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The processed and packaged food giant, ConAgra Foods, Inc. (CAG - Analyst Report) recently raised funds from the market through issuance of approximately $750 million principal amount of Senior Notes. The whole process took place in three tranches of equal amount of $250 million each.
Discussed in parts, the first lot comprised 1.35% of Senior Notes due to mature on September 10, 2015. These notes are expected to yield 1.425% at maturity and were offered at 99.781% of the principal amount.
The second lot consisted of 2.10% of Senior Notes, maturing on March 15, 2018. The notes were issued at 99.762% of the principal amount and yield 2.146% on maturity. The third lot included 3.25% of Senior Notes due to mature on September 15, 2022. The notes were issued at 99.442% of the principal amount and yield 3.316% on maturity.
Moody’s conferred a Baa2 rating to these notes while a BBB rating was provided by both S&P and Fitch credit rating agencies, all indicating a stable outlook. Interest payments will be made semi-annually with the first payment due to mature on March 10, 2013, for the first tranche issue while on March 15, 2013, for the second and third tranches.
ConAgra Foods estimates collection of approximately $743.3 million, net of underwriting discounts from the notes offering, and intends to use the proceeds for general corporate purposes and repayment of $300 million of commercial papers.
For the fiscal year 2012 (ended May 27, 2012), the company had Senior long-term debt balance of approximately $2,662.7 million and Subordinated debt balance of $195.9 million.
The Zacks Consensus Estimate for the fiscal first quarter 2013 is 36 cents per share, up 22.9% year over year. Estimates for fiscal 2013 and 2014 stand at $1.98 and $2.12 per share, representing year-over-year growth of 7.8% and 6.9%, respectively.
ConAgra Foods Inc. is one of North America’s leading food companies. We currently maintain a Neutral recommendation on ConAgra. The stock also bears a Zacks #3 Rank, implying a short-term Hold rating. Its prime competitors HJ Heinz Co. (HNZ) and Kraft Foods Inc. (KFT) also hold a Zacks #3 (Hold) Rank.
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