Ball Corporation Announces Pricing of Cash Tender Offers for Certain Outstanding Debt Securities
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Insights
The announcement by Ball Corporation regarding the tender offers for its outstanding senior notes is a strategic financial maneuver that warrants a close examination of its implications on the company's capital structure and overall financial health. By offering to purchase these notes before their maturity, Ball is potentially lowering its future interest expenses and extending its debt maturity profile. This action could be indicative of Ball's proactive management of its debt obligations and a strategic move to take advantage of current market conditions.
From a financial analyst's perspective, the key metrics to consider are the interest rates of the notes being repurchased, the fixed spread and the early tender premium. The tender offers include a premium over the current market price, which may be attractive to current note holders and could result in a high participation rate. The repurchase of debt at a premium, however, will have an immediate impact on Ball's cash reserves, which they plan to offset with proceeds from the sale of their aerospace business. The timing and success of this sale are thus critical factors in evaluating the risks associated with the tender offers.
It is also important to consider the impact of these tender offers on Ball's leverage ratios and interest coverage ratios, as these will affect credit ratings and the cost of future borrowing. The use of the term 'basis points' refers to the incremental interest rate percentage used to calculate the additional yield over the reference U.S. Treasury Security, which is a common benchmark for such financial instruments.
From a market research perspective, Ball Corporation's decision to repurchase its senior notes can be seen as a response to market conditions and investor sentiment. The fixed income market, particularly for corporate debt, is sensitive to interest rate movements and economic forecasts. If interest rates are expected to rise, repurchasing debt with a lower interest rate now could save the company money in the long term.
Furthermore, the choice of dealer managers, BNP Paribas Securities Corp. and Morgan Stanley & Co. LLC, for the tender offers is notable. These institutions have a broad reach and can effectively communicate with note holders, which may facilitate a successful tender offer. The market's reception to such offers can be influenced by the reputation and capability of the involved financial institutions.
Additionally, the tender offer's impact on Ball's stock price should be monitored. While the tender offer itself is a fixed income market event, equity investors often interpret debt restructuring as a signal of management's confidence in the company's future cash flows and strategic direction. A successful tender offer could lead to positive sentiment in the equity market if interpreted as a sign of financial prudence and strength.
Legally, the tender offers are subject to specific terms and conditions as outlined in the Offer to Purchase. The legal implications for Ball Corporation involve the adherence to securities regulations and ensuring transparent communication with note holders. The conditions also stipulate that Ball is not obligated to accept for payment, or pay for any tendered notes if certain conditions are not met, which could include changes in market conditions or other unforeseen events.
The legal framework of such tender offers is designed to protect both the issuer and the note holders. For instance, the Withdrawal Deadline provides note holders the right to reconsider their decision to tender their notes, which is an important legal protection. Moreover, the potential amendment, extension, or termination of the tender offers by Ball offers flexibility to the company but must be communicated clearly to avoid any legal repercussions related to miscommunication or misrepresentation.
Understanding the legal terms, such as 'Early Tender Time,' 'Expiration Time,' and 'Accrued Interest,' is crucial for note holders when considering their options. These terms dictate the timeline and financial implications of participating in the tender offers and any deviation from the stated terms could result in legal challenges or disputes.
The following table summarizes the material pricing terms of the Tender Offers:
Title of | CUSIP | Principal |
| Bloomberg | Reference | Fixed | Early Tender | Total |
| 058498AT3 |
| FIT4 | 4.902 % | 50 bps | |||
| 058498AV8 |
| FIT5 | 4.677 % | 70 bps |
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(1) | The applicable page on Bloomberg from which the Dealer Managers named below quoted the bid side prices of the |
(2) | The Total Consideration (as defined below) for Notes validly tendered prior to or at the Early Tender Time (as defined below) and accepted for purchase is calculated using the applicable fixed spread and is inclusive of the applicable Early Tender Premium (as defined below). |
(3) | Total Consideration per |
The Tender Offers are being made upon the terms and subject to conditions described in the Offer to Purchase, dated February 14, 2024 (as it may be amended or supplemented from time to time, the "Offer to Purchase"), which sets forth a detailed description of the Tender Offers.
Each Tender Offer will expire at 5:00 p.m., New York City Time, on March 14, 2024, unless such Tender Offer is extended or earlier terminated (the "Expiration Time"). Holders of Notes must validly tender and not validly withdraw their Notes prior to or at 5:00 p.m.,
The applicable total consideration listed in the table above (with respect to each series of Notes, the "Total Consideration") will be paid for each
In addition to the Total Consideration or the Tender Offer Consideration, as applicable, all holders of Notes accepted for purchase will also receive accrued and unpaid interest on Notes validly tendered and accepted for purchase from the applicable last interest payment date up to, but excluding, the applicable settlement date ("Accrued Interest").
