Owens-Brockway Glass Container Inc. Launches $300 Million Senior Notes Offering

Rhea-AI Summary

O-I Glass announced that Owens-Brockway Glass Container (OBGC), an indirect subsidiary, plans to offer $300 million in senior notes due 2032, subject to market conditions. The notes will be guaranteed by Owens-Illinois Group and certain U.S. subsidiaries. Proceeds will be used to redeem OBGC’s outstanding 6.375% senior notes due 2025. The offering will be private and to qualified institutional buyers and non-U.S. persons under Rule 144A and Regulation S. The notes and guarantees are not registered under the U.S. Securities Act and are restricted from being sold in the U.S. without proper exemptions.

Positive

• OBGC aims to raise $300 million through the senior notes offering, potentially enhancing liquidity.
• The new notes due 2032 will replace existing 6.375% senior notes due 2025, possibly improving debt maturity profiles.
• The offering will help OBGC manage existing debt more effectively by using the proceeds to redeem older, higher-interest notes.

Negative

• The notes and guarantees are not registered under the Securities Act, restricting their sale in the U.S. without specific exemptions.
• Market conditions may affect the success of the $300 million offering and the associated financial benefits.
• The redemption of the 6.375% senior notes due 2025 will require using cash on hand, potentially impacting short-term liquidity.

Insights

Financial Analyst

The announcement that Owens-Brockway Glass Container Inc. will issue $300 million in senior notes due 2032 is a significant financial move. This new issuance is intended to redeem the existing 6.375% Senior Notes due 2025. For investors, this indicates a strategic move to refinance existing debt, likely to take advantage of more favorable interest rates or improved credit conditions. Reducing the cost of debt from the 2025 notes can improve cash flow and reduce interest expenses. However, it's essential to consider the company's overall debt strategy and financial health. As of 2023, O-I Glass reported net sales of $7.1 billion, signaling solid revenue generation capabilities which should support their debt servicing abilities.

For retail investors, it's important to note that these notes are not available to the general public but only to qualified institutional buyers. This limits direct investment opportunities but can still impact the stock price positively if the market views the refinancing as a prudent financial management step. The shift in maturity from 2025 to 2032 also suggests the company's confidence in its long-term financial stability, which can be seen as a positive indicator for long-term investors.

Market Research Analyst

From a market perspective, issuing new senior notes to redeem existing ones can signal multiple aspects about the company's current standing and future strategies. The shift to longer-term notes due in 2032 implies that OBGC is aiming to restructure its debt portfolio to better align with its long-term capital planning. This move can also provide the company with the flexibility it needs to invest in growth opportunities without the immediate pressure of upcoming debt maturities in 2025. For stakeholders and investors, this type of debt management can enhance the company’s credit profile and potentially lead to a better rating from credit agencies, which in turn can lower future borrowing costs.

Additionally, redeeming earlier notes may reflect the company's anticipation of favorable market conditions or an improved operating environment. For the retail investor, understanding these strategic financial maneuvers is critical, as they can influence the company’s ability to fund operations, pursue growth initiatives and maintain a healthy balance sheet overall. This can drive stock value over time, provided other market conditions remain stable.

PERRYSBURG, Ohio, May 20, 2024 (GLOBE NEWSWIRE) -- FOR IMMEDIATE RELEASE

O-I Glass, Inc. (the “Company”) announced that Owens-Brockway Glass Container Inc. (“OBGC”), an indirect wholly owned subsidiary of the Company, intends to offer, subject to market and other conditions, $300 million aggregate principal amount of its senior notes due 2032 (the “Notes”) in a private offering (the “Offering”) to eligible purchasers under Rule 144A and Regulation S of the U.S. Securities Act of 1933, as amended (the “Securities Act”). OBGC’s obligations under the Notes will be guaranteed on a joint and several basis by Owens-Illinois Group, Inc. (“OI Group”) and certain U.S. domestic subsidiaries of OI Group that are guarantors under OI Group’s credit agreement.

OBGC expects to use the net proceeds from the Offering, together with cash on hand, to redeem all of OBGC’s outstanding 6.375% Senior Notes due 2025 (the “2025 OBGC Notes”).

The Notes and the guarantees have not been registered under the Securities Act, or applicable state securities laws, and will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act. Unless so registered, the Notes and the guarantees may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. Prospective purchasers that are qualified institutional buyers are hereby notified that the seller of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.

