Kraft Heinz Commences Cash Tender Offer for up to $2.0 Billion Aggregate Purchase Price of Certain of Its Outstanding Notes

Rhea-AI Summary

Kraft Heinz has initiated a Tender Offer to purchase up to $2 billion of its Senior Notes, including various series due from 2022 to 2050. The offer, made through its subsidiary, is subject to conditions, including the completion of a transaction involving the sale of assets in its global cheese business. The Tender Offer will expire on December 16, 2021, with early tender incentives set until December 2, 2021. Holders are advised to review the Offer to Purchase for further details.

Positive

• Announcement of a $2 billion Tender Offer could improve cash management.
• Potential sale of global cheese business assets may provide liquidity.

Negative

• Tender Offer's acceptance is contingent on asset sale completion.
• Liquidity risk remains if the Tender Offer is under-subscribed.

PITTSBURGH & CHICAGO--(BUSINESS WIRE)-- The Kraft Heinz Company (“Kraft Heinz”) (Nasdaq: KHC) announced today that Kraft Heinz Foods Company, its 100% owned subsidiary (the “Issuer”), has commenced an offer to purchase for cash (the “Tender Offer”) up to the maximum combined aggregate purchase price of $2.0 billion, including principal and premium but excluding accrued and unpaid interest (the “Maximum Tender Amount”), of its 3.500% Senior Notes due June 2022 (the “June 2022 Notes”), 4.625% Senior Notes due January 2029 (the “January 2029 Notes”), 4.250% Senior Notes due March 2031 (the “March 2031 Notes”), 6.750% Senior Notes due March 2032 (the “March 2032 Notes”), 5.000% Senior Notes due July 2035 (the “July 2035 Notes”), 6.500% Senior Notes due February 2040 (the “February 2040 Notes”), 5.000% Senior Notes due June 2042 (the “June 2042 Notes”), 5.200% Senior Notes due July 2045 (the “July 2045 Notes”), 6.875% Senior Notes due January 2039 (the “January 2039 Notes”), 7.125% Senior Notes due August 2039 (the “August 2039 Notes”), 5.500% Senior Notes due June 2050 (the “June 2050 Notes”), and 4.875% Senior Notes due October 2049 (the “October 2049 Notes” and, together with the June 2022 Notes, the January 2029 Notes, the March 2031 Notes, the March 2032 Notes, the July 2035 Notes, the February 2040 Notes, the June 2042 Notes, the July 2045 Notes, the January 2039 Notes, the August 2039 Notes, and the June 2050 Notes, the “Notes,” and each, a “Series” of Notes). Subject to the Maximum Tender Amount, the amount of a Series of Notes that is purchased in the Tender Offer will be based on the Acceptance Priority Levels set forth below. The Tender Offer is being made on the terms and subject to the conditions set forth in the offer to purchase dated November 18, 2021 (the “Offer to Purchase”). Capitalized terms used in this release but not otherwise defined have the meaning given in the Offer to Purchase.

Consummation of the Tender Offer and payment for the Notes accepted for purchase are subject to the satisfaction or waiver of certain conditions described in the Offer to Purchase, including among other things, the receipt of proceeds upon completion of a transaction involving the sale of certain assets in Kraft Heinz’s global cheese business and the license of certain trademarks, pursuant to a definitive agreement with an affiliate of Groupe Lactalis, as announced by Kraft Heinz in September 2020 (the “Financing Condition”). Subject to applicable law, the Issuer has reserved the absolute right, in its sole discretion, to at any time (i) waive any and all conditions to the Tender Offer, including the satisfaction of Financing Condition, (ii) extend, terminate, or withdraw the Tender Offer, (iii) increase or waive the Maximum Tender Amount, with or without extending the Withdrawal Date (as defined below), or (iv) otherwise amend the Tender Offer in any respect.

