Sonoco Announces Pricing of $1.8 Billion of Senior Unsecured Notes

Rhea-AI Summary

Sonoco Products Company (NYSE: SON) has announced the pricing of $1.8 billion in senior unsecured notes. The offering includes three tranches: $500 million at 4.450% due 2026, $600 million at 4.600% due 2029, and $700 million at 5.000% due 2034. The closing is expected on September 19, 2024. Sonoco plans to use the net proceeds, along with borrowings from acquisition term loan facilities and possibly cash on hand or additional credit facility borrowings, to fund the cash consideration for its pending acquisition of Eviosys and related expenses. The offering is being managed by J.P. Morgan Securities, Morgan Stanley & Co., BofA Securities, and Wells Fargo Securities.

Positive

• Successful pricing of $1.8 billion in senior unsecured notes
• Funds secured for pending acquisition of Eviosys
• Diversified debt structure with three tranches of notes due in 2026, 2029, and 2034

Negative

• Increase in long-term debt obligations
• Potential impact on financial leverage and interest expenses

Insights

Financial Analyst

Sonoco's $1.8 billion senior unsecured notes offering is a significant move that will reshape its capital structure. The three-tranche structure with maturities ranging from 2026 to 2034 suggests a strategic approach to debt management. The interest rates (4.450% to 5.000%) appear competitive in the current market, indicating investor confidence in Sonoco's creditworthiness.

The primary purpose of this debt issuance is to fund the acquisition of Eviosys, which signals Sonoco's aggressive growth strategy. This acquisition could potentially enhance Sonoco's market position in sustainable packaging, but investors should closely monitor the integration process and any potential impact on the company's leverage ratios.

The involvement of major financial institutions as joint book-running managers adds credibility to the offering. However, investors should be aware that this substantial debt increase may impact Sonoco's financial flexibility and interest expenses in the coming years.

Market Research Analyst

Sonoco's bold move to raise $1.8 billion through senior unsecured notes highlights the company's confidence in its growth trajectory and the broader packaging industry. The acquisition of Eviosys aligns with the increasing demand for sustainable packaging solutions, a trend driven by consumer preferences and regulatory pressures.

The successful pricing of the notes, especially in the current economic climate, suggests strong investor appetite for Sonoco's expansion plans. This could potentially signal positive market sentiment towards the packaging sector as a whole. However, investors should remain cautious about potential market saturation and the cyclical nature of the industry.

The multi-tranche structure of the offering provides Sonoco with a balanced debt profile, potentially mitigating refinancing risks. This strategic financial maneuver could position Sonoco more competitively against industry rivals, but it's important to monitor how effectively the company leverages this capital for long-term growth and shareholder value creation.

HARTSVILLE, S.C., Sept. 17, 2024 (GLOBE NEWSWIRE) -- Sonoco Products Company (“Sonoco” or the “Company”) (NYSE: SON), a global leader in high-value sustainable packaging, today announced that it has priced an offering (the “Offering”) of senior unsecured notes in a combined aggregate principal amount of $1.8 billion (collectively, the “Notes”).   The Notes will be issued in three tranches:

• $500 million in aggregate principal amount of 4.450% notes due 2026
• $600 million in aggregate principal amount of 4.600% notes due 2029
• $700 million in aggregate principal amount of 5.000% notes due 2034
  

Sonoco expects that the closing of the Offering will occur on September 19, 2024, subject to the satisfaction of customary closing conditions.

Sonoco intends to use an amount equal to the net proceeds from the Offering, together with borrowings under its acquisition term loan facilities and, if needed, cash on hand or additional borrowings under its existing revolving credit facility, to fund the cash consideration payable by Sonoco in connection with Sonoco’s pending acquisition of Titan Holdings I B.V. (“Eviosys”) and to pay related fees and expenses.

J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, BofA Securities, Inc. and Wells Fargo Securities, LLC are serving as joint book-running managers for the Offering.

Sonoco has an effective shelf registration statement and has filed a preliminary prospectus supplement dated September 16, 2024 and a base prospectus forming part of the registration statement (together, the “preliminary prospectus”) with the Securities and Exchange Commission (the “SEC”) for the Offering. The Offering is being made only by means of the preliminary prospectus. Before you invest, you should read the preliminary prospectus (and, when available, the final prospectus supplement) relating to the Offering and the documents incorporated by reference therein. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, copies of the preliminary prospectus and, when available, the final prospectus supplement relating to the Offering may be obtained by contacting J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179 collect at 1-212-834-4533, Morgan Stanley & Co. LLC, 1585 Broadway, 29th Floor, New York, NY 10036 toll-free at 1-866-718-1649, BofA Securities, Inc., NC1-022-02-25, 201 North Tryon Street, Charlotte, NC 28255-0001, Attn: Prospectus Department toll free at 1-800-294-1322, or Wells Fargo Securities, LLC, 608 2nd Avenue South, Suite 1000, Minneapolis, MN 55402, Attn: WFS Customer Service toll-free at 1-800-645-3751.

This press release shall not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, the Notes or any other security. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation or sale would be unlawful.

About Sonoco:
With net sales of approximately $6.8 billion in 2023, Sonoco has approximately 22,000 employees working in more than 300 operations around the world, serving some of the world’s best-known brands. With our corporate purpose of Better Packaging. Better Life., Sonoco is committed to creating sustainable products and a better world for our customers, employees, and communities. Sonoco was named one of America’s Most Responsible Companies by Newsweek.

Forward-Looking Statements
This press release contains certain forward-looking statements. Words, and variations of words, such as “will,” “may,” “could,” “intend,” “plan,” and similar expressions are intended to identify those forward-looking statements, including but not limited to statements about the timing of the closing of the Offering and the receipt and intended use of the net proceeds of the Offering. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including the ability of the parties to complete the Offering on the anticipated timing or at all and Sonoco’s ability to complete the pending acquisition of Eviosys. Therefore, actual results may differ materially from those expressed or forecasted in such forward-looking statements. Additional information concerning some of the factors that could cause materially different results is included in the preliminary prospectus and the Company’s reports on forms 10-K, 10-Q and 8-K filed with the U.S. Securities and Exchange Commission. Such documents are available from EDGAR on the SEC’s website at www.sec.gov.

Contact Information

Investors
Lisa Weeks
Vice President of Investor Relations & Communications
lisa.weeks@sonoco.com
843-383-7524

FAQ

What is the total value of Sonoco's (SON) recent senior unsecured notes offering?

Sonoco (SON) has priced a senior unsecured notes offering for a total of $1.8 billion.

When is the expected closing date for Sonoco's (SON) $1.8 billion notes offering?

The closing of Sonoco's (SON) $1.8 billion notes offering is expected to occur on September 19, 2024, subject to customary closing conditions.

What are the interest rates and maturity dates for Sonoco's (SON) new notes?

Sonoco's (SON) new notes are issued in three tranches: 4.450% notes due 2026, 4.600% notes due 2029, and 5.000% notes due 2034.

What is the purpose of Sonoco's (SON) $1.8 billion notes offering?

Sonoco (SON) intends to use the net proceeds from the $1.8 billion notes offering to fund the cash consideration for its pending acquisition of Eviosys and to pay related fees and expenses.