The information contained in this news release is for informational purposes only and shall not constitute a notice of redemption for the 2025 OBGC Notes or an offer to sell or the solicitation of an offer to buy the 2025 OBGC Notes, the Notes or the guarantees, nor shall there be any sale of the Notes and the guarantees in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

About O-I Glass

At O-I Glass, Inc. (NYSE: OI), we love glass and we’re proud to be one of the leading producers of glass bottles and jars around the globe. Glass is not only beautiful, it’s also pure and completely recyclable, making it the most sustainable rigid packaging material. Headquartered in Perrysburg, Ohio (USA), O-I is the preferred partner for many of the world’s leading food and beverage brands. We innovate in line with customers’ needs to create iconic packaging that builds brands around the world. Led by our diverse team of more than 23,000 people across 68 plants in 19 countries, O-I achieved net sales of $7.1 billion in 2023.

Forward-Looking Statements

This press release contains “forward-looking” statements related to the Company within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act. Forward-looking statements reflect the Company’s current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward-looking statements.

It is possible that the Company’s future financial performance may differ from expectations due to a variety of factors including, but not limited to the following: (1) the general political, economic and competitive conditions in markets and countries where the Company has operations, including uncertainties related to economic and social conditions, trade disputes, disruptions in the supply chain, competitive pricing pressures, inflation or deflation, changes in tax rates and laws, war, civil disturbance or acts of terrorism, natural disasters, public health issues and weather, (2) cost and availability of raw materials, labor, energy and transportation (including impacts related to the current Ukraine-Russia and Israel-Hamas conflicts and disruptions in supply of raw materials caused by transportation delays), (3) competitive pressures from other glass container producers and alternative forms of packaging or consolidation among competitors and customers, (4) changes in consumer preferences or customer inventory management practices, (5) the continuing consolidation of the Company’s customer base, (6) the Company’s ability to improve its glass melting technology, known as the modular advanced glass manufacturing asset (“MAGMA”) program, and implement it within the timeframe expected, (7) unanticipated supply chain and operational disruptions, including higher capital spending, (8) seasonality of customer demand, (9) the failure of the Company’s joint venture partners to meet their obligations or commit additional capital to the joint venture, (10) labor shortages, labor cost increases or strikes, (11) the Company’s ability to acquire or divest businesses, acquire and expand plants, integrate operations of acquired businesses and achieve expected benefits from acquisitions, divestitures or expansions, (12) the Company’s ability to generate sufficient future cash flows to ensure the Company’s goodwill is not impaired, (13) any increases in the underfunded status of the Company’s pension plans, (14) any failure or disruption of the Company’s information technology, or those of third parties on which the Company relies, or any cybersecurity or data privacy incidents affecting the Company or its third-party service providers, (15) risks related to the Company’s indebtedness or changes in capital availability or cost, including interest rate fluctuations and the ability of the Company to generate cash to service indebtedness and refinance debt on favorable terms, (16) risks associated with operating in foreign countries, (17) foreign currency fluctuations relative to the U.S. dollar, (18) changes in tax laws or U.S. trade policies, (19) the Company’s ability to comply with various environmental legal requirements, (20) risks related to recycling and recycled content laws and regulations, (21) risks related to climate-change and air emissions, including related laws or regulations and increased environmental, social and governance scrutiny and changing expectations from stakeholders, (22) risks related to the Company’s long-term succession planning process and (23) the other risk factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and any subsequently filed Quarterly Reports on Form 10-Q or the Company’s other filings with the Securities and Exchange Commission.

It is not possible to foresee or identify all such factors. Any forward-looking statements in this press release are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate in the circumstances. Forward-looking statements are not a guarantee of future performance and actual results, or developments may differ materially from expectations. While the Company continually reviews trends and uncertainties affecting the Company’s results or operations and financial condition, the Company does not assume any obligation to update or supplement any particular forward-looking statements contained in this press release. 

SOURCE: O-I Glass, Inc.

Attachment

• Owens-Brockway Glass Container Inc. Launches $300 Million Senior Notes Offering

FAQ

What is the amount of senior notes OBGC is planning to offer?

OBGC plans to offer $300 million in senior notes.

What will the proceeds from the OBGC senior notes offering be used for?

The proceeds will be used to redeem OBGC’s outstanding 6.375% senior notes due 2025.

When are the new senior notes from OBGC due?

The new senior notes are due in 2032.

Are the OBGC senior notes registered under the U.S. Securities Act?

No, the notes and guarantees are not registered under the U.S. Securities Act.

Who can purchase the OBGC senior notes?

The notes can be purchased by qualified institutional buyers and certain non-U.S. persons under Rule 144A and Regulation S.