Berry Global Announces Pricing of Offering of First Priority Senior Secured Notes
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Insights
The announcement by Berry Global Group regarding the pricing of a private placement for $800 million in First Priority Senior Secured Notes due 2034 is a strategic financial move. This decision reflects the company's approach to capital management and could indicate a pursuit of liquidity for potential investments, refinancing existing debt, or other corporate activities. The secured nature of the notes suggests a lower risk for investors, as they are backed by collateral, potentially lowering the interest rate compared to unsecured debt.
From a financial perspective, the key factors to consider include the interest rate set on the notes, the company's current debt profile and the intended use of the proceeds. Investors and stakeholders should evaluate the company's leverage ratios post-issuance and how this debt will affect its financial flexibility. Additionally, the impact on the company's credit rating and the implied confidence of the debt markets in Berry's financial health and future prospects are important considerations.
Within the packaging industry, Berry Global Group's issuance of secured notes can be seen as a response to industry trends such as increased demand for sustainable packaging solutions and potential expansion opportunities. The size of the placement, $800 million, is considerable and suggests that Berry may be positioning itself for significant strategic moves, which could include acquisitions, R&D investments in new materials or technologies, or geographic expansion.
It's essential to analyze how this financial activity aligns with market trends and competitor actions. If Berry is leveraging this capital to innovate or expand its market share, it could gain a competitive edge. However, if the capital is primarily used for refinancing existing debt, the impact on the company's market position might be less pronounced. Market dynamics and consumer preferences in the packaging sector will ultimately influence the effectiveness of Berry's investment strategy stemming from this capital raise.
The issuance of First Priority Senior Secured Notes is governed by a complex legal framework that ensures protection for both the issuer and the investors. These legal protections include covenants, representations, warranties and events of default, which are critical in safeguarding the interests of the note holders. For Berry Global Group, adherence to these legal stipulations is crucial to maintain investor confidence and ensure compliance with financial regulations.
Furthermore, as a private placement, the offering is subject to securities laws that dictate the disclosures required and the categories of investors eligible to participate. The legal structuring of such a deal can also have tax implications for the company and the investors. Understanding these legal intricacies is vital for stakeholders to assess the robustness of the transaction and its alignment with corporate governance standards.
The Notes will bear interest at a rate of
The Notes will be guaranteed by Berry and each of the Issuer’s existing and future direct or indirect domestic subsidiaries that guarantees the Issuer’s senior secured credit facilities and existing first priority secured notes, subject to certain exceptions. The Notes and the guarantees thereof will be unsubordinated obligations of the Issuer and will rank equally in right of payment with all of the Issuer’s, and, in the case of the guarantees, to all of the guarantors’, existing and future unsubordinated debt. The guarantee by Berry will be unsecured. The Notes will be secured on a second priority basis by liens (subject to certain exceptions and permitted liens) on accounts receivable, inventory and certain related assets that secure the Issuer’s revolving credit facility, and on a first priority basis by liens on the property and assets of the Issuer and the subsidiary guarantors that secure the Issuer’s senior secured term loan credit facility, subject to certain exceptions.
The net proceeds from the offering are intended to prepay a portion of certain existing indebtedness of the Issuer and to pay certain fees and expenses related to the offering.
The Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside
This press release shall not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful. Any offers of the Notes will be made only by means of a private offering memorandum.
About Berry
At Berry Global Group, Inc. (NYSE: BERY), we create packaging and engineered products that we believe make life better for people and the planet. We do this every day by leveraging our unmatched global capabilities, sustainability leadership, and deep innovation expertise to serve customers of all sizes around the world. Harnessing the strength in our diversity and industry-leading talent of more than 40,000 global employees across more than 250 locations, we partner with customers to develop, design, and manufacture innovative products with an eye toward the circular economy. The challenges we solve and the innovations we pioneer benefit our customers at every stage of their journey. For more information, visit our website, or connect with us on LinkedIn or X. (BERY-F)
Forward Looking Statements
Certain statements and information in this release that are not historical, including statements relating to the Notes and the expected future performance of the Company, may constitute “forward looking statements” within the meaning of the federal securities laws and are presented pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “would,” “could,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects,” “outlook,” “anticipates” or “looking forward,” or similar expressions that relate to our strategy, plans, intentions, or expectations. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates, and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments.
These forward-looking statements are subject to risks and uncertainties that may change at any time, and therefore, our actual results may differ materially from those that we expected due to a variety of factors, including without limitation: (1) risks associated with our substantial indebtedness and debt service; (2) changes in prices and availability of resin and other raw materials and our ability to pass on changes in raw material prices to our customers on a timely basis; (3) risks related to acquisitions or divestitures and integration of acquired businesses and their operations, and realization of anticipated cost savings and synergies; (4) risks related to international business, including transactional and translational foreign currency exchange rate risk and the risks of compliance with applicable export controls, sanctions, anti-corruption laws and regulations; (5) increases in the cost of compliance with laws and regulations, including environmental, safety, and climate change laws and regulations; (6) labor issues, including the potential labor shortages, shutdowns or strikes, or the failure to renew effective bargaining agreements; (7) risks related to disruptions in the overall global economy, persistent inflation, supply chain disruptions, and the financial markets that may adversely impact our business; (8) risk of catastrophic loss of one of our key manufacturing facilities, natural disasters, and other unplanned business interruptions; (9) risks related to weather-related events and longer-term climate change patterns; (10) risks related to the failure of, inadequacy of, or attacks on our information technology systems and infrastructure; (11) risks that our restructuring programs may entail greater implementation costs or result in lower cost savings than anticipated; (12) risks related to future write-offs of substantial goodwill; (13) risks of competition, including foreign competition, in our existing and future markets; (14) risks related to market conditions associated with our share repurchase program; (15) risks related to market disruptions and increased market volatility; and (16) the other factors and uncertainties discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K filed on November 17, 2023 and subsequent filings with the Securities and Exchange Commission. We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. Accordingly, readers should not place undue reliance on those statements. All forward-looking statements are based upon information available to us on the date hereof. All forward-looking statements are made only as of the date hereof and we undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240110155636/en/
Investor Contact:
Dustin Stilwell
+1 812.306.2964
ir@berryglobal.com
Global Media Contact:
Anna Raben
+1 812.492.1387
mediarelations@berryglobal.com
Source: Berry Global Group, Inc.
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