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Berry Global Group (BERY) Prices $750M Senior Notes Offering

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Berry Global Group, Inc. (BERY - Free Report) yesterday announced the pricing of $750 million worth of first-priority senior secured notes. The notes have been offered to private investors by Berry Global, Inc. — a wholly-owned subsidiary of the Berry Global Group.

Notably, the proposal for the above-mentioned private offering was announced by Berry Global Group on Dec 15.

Inside the Headlines

As noted, the notes offered are due to mature on Jan 15, 2026, and carry a 1.57% coupon rate. The interest will be paid semi-annually, with installments made each year on Jan 15 and Jul 15. The first interest payment will be made on Jul 15, 2021.

The senior notes offered will be guaranteed by Berry Global Group as well as direct or indirect domestic subsidiaries (existing and future) of Berry Global, which act as guarantors to its existing first-priority secured notes, existing second-priority senior secured notes and senior credit facilities (secured).

The proceeds from the notes offering will likely be used by the company to repay Berry Global’s term loans (existing) and some related expenses.

The notes offering is predicted to close on Dec 22, 2020.

Berry Global Group’s Debt Profile

The company has high debts, with current and long-term debts of $10,237 million at the end of fourth-quarter fiscal 2020 (ended Sep 26, 2020). Net interest expenses were $435 million in fiscal 2020, up 32.2% year over year.

Notably, the company’s total debt to total capital was 83% and times interest earned was 2.6X at the end of the fourth quarter. This compares unfavorably with the industry’s total debt to total capital of 60.4% and times interest earned of 5.2X.

Zacks Rank, Price Performance and Earnings Estimate Trend

With a market capitalization of $7.2 billion, Berry Global Group presently carries a Zacks Rank #3 (Hold). The company benefits from buyouts, robust capital-allocation policies and a diversified product portfolio. However, high debts, inflating costs and the pandemic-led challenges remain concerning.

Over the past three months, Berry Global Group’s shares have gained 10.1% compared with 13.1% growth recorded by the industry.


Furthermore, the company’s earnings estimates have been raised in the past 60 days. Currently, the Zacks Consensus Estimate for its earnings is pegged at $5.37 for fiscal 2021 (ending September 2021) and $5.78 for fiscal 2022 (ending September 2022), reflecting growth of 5.7% and 4.1% from respective 60-day-ago figures.

Some better-ranked stocks in the industry are Packaging Corporation of America (PKG - Free Report) , Greif, Inc. (GEF - Free Report) and Sealed Air Corporation (SEE - Free Report) . While Packaging Corporation currently sports a Zacks Rank #1 (Strong Buy), Greif and Sealed Air carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for Tennant and DXP Enterprises have improved for the current year, while the same has been unchanged for Standex. Further, positive earnings surprise for the last reported quarter was 15.44% for Packaging Corporation, 8.33% for Greif and 22.39% for Sealed Air.

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