year turnaround” as it cuts administrative and manufactu-ring costs and announces new projects, such as a live-action Barbie movie with actress Margot Robbie.

In July, the toymaker reported a loss of USD108 million in the second quarter, an improvement on the USD240.9 million loss a year earlier.

The company’s results have been most recently dented by the recall of a Fisher-Price infant sleeper due to baby fatalities, and incident that hit results by some USD30.4 million so far in 2019 and raised questions about brand reputation.