The Tender Offer will expire at 11:59 p.m., New York City time, on December 16, 2021, unless extended or earlier terminated as described in the Offer to Purchase (such time and date, as they may be extended, the “Expiration Time”). Notes tendered at or prior to 5:00 p.m., New York City time, on December 2, 2021 (such date and time, as the same may be extended, the “Withdrawal Date”) may be validly withdrawn at any time at or prior to the Withdrawal Date, but not thereafter, except in certain limited circumstances where the Issuer determines that additional withdrawal rights are required by law. Holders of the Notes (“Holders”) are urged to read the Offer to Purchase carefully before making any decision with respect to the Tender Offer.

Certain information regarding the Notes and the Tender Offer is set forth in the table below.

CUSIP No. / ISIN		Title of Security		Principal Amount Outstanding		Acceptance Priority Level		Reference Treasury Security		Bloomberg Reference Page		Fixed Spread (bps)		Early Tender Premium(1)(2)		Hypothetical Total Consideration(3)
50076QAZ9 / US50076QAZ90 (144A): 50076QAF3 / US50076QAF37 (Reg S): U5009CAC4 / USU5009CAC48		3.500% Senior Notes due June 2022		$631,263,000		1		0.375% U.S. Treasury due October 31, 2023		FIT1		-35		$30.00		$1,016.65
50077LAT3 / US50077LAT35		4.625% Senior Notes due January 2029		$725,402,000		2		1.375% U.S. Treasury due November 15, 2031		FIT1		+65		$30.00		$1,149.14
50077LBF2 / US50077LBF22		4.250% Senior Notes due March 2031		$1,350,000,000		3		1.375% U.S. Treasury due November 15, 2031		FIT1		+90		$30.00		$1,137.73
42307TAG3 / US42307TAG31		6.750% Senior Notes due March 2032		$370,950,000		4		1.375% U.S. Treasury due November 15, 2031		FIT1		+95		$30.00		$1,374.55
50077LAL0 / US50077LAL09		5.000% Senior Notes due July 2035		$784,458,000		5		1.375% U.S. Treasury due November 15, 2031		FIT1		+110		$30.00		$1,249.08
50076QAN6 / 50076QAM8 / US50076QAN60 / US50076QAM87 (144A): 50076QAL0 / US50076QAL05 (Reg S): U5009CAE0 / USU5009CAE04		6.500% Senior Notes due February 2040		$706,379,000		6		1.750% U.S. Treasury due August 15, 2041		FIT1		+120		$30.00		$1,439.38
50076QAE6 / US50076QAE61 (144A): 50076QAC0 / US50076QAC06 (Reg S): U5009CAB6 / USU5009CAB64		5.000% Senior Notes due June 2042		$1,531,918,000		7		1.750% U.S. Treasury due August 15, 2041		FIT1		+125		$30.00		$1,247.82
50077LAM8 / US50077LAM81 (144A): 423074AV5 / US423074AV57 (Reg S): U42314AC5 / USU42314AC51		5.200% Senior Notes due July 2045		$1,810,696,000		8		2.000% U.S. Treasury due August 15, 2051		FIT1		+135		$30.00		$1,289.48
50076QAR7 / US50076QAR74 (144A): 50076QAP1 / US50076QAP19 (Reg S): U5009CAF7 / USU5009CAF78		6.875% Senior Notes due January 2039		$810,759,000		9		1.750% U.S. Treasury due August 15, 2041		FIT1		+110		$30.00		$1,486.45
42307TAH1 / US42307TAH14		7.125% Senior Notes due August 2039		$859,264,532		10		1.750% U.S. Treasury due August 15, 2041		FIT1		+110		$30.00		$1,530.96
50077LBJ4 / US50077LBJ44 (144A): 50077LBG0 / US50077LBG05 (Reg S): U5009LBC3 / USU5009LBC38		5.500% Senior Notes due June 2050		$800,000,000		11		2.000% U.S. Treasury due August 15, 2051		FIT1		+150		$30.00		$1,347.60
50077LAZ9 / US50077LAZ94 (144A): 50077LAY2 / US50077LAY20 (Reg S): U5009LAZ3 / USU5009LAZ32		4.875% Senior Notes due October 2049		$1,500,000,000		12		2.000% U.S. Treasury due August 15, 2051		FIT1		+145		$30.00		$1,243.81