The Total Consideration, Accrued Interest and the costs and expenses of the Tender Offers are expected to be paid with funds provided by the net cash proceeds from the closing of the previously announced sale of Ball's aerospace business.
Each Tender Offer will expire at the applicable Expiration Time. Except as set forth below, payment for the Notes that are validly tendered prior to or at the Expiration Time and that are accepted for purchase will be made on a date promptly following the Expiration Time, which is currently anticipated to be March 15, 2024, the business day after the Expiration Time. Ball reserves the right, in its sole discretion, to make payment for Notes that are validly tendered prior to or at the Early Tender Time and that are accepted for purchase on an earlier settlement date, which, if applicable, is currently anticipated to be February 29, 2024, provided that the conditions to the satisfaction of the applicable Tender Offer are satisfied. Ball is not obligated to conduct any early settlement or have any early settlement occur on any particular date.
Each Tender Offer is contingent upon the satisfaction of certain conditions. If any of the conditions are not satisfied, Ball is not obligated to accept for payment, or pay for, and may delay the acceptance for payment of, any tendered Notes and may even terminate one or both Tender Offers. Ball reserves the right to amend, extend, terminate or waive any condition with respect to one Tender Offer without taking a similar action with respect to the other Tender Offer. Full details of the terms and conditions of the Tender Offers are included in the Offer to Purchase.
Information Relating to the Tender Offers
Requests for documents relating to the Tender Offers should be directed to D.F. King & Co., Inc., the tender agent and information agent, by telephone at +1 (866) 796-1271 (toll-free) or by email at ball@dfking.com. BNP Paribas Securities Corp. and Morgan Stanley & Co. LLC are serving as dealer managers in connection with the Tender Offers. Investors with questions regarding the terms and conditions of the Tender Offers may contact the dealer managers as follows:
BNP Paribas Securities Corp. | Morgan Stanley & Co. LLC |
This press release is for informational purposes only and does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders with respect to, the Notes. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation or sale would be unlawful. Each Tender Offer is being made solely pursuant to the Offer to Purchase made available to holders of the Notes. None of Ball or its affiliates, their respective boards of directors, the dealer managers, the tender agent and information agent or the trustee with respect to any series of Notes is making any recommendation as to whether or not holders should tender or refrain from tendering all or any portion of their Notes in response to each Tender Offer. Holders are urged to evaluate carefully all information in the Offer to Purchase, consult their own investment and tax advisors and make their own decisions whether to tender Notes in each Tender Offer, and, if so, the principal amount of Notes to tender.
About Ball Corporation
Ball Corporation supplies innovative, sustainable aluminum packaging solutions for beverage, personal care and household products customers. Ball Corporation employs 16,000 people worldwide (excluding divested aerospace staff) and reported 2023 net sales of
Cautionary Statement Regarding Forward-Looking Statements
This release contains "forward-looking" statements concerning future events and financial performance. Words such as "expects," "anticipates," "estimates," "believes," and similar expressions typically identify forward looking statements, which are generally any statements other than statements of historical fact. Such statements are based on current expectations or views of the future and are subject to risks and uncertainties, which could cause actual results or events to differ materially from those expressed or implied. You should therefore not place undue reliance upon any forward-looking statements, and they should be read in conjunction with, and qualified in their entirety by, the cautionary statements referenced below. Ball undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Key factors, risks and uncertainties that could cause actual outcomes and results to be different are summarized in filings with the Securities and Exchange Commission, including Exhibit 99 in Ball's Form 10-K, which are available on Ball's website and at www.sec.gov. Additional factors that might affect: a) Ball's packaging segments include product capacity, supply, and demand constraints and fluctuations and changes in consumption patterns; availability/cost of raw materials, equipment, and logistics; competitive packaging, pricing and substitution; changes in climate and weather and related events such as drought, wildfires, storms, hurricanes, tornadoes and floods; footprint adjustments and other manufacturing changes, including the startup of new facilities and lines; failure to achieve synergies, productivity improvements or cost reductions; unfavorable mandatory deposit or packaging laws; customer and supplier consolidation; power and supply chain interruptions; changes in major customer or supplier contracts or loss of a major customer or supplier; inability to pass through increased costs; war, political instability and sanctions, including relating to the situation in
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SOURCE Ball Corporation
FAQ
What does Ball Corporation announce regarding its Senior Notes?
How will Ball Corporation fund the tender offers?
What are the expiration dates for the Tender Offers?
Who are the dealer managers in connection with the Tender Offers?
What is the purpose of the Offer to Purchase?
