US Foods Announces Pricing of Private Offering of $500 Million of Senior Unsecured Notes

Rhea-AI Summary

US Foods Holding Corp. (NYSE: USFD) has announced that its subsidiary, US Foods, Inc., has priced a private offering of $500 million in senior unsecured notes due 2033 with a 5.75% interest rate. The company plans to use the net proceeds to repay a portion of its outstanding term loan facility. The notes will be senior unsecured obligations of US Foods and guaranteed by its existing and future wholly-owned domestic subsidiaries that guarantee its term loan credit facility. The closing is scheduled for October 3, 2024, subject to customary conditions. The offering is exempt from SEC registration requirements and is only available to qualified institutional buyers in the US and certain non-US persons.

Positive

• Successful pricing of $500 million senior unsecured notes offering
• Proceeds to be used for repaying a portion of term loan facility, potentially improving debt structure
• Notes offering provides additional liquidity and financial flexibility

Negative

• Increased long-term debt obligation with 5.75% interest rate
• Potential impact on future cash flows due to interest payments on new notes

Insights

Financial Analyst

US Foods' pricing of $500 million in senior unsecured notes due 2033 at 5.75% interest is a significant financial move. This debt issuance allows the company to refinance a portion of its existing term loan facility, potentially improving its debt structure and maturity profile. The 5.75% interest rate seems competitive in the current market environment, suggesting investor confidence in US Foods' creditworthiness. However, it's important to note that this adds to the company's long-term debt obligations. The private offering to qualified institutional buyers indicates a targeted approach to debt financing. This move may provide US Foods with more financial flexibility, but investors should monitor how effectively the company manages its overall debt load and interest expenses in the coming years.

Market Research Analyst

This debt offering by US Foods reflects broader trends in the food distribution industry, where companies are seeking to optimize their capital structures amid changing market conditions. The successful pricing of these notes suggests that there's still appetite for corporate debt from institutional investors, even as interest rates have risen. For US Foods, this move could enhance its competitive position by potentially lowering its overall cost of capital. However, the impact on the company's financial health will depend on how effectively it utilizes this refinancing opportunity. Investors should pay attention to US Foods' future financial reports to assess the impact on its interest coverage ratios and overall leverage. The food distribution sector faces challenges from inflation and supply chain issues, making financial flexibility important for navigating uncertain market conditions.

ROSEMONT, Ill.--(BUSINESS WIRE)-- US Foods Holding Corp. (NYSE: USFD) today announced that its wholly-owned subsidiary, US Foods, Inc. (“US Foods”), has priced the previously announced notes offering and has agreed to issue and sell $500 million aggregate principal amount of 5.75% senior unsecured notes due 2033 (the “Notes”).

US Foods intends to use the net proceeds of the Notes offering to repay a portion of the amounts outstanding under its term loan facility. The Notes will be the senior unsecured obligations of US Foods and will be guaranteed by all of US Foods’ existing and future wholly-owned domestic subsidiaries that guarantee US Foods’ obligations under its existing term loan credit facility. The closing of the sale of the Notes is scheduled for October 3, 2024, subject to customary closing conditions.

The Notes and the related guarantees thereof will be offered in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) in the United States to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act, and outside the United States pursuant to Regulation S under the Securities Act. The Notes and the related guarantees have not been registered under the Securities Act or any state securities laws and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.

This press release is for informational purposes only and does not constitute an offer to sell the Notes, nor a solicitation for an offer to purchase the Notes or any other securities, nor shall there be any sales of Notes or other securities, 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 or jurisdiction. No assurance can be made that the Offering will be consummated on its proposed terms or at all.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240927990835/en/

INVESTOR CONTACT:

Mike Neese

(847) 232-5894

Michael.Neese@usfoods.com

MEDIA CONTACT:

Sara Matheu

(773) 580-3775

Sara.Matheu@usfoods.com

Source: US Foods

FAQ

What is the size and interest rate of US Foods' (USFD) new notes offering?

US Foods (USFD) has priced a $500 million offering of senior unsecured notes due 2033 with a 5.75% interest rate.

How will US Foods (USFD) use the proceeds from the notes offering?

US Foods (USFD) intends to use the net proceeds from the notes offering to repay a portion of the amounts outstanding under its term loan facility.

When is the closing date for US Foods' (USFD) notes offering?

The closing of the sale of the notes is scheduled for October 3, 2024, subject to customary closing conditions.

Are US Foods' (USFD) new notes registered under the Securities Act?

No, the notes and related guarantees are not registered under the Securities Act and are being offered in a private offering exempt from registration requirements.