________________________
(1)		The Total Consideration for each Series validly tendered prior to or at the applicable Early Tender Time and accepted for purchase is calculated using the applicable Fixed Spread and is inclusive of the applicable Early Tender Premium.
(2)		Per $1,000 principal amount of Notes validly tendered and not validly withdrawn at or prior to the Early Tender Time and accepted for purchase.
(3)		Hypothetical Total Consideration as of 10:00 a.m., New York City time, on November 17, 2021 and assuming Early Settlement Date of December 6, 2021.

Holders who validly tender and do not validly withdraw their Notes at or prior to 5:00 p.m., New York City time, on December 2, 2021, unless extended with respect to any Series of Notes (such date and time, as the same may be extended, the “Early Tender Time”) or earlier terminated by the Issuer, will be eligible to receive the applicable Total Consideration, which includes the applicable Early Tender Premium as set forth in the table above. The applicable Total Consideration for each $1,000 principal amount of Notes validly tendered and accepted for purchase will be determined in the manner described in the Offer to Purchase by reference to the applicable Fixed Spread specified on the front cover of the Offer to Purchase over the applicable Reference Yield based on the bid-side price of the applicable Reference Treasury Security specified on the front cover of the Offer to Purchase, as calculated by the Lead Dealer Managers (as defined below) at 10:00 a.m., New York City time, on December 3, 2021 (subject to certain exceptions set forth in the Offer to Purchase, such time and date, as the same may be extended the “Price Determination Date”). Holders who validly tender their Notes after the Early Tender Time and at or prior to the Expiration Time will be entitled to receive only the applicable Tender Offer Consideration, which is equal to the applicable Total Consideration minus the applicable Early Tender Premium.

For Notes validly tendered at or prior to the Early Tender Time, and not subsequently validly withdrawn and that are accepted for purchase, the Issuer has the option for settlement to occur on the Early Settlement Date, which is expected to be December 6, 2021, the second business day following the Early Tender Time. In the event we choose to have an Early Settlement Date, settlement for Notes validly tendered after the Early Tender Time, but at or prior to the Expiration Time, is expected to occur on December 20, 2021, the second business day following the Expiration Time, unless extended.

In addition to the Total Consideration or the Tender Offer Consideration, as applicable, all Notes accepted for purchase pursuant to the Tender Offer, will, on the Early Settlement Date or the Final Settlement Date, as applicable, also receive accrued and unpaid interest in respect of such Notes from the last interest payment date to, but not including, the applicable Settlement Date.

Subject to the Maximum Tender Amount, the application of the Acceptance Priority Levels, and the other terms and conditions described in the Offer to Purchase, the Issuer intends to accept for purchase all Notes validly tendered and not validly withdrawn at or prior to the Early Tender Time. However, if the Tender Offer is fully subscribed as of the Early Tender Time, Holders who validly tender their Notes after the Early Tender Time will not have any of their Notes accepted for purchase. Notes validly tendered and not validly withdrawn at or prior to the Early Tender Time will be accepted for purchase in priority to the Notes validly tendered after the Early Tender Time and at or prior to the Expiration Time even if such Notes validly tendered after the Early Tender Time and at or prior to the Expiration Time have a higher Acceptance Priority Level than the Notes validly tendered and not validly withdrawn at or prior to the Early Tender Time. As a result, each Holder who validly tenders Notes pursuant to the Tender Offer may have a portion of its Notes returned to it, and the amount of Notes returned will depend on the level of participation of Holders in the Tender Offer. The Tender Offer may be subject to proration if the aggregate purchase price (including principal and premium but excluding accrued and unpaid interest) of the Notes that are validly tendered and not validly withdrawn is greater than the Maximum Tender Amount.

Kraft Heinz has engaged Citigroup Global Markets Inc. (“Citigroup”), Morgan Stanley & Co. LLC (“Morgan Stanley”), and RBC Capital Markets, LLC (“RBC Capital Markets”) to act as lead dealer managers (collectively, the “Lead Dealer Managers”) and Barclays Capital Inc., Credit Agricole Securities (USA) Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., Mizuho Securities USA LLC, Santander Investment Securities Inc., SMBC Nikko Securities America, Inc. and Wells Fargo Securities, LLC to act as co-dealer managers (collectively, the “Co-Dealer Managers” and, together with the Lead Dealer Managers, the “Dealer Managers”) in connection with the Tender Offer and has appointed Global Bondholder Services Corporation to serve as the Tender Agent and Information Agent for the Tender Offer. Copies of the Offer to Purchase are available at https://www.gbsc-usa.com/kraftheinzcompany/ or by contacting Global Bondholder Services Corporation via telephone at +1 (866) 470-3800 (toll free) or +1 212-430-3774 (for banks and brokers). Questions regarding the terms of the Tender Offer should be directed to Citigroup at (800) 558-3745 (toll-free) or (212) 723-6106 (collect); Morgan Stanley at (800) 624-1808 (toll-free) or (212) 761-1057 (collect); and RBC Capital Markets at (877) 381-2099 (toll-free) or (212) 618-7843 (collect).

None of the Issuer, Kraft Heinz, their boards of directors or boards of managers, as applicable, the Dealer Managers, Global Bondholder Services Corporation, the Trustees for the Notes, or any of their respective affiliates, is making any recommendation as to whether Holders should tender any Notes in response to the Tender Offer. Holders must make their own decision as to whether to tender any of their Notes and, if so, the principal amounts of Notes to tender.

This press release is for informational purposes only and is not an offer to purchase, a solicitation of an offer to purchase, or a solicitation of consents with respect to any securities. This press release does not describe all the material terms of the Tender Offer, and no decision should be made by any Holder on the basis of this press release. The terms and conditions of the Tender Offer are described in the Offer to Purchase, and this press release must be read in conjunction with the Offer to Purchase. The Offer to Purchase contains important information that should be read carefully before any decision is made with respect to the Tender Offer. The Tender Offer is not being made in any jurisdiction in which, or to or from any person to or from whom, it is unlawful to make such offer or solicitation under applicable securities or blue sky laws. If any Holder is in any doubt as to the contents of this press release, or the Offer to Purchase, or the action it should take, the Holder should seek its own financial and legal advice, including in respect of any tax consequences, immediately from its stockbroker, bank manager, solicitor, accountant, or other independent financial, tax, or legal adviser. Any individual or company whose Notes are held on its behalf by a broker, dealer, bank, custodian, trust company, or other nominee must contact such entity if it wishes to tender such Notes pursuant to the Tender Offer.

ABOUT THE KRAFT HEINZ COMPANY

We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, Let’s Make Life Delicious. Consumers are at the center of everything we do. With 2020 net sales of approximately $26 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale. We leverage our scale and agility to unleash the full power of Kraft Heinz across a portfolio of six consumer-driven product platforms. As global citizens, we’re dedicated to making a sustainable, ethical impact while helping feed the world in healthy, responsible ways. Learn more about our journey by visiting www.kraftheinzcompany.com or following us on LinkedIn and Twitter.

Forward-Looking Statements

This press release contains a number of forward-looking statements. Words such as “plan,” “believe,” “anticipate,” “reflect,” “invest,” “see,” “make,” “expect,” “deliver,” “drive,” “improve,” “intend,” “assess,” “remain,” “evaluate,” “establish,” “focus,” “build,” “turn,” “expand,” “leverage,” “grow,” “will,” “maintain,” “manage,” and variations of such words and similar future or conditional expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding Kraft Heinz’s plans, impacts of accounting standards and guidance, growth, legal matters, taxes, costs and cost savings, impairments, dividends, expectations, investments, innovations, opportunities, capabilities, execution, initiatives, and pipeline. These forward-looking statements reflect management’s current expectations and are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which are difficult to predict and beyond Kraft Heinz’s control.

Important factors that may affect Kraft Heinz’s business and operations and that may cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, market conditions and the timing and ability of the Issuer to consummate the Tender Offer; the impacts of COVID-19 and government and consumer responses; operating in a highly competitive industry; Kraft Heinz’s ability to correctly predict, identify, and interpret changes in consumer preferences and demand, to offer new products to meet those changes, and to respond to competitive innovation; changes in the retail landscape or the loss of key retail customers; changes in Kraft Heinz’s relationships with significant customers or suppliers, or in other business relationships; Kraft Heinz’s ability to maintain, extend, and expand its reputation and brand image; Kraft Heinz’s ability to leverage its brand value to compete against private label products; Kraft Heinz’s ability to drive revenue growth in its key product categories or platforms, increase its market share, or add products that are in faster-growing and more profitable categories; product recalls or other product liability claims; Kraft Heinz’s ability to identify, complete, or realize the benefits from strategic acquisitions, alliances, divestitures, joint ventures, or other investments; Kraft Heinz’s ability to successfully execute its strategic initiatives; the impacts of Kraft Heinz’s international operations; Kraft Heinz’s ability to protect intellectual property rights; Kraft Heinz’s ownership structure; Kraft Heinz’s ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes, and improve its competitiveness; Kraft Heinz’s level of indebtedness, as well as our ability to comply with covenants under our debt instruments; additional impairments of the carrying amounts of goodwill or other indefinite-lived intangible assets; foreign exchange rate fluctuations; volatility in commodity, energy, and other input costs; volatility in the market value of all or a portion of the commodity derivatives we use; compliance with laws and regulations and related legal claims or regulatory enforcement actions; failure to maintain an effective system of internal controls; a downgrade in Kraft Heinz’s credit rating; the impact of future sales of Kraft Heinz’s common stock in the public market; Kraft Heinz’s ability to continue to pay a regular dividend and the amounts of any such dividends; unanticipated business disruptions and natural events in the locations in which Kraft Heinz or Kraft Heinz’s customers, suppliers, distributors, or regulators operate; economic and political conditions in the United States and in various other nations where Kraft Heinz does business; changes in Kraft Heinz’s management team or other key personnel and Kraft Heinz’s ability to hire or retain key personnel or a highly skilled and diverse global workforce; risks associated with information technology and systems, including service interruptions, misappropriation of data, or breaches of security; increased pension, labor, and people-related expenses; changes in tax laws and interpretations; volatility of capital markets and other macroeconomic factors; and other factors. For additional information on these and other factors that could affect the Kraft Heinz’s forward-looking statements, see Kraft Heinz’s risk factors, as they may be amended from time to time, set forth in its filings with the Securities and Exchange Commission. Kraft Heinz disclaims and does not undertake any obligation to update, revise, or withdraw any forward-looking statement in this press release, except as required by applicable law or regulation.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211118006300/en/

Alex Abraham (media)

Alex.Abraham@kraftheinz.com

Christopher Jakubik, CFA (investors)

ir@kraftheinz.com

Source: The Kraft Heinz Company

FAQ

What is the Kraft Heinz Tender Offer amount for its Senior Notes?

Kraft Heinz has initiated a Tender Offer to purchase up to $2 billion of its Senior Notes.

When does the Kraft Heinz Tender Offer expire?

The Kraft Heinz Tender Offer will expire at 11:59 p.m. on December 16, 2021.

What conditions are attached to the Kraft Heinz Tender Offer?

The Tender Offer is subject to the satisfaction of conditions, including the completion of a transaction involving the sale of certain assets in Kraft Heinz's global cheese business.

What is the early tender deadline for the Kraft Heinz Tender Offer?

Holders must tender their Notes by 5:00 p.m. on December 2, 2021, to qualify for early tender incentives.

Where can I find more information about the Kraft Heinz Tender Offer?

More information can be found in the Offer to Purchase available at Global Bondholder Services Corporation's website.