Murphy Oil Corp. of El Dorado is using a $1.5 billion bond sale, announced in a filing with the U.S. Securities and Exchange Commission on Tuesday, to help fund its previously announced $2.50 per share dividend payment.
In doing so, Murphy Oil becomes one of several U.S. companies (and that includes Arkansas’ own Wal-Mart Stores Inc. and Dillard’s Inc.) that’s reacting to uncertainty around the coming “fiscal cliff.”
CNBC describes Murphy’s play:
Fearing a tripling of dividend tax rates next year, companies have found one-time payouts and early payments of quarterly dividends as a way to beat some of the impact of the “Fiscal Cliff.”
Taking advantage of super-low interest rates, companies have been issuing debt at a record rate this month. Some say they plan to use the proceeds to fund dividends and share repurchases.
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Christopher Reich of Thomson Reuters IFR points out, for instance, that Murphy Oil in its prospectus Tuesday also said that it would use the proceeds of its more than $600 million offering of 5-year, 10-year and 30-year bonds to fund its previously announced special dividend, among other things.
You can read more about Murphy’s plans in its prospectus here.