TORONTO -- Celestica became the latest EMS firm to announce a debt reduction plan, announcing last night plans to purchase up to $150 million worth of its 7.875% senior subordinated notes due in 2011. Under the modified Dutch tender offer, Celestica will purchase notes in a range $960 to $1,010 per every $1,000 in principal, with the offer expiring in a month.

Like many of its competitors, Celestica has large amounts of cash on hand and is using some to lower its debt and perhaps boost its earnings. At the end of December, the company had $1.2 billion in cash on its balance sheet, and was in a net cash position of $468 million.

"We believe Celestica is looking for a way to return value to shareholders through repurchasing its near-term debt," Deustche Bank analyst Sherri Scribner wrote in a research note. She estimates Celestica's buyback will reduce debt levels and lower its interest expense by roughly $10.5 million a year.