Back to top

Image: Bigstock

Berry Global Group Prices Senior Secured Notes Offering

Read MoreHide Full Article

Berry Global Group, Inc. (BERY - Free Report) yesterday announced the pricing of €1,075 million worth first-priority senior secured notes. The notes will be offered to private investors by the company’s wholly-owned subsidiary — Berry Global, Inc.

Notably, the proposal for a private offering of €725 million of first-priority senior secured notes (in two installments) was announced by Berry Global Group on Dec 9.

Inside the Headlines

As noted, the first part of the notes offering will include €700 million of first-priority senior secured notes due to mature on Jan 15, 2025. The notes carry a 1% interest rate, with two semi-annual payments to be made each year on Jan 15 and Jul 15. The first interest payment will be made on Jul 15, 2020.

The second installment of notes offering will comprise €375 million of first-priority senior secured notes due to mature on Jan 15, 2027. These notes carry a 1.5% interest rate. Interest payments will be made semi-annually each year on Jan 15 and Jul 15. The first interest payment will be made on Jul 15, 2020.

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 and available cash will likely be used by the company to repay Berry Global’s existing term loans and some related expenses.

The notes offering are predicted to close on Jan 2, 2020.

Berry Global Group’s High Debt Profile

The company has a highly leveraged balance sheet. At the end of fourth-quarter fiscal 2019 (ended Sep 28, 2019), its current and long-term debts were at $11,365 million, reflecting a 94.5% increase from the previous year. Net interest expenses were $329 million in fiscal 2019, up 27% year over year.

Notably, Berry Global Escrow Corporation — an indirect, wholly-owned subsidiary of Berry Global Group — issued $1,250 million of first-priority senior secured notes and $500 million of second-priority senior secured notes in May 2019. Notably, the first-priority senior secured notes are due to mature in 2026, while the second-priority notes will mature in 2027.

Although the current notes offering by Berry Global will help in repaying existing term loans, we believe that it will also add to Berry Global Group’s existing debt balance. Unwarranted rise in debt levels, in turn, can inflate Berry Global Group’s financial obligations and hurt profitability. Notably, the company continues to predict interest expenses of $500 million for fiscal 2020 (ending September 2020).

Zacks Rank & Stocks to Consider

With a market capitalization of $6.2 billion, Berry Global Group presently carries a Zacks Rank #3 (Hold). The company benefits from acquired assets, robust capital-allocation policies and restructuring initiatives. However, high debts, forex woes and inflating costs remain concerning.

Over the past three months, Berry Global Group’s shares have gained 19.4% compared with 7% growth recorded by the industry.

Furthermore, the company’s earnings estimates have been raised in the past 30 days. Currently, the Zacks Consensus Estimate for its earnings per share is pegged at $4.07 for fiscal 2020 and $4.56 for fiscal 2021 (ending September 2021), reflecting growth of 6.5% and 0.4% from respective 30-day-ago figures.

Berry Global Group, Inc. Price and Consensus


Berry Global Group, Inc. Price and Consensus

Berry Global Group, Inc. price-consensus-chart | Berry Global Group, Inc. Quote

Some better-ranked stocks in the Zacks Industrial Products sector are Tennant Company (TNC - Free Report) , DXP Enterprises, Inc (DXPE - Free Report) and Standex International Corporation (SXI - Free Report) . While Tennant currently sports a Zacks Rank #1 (Strong Buy), DXP Enterprises and Standex 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 40% for Tennant, 16.39% for DXP Enterprises and 2.11% for Standex.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>