Tiffany sells $250M in debt to Buffett's firm

OMAHA, Nebraska - Tiffany & Co. says it sold $250 million of debt to billionaire Warren Buffett's company, and the jeweler plans to use the proceeds to refinance existing debt.

New York-based Tiffany disclosed in a filing with the Securities and Exchange Commission Friday that it had sold the debt to Berkshire Hathaway Inc. a day earlier.

Omaha-based Berkshire will receive 10 percent interest on the new senior notes. Half of the debt will be due in 2017, and the other half will be due in 2019.

No one was immediately available Friday afternoon at either Tiffany or Berkshire to discuss the debt financing arrangement.

Last month, Tiffany warned that its same-store sales for the holiday season fell 24 percent as sales slowed in its domestic stores. Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.

Tiffany's total worldwide sales fell 21 percent to $687.4 million in the November-through-December period.

The company warned that the disappointing holiday sales will hurt fourth-quarter earnings, which are scheduled to be reported on March 23.

In the third quarter, Tiffany earned $43.8 million, or 35 cents per share. That was better than Wall Street expected, but the jeweler warned investors then it was expecting weak 2008 results because even wealthy consumers were cutting spending in the recession.

Tiffany operated 206 stores and boutiques as of Dec. 31.

Berkshire has offered several other iconic companies similar financing deals recently, including buying $300 million of Harley-Davidson Inc. debt last week. The Harley debt will pay 15 percent interest.

Last fall, Berkshire also invested billions in General Electric Co. and Goldman Sachs to help those venerable companies raise capital. Berkshire invested $3 billion in preferred GE shares and $5 billion in preferred Goldman shares, and both companies agreed to pay Berkshire a 10 percent dividend.

Berkshire owns a diverse mix of more than 60 companies, including insurance, furniture, carpet, jewelry, restaurants and utility businesses. And it has major investments in such companies as Wells Fargo & Co. and Coca-Cola Co.

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On the Net:

Tiffany & Co.: http://www.tiffany.com

Berkshire Hathaway Inc.: http://www.berkshirehathaway.com

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