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Berry Global (BERY) Prices $800M Senior Notes in Private Offering
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Berry Global Group, Inc. (BERY - Free Report) recently announced the pricing of $800 million principal amount of first priority senior secured notes due 2034 in a private placement. The sale of the notes is expected to close on or around Jan 17, 2024, by the company’s wholly-owned subsidiary, Berry Global, Inc.
The company’s shares inched down 0.2% yesterday, ending the trading session at $66.37.
Inside the Headlines
The notes will be offered only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended and to non-U.S. investors conforming to Regulation S. Interest on the senior notes has been set at 5.650% and will be paid out semi-annually — in cash in arrears — on Jan 15 and Jul 15 of every year. The first interest payment will be made on Jul 15, 2024, while the maturity of the notes will occur on Jan 15, 2034.
The company expects the net proceeds from this offering to be used to prepay part of certain indebtedness. The remaining net proceeds will be used to meet certain fees and expenses associated with the offering.
We believe that the offering of senior notes will increase the company’s debts and, in turn, might inflate its financial obligations and hurt profitability. However, prepaying part of certain indebtedness will offer some relief. Exiting fourth-quarter fiscal 2023 (ended September 2023), its current and long-term debt remained high at $8,980 million.
Zacks Rank, Price Performance and Earnings Trend
The company, with a $7.7-billion market capitalization, currently carries a Zacks Rank #4 (Sell). Softer consumer and industrial market demand is affecting the company’s Consumer Packaging International segment. Lower selling prices due to the pass-through of lower resin costs in the United States and reduced demand in the industrial end markets are affecting the Consumer Packaging North America segment.
Image Source: Zacks Investment Research
Berry Global’s shares have gained 0.1% compared with the 3.1% growth recorded by the industry in the past six months.
The Zacks Consensus Estimate for fiscal 2024 (ending September 2024) earnings has decreased 4.5% to $7.59 in the past 60 days. Also, estimates for fiscal 2025 (ending September 2025) have declined by 4.4% to $8.44 during the same period.
Packaging Corporation delivered a trailing four-quarter average earnings surprise of 6.8%. In the past 60 days, the Zacks Consensus Estimate for PKG’s 2023 earnings inched up 0.1%. The stock has rallied 24.4% in the past six months.
Graphic Packaging has a trailing four-quarter average earnings surprise of 4.2%. The consensus estimate for GPK’s 2023 earnings has been stable in the past 60 days. Shares of the company have increased 7.5% in the past six months.
Amcor delivered a trailing four-quarter average earnings surprise of 6.4%. In the past 60 days, the consensus estimate for AMCR’s fiscal 2024 (ending June 2024) earnings has been unchanged. The stock has declined 1.3% in the past six months.
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Berry Global (BERY) Prices $800M Senior Notes in Private Offering
Berry Global Group, Inc. (BERY - Free Report) recently announced the pricing of $800 million principal amount of first priority senior secured notes due 2034 in a private placement. The sale of the notes is expected to close on or around Jan 17, 2024, by the company’s wholly-owned subsidiary, Berry Global, Inc.
The company’s shares inched down 0.2% yesterday, ending the trading session at $66.37.
Inside the Headlines
The notes will be offered only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended and to non-U.S. investors conforming to Regulation S. Interest on the senior notes has been set at 5.650% and will be paid out semi-annually — in cash in arrears — on Jan 15 and Jul 15 of every year. The first interest payment will be made on Jul 15, 2024, while the maturity of the notes will occur on Jan 15, 2034.
The company expects the net proceeds from this offering to be used to prepay part of certain indebtedness. The remaining net proceeds will be used to meet certain fees and expenses associated with the offering.
We believe that the offering of senior notes will increase the company’s debts and, in turn, might inflate its financial obligations and hurt profitability. However, prepaying part of certain indebtedness will offer some relief. Exiting fourth-quarter fiscal 2023 (ended September 2023), its current and long-term debt remained high at $8,980 million.
Zacks Rank, Price Performance and Earnings Trend
The company, with a $7.7-billion market capitalization, currently carries a Zacks Rank #4 (Sell). Softer consumer and industrial market demand is affecting the company’s Consumer Packaging International segment. Lower selling prices due to the pass-through of lower resin costs in the United States and reduced demand in the industrial end markets are affecting the Consumer Packaging North America segment.
Image Source: Zacks Investment Research
Berry Global’s shares have gained 0.1% compared with the 3.1% growth recorded by the industry in the past six months.
The Zacks Consensus Estimate for fiscal 2024 (ending September 2024) earnings has decreased 4.5% to $7.59 in the past 60 days. Also, estimates for fiscal 2025 (ending September 2025) have declined by 4.4% to $8.44 during the same period.
3 Promising Stocks
We have highlighted three better-ranked stocks from the same space, namely Packaging Corporation of America (PKG - Free Report) , Graphic Packaging Holding Company (GPK - Free Report) and Amcor plc (AMCR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Packaging Corporation delivered a trailing four-quarter average earnings surprise of 6.8%. In the past 60 days, the Zacks Consensus Estimate for PKG’s 2023 earnings inched up 0.1%. The stock has rallied 24.4% in the past six months.
Graphic Packaging has a trailing four-quarter average earnings surprise of 4.2%. The consensus estimate for GPK’s 2023 earnings has been stable in the past 60 days. Shares of the company have increased 7.5% in the past six months.
Amcor delivered a trailing four-quarter average earnings surprise of 6.4%. In the past 60 days, the consensus estimate for AMCR’s fiscal 2024 (ending June 2024) earnings has been unchanged. The stock has declined 1.3% in the past